Searching for a New Narrative
|Popcorn at the read today as President elect Trump has a scheduled news conference later in the day (around 16:00 GMT). Markets have become used to listening to him in 140 characters or less over the recent weeks, so a more elongated narrative should be welcome. It’s pretty clear that the dollar strength has stalled, with the uptrend seen since the US election results waning on a technical basis. The week so far has seen some reversal of the recent weakness, but this has been within very narrow ranges. This held true for cable yesterday, which posted a low at 1.2108 before recovering through the day. Note that BoE governor Carney speaks this afternoon in front of the parliamentary Treasury select committee, so sterling will be keeping a close eye on that. As discussed yesterday, sterling remains the only major currency weaker against the dollar in the short year to date.
Elsewhere whilst the Dow continues to struggle with the 20k area, the FTSE has continued its push north, not having seen a down day since before Christmas. Gold has also been doing a decent job of brushing off the weakness seen in the closing weeks of last year, having now recovered 4% from the lows. The move has outpaced the reversal of the dollar turn-around, underlining the fact that’s it’s more than just about the currency for gold.
Before Trump o’clock, we have UK trade and production data at 09:30 GMT. Otherwise, we’re likely to see a fairly tentative market through the day, both in FX and equities.
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