It’s been a very active day for trading in North American and European markets with a focus on Brexit, and US monetary policy
An emerging battle between hawks and doves at the Fed sparked swings in both directions for USD today. The greenback soared early the day following hawkish comments from Philadelphia Fed President Harker who left the door open to a March rate hike if the US economy continues to perform well. This rally ended abruptly and the US Dollar started to sink again after Minneapolis Fed President Kashkari took a more dovish stance, indicating inflation expectations remain anchored, wage pressures aren't building and that it would be better to have Fed policy too easy than too tight at the moment.
The biggest currency action on the day has been in the UK where Sterling has staged a major rebound. Early in the day, Cable sold off along with other major currencies when USD rallied, it started to recovery when USD eased, then soared on positive Brexit developments. PM May scored a big win in Parliament defeating an amendment that could have impacted the process by promising MPs a take it or leave it vote on whatever final deal is struck with the EU. The amendment would have forced a vote before a final deal is reached. The strong response in GBP indicates that traders now favour a clear, expedited breakaway process and for the UK to move on.
US indices have also been active with the NASDAQ 100 breaking out to a new all-time high but the Dow and S&P stopping short of breakouts and completing double tops instead. Traders responded favourably early on to indications that contentious measures like changing Obamacare or Dodd-Frank could drag on for years. Stocks turned downward again, however, on a report from the US Chamber of Commerce suggesting that all three countries could lose jobs if NAFTA is torn up.
Gold and JPY continued to attract interest through the day consolidating and then building on recent gains. Traders continue to move capital back into defensive havens on concerns that political change in the US and Europe could cause turmoil and disruptions that could spill over into the broader economy.
Crude oil came under renewed pressure Tuesday, taking another tumble after US markets close after API reported a massive 14.2 mmbbls inventory increase for last week. Oil could remain active through the Wednesday morning inventory reports. NZD may also attract some attention as traders position ahead of tomorrow’s RBNZ meeting.
Walt Disney $1.55 vs street $1.49
Significant announcements released overnight include:
US trade balance ($44.3B) vs street ($45.0B)
US API crude oil inventories 14.2 mmbbls
Canada trade balance $0.9B vs street $0.2B
Canada building permits (6.6%) vs street (3.5%)
Canada Ivey PMI 57.2 vs previous 60.8
Germany industrial production (0.7%) vs street 2.5%
UK Halifax house prices 5.7% vs street 6.0%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
8:15 am EST Canada housing starts street 198K
10:30 am EST US DOE crude oil inventories street 2.5 mmbbls
10:30 am EST US DOE gasoline inventories street 1.6 mmbbls
9:00 pm NZDT Thu NZ RBNZ interest rate 1.75% no change expected
3:00 pm EST Wed