Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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NY Open: The stage is set for a big finish to January
Michael O’Neill
FX Trader, Loonieviews.net
Summary: Next week is the end of January and FX markets are poised for a big finish. There is another UK parliamentary vote on Theresa May’s Brexit Plan B, a FOMC meeting, nonfarm payrolls data and the possibility of month-end portfolio rebalancing high jinks
There is increasing optimism for a positive result for Brexit Plan B at Tuesday’s vote, but the debate is far from settled. The UK Sun reported that Northern Ireland's Democratic Unionist Party would back Prime Minister May’s plan, and that has traders wary of a vicious short squeeze higher.
The Federal Open Market Committee meeting could be a barn-burner, especially if Fed Chair Jerome Powell answers questions about his apparent flip-flop between the December 21 press conference and his January 4 speech. The committee is widely expected to leave rates unchanged.
The consensus forecast for Friday’s nonfarm payrolls report is for a gain of 168,000 jobs, well below Decembers 312,000 increase, but still healthy.
Other flash-points include the US government shutdown and the US/China trade talks. Positive developments from either one them would boost Wall Street and spark a bit of a “risk-on” rally in FX.
The US dollar is on the defensive. The major G-10 currency pairs all posted gains since this morning’s open, and they are making a serious run at eliminating all their losses since last Friday’s close. Only the Australian dollar is underwater, as of 1345 GMT. NZDUSD is leading the charge higher, but it is an extremely close race. USDJPY is the laggard, and it is unchanged since the open. GBPUSD appears to have snapped the downtrend line from April 2018 with the break above 1.2980 on a daily chart which puts 1.3250 in play.
US stocks are higher as Wall Street follows the lead of European bourses. Prices are supported by a mix of profit-taking, some positive earnings reports, and the mildly improved outlook for US/China trade. However, the major indices need to climb a lot further to get back to Tuesday’s levels.
The Federal Open Market Committee meeting could be a barn-burner, especially if Fed Chair Jerome Powell answers questions about his apparent flip-flop between the December 21 press conference and his January 4 speech. The committee is widely expected to leave rates unchanged.
The consensus forecast for Friday’s nonfarm payrolls report is for a gain of 168,000 jobs, well below Decembers 312,000 increase, but still healthy.
Other flash-points include the US government shutdown and the US/China trade talks. Positive developments from either one them would boost Wall Street and spark a bit of a “risk-on” rally in FX.
The US dollar is on the defensive. The major G-10 currency pairs all posted gains since this morning’s open, and they are making a serious run at eliminating all their losses since last Friday’s close. Only the Australian dollar is underwater, as of 1345 GMT. NZDUSD is leading the charge higher, but it is an extremely close race. USDJPY is the laggard, and it is unchanged since the open. GBPUSD appears to have snapped the downtrend line from April 2018 with the break above 1.2980 on a daily chart which puts 1.3250 in play.
US stocks are higher as Wall Street follows the lead of European bourses. Prices are supported by a mix of profit-taking, some positive earnings reports, and the mildly improved outlook for US/China trade. However, the major indices need to climb a lot further to get back to Tuesday’s levels.
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