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Market Insight Commentary – Forex
Today's News Headlines
- Donald Trump will be the first US President to attend Davos in almost 20 years, it is believed he was encouraged not to attend but he is keen to talk at the event. He won’t be welcomed with open arms but I am certain that he will try and sell the growth story in the US – could be a big market mover.
Market Insight Commentary – Indices
Market Recap
The market spent most of last week selling the greenback and buying anything else, just when you thought that there could possibly be some longer term trend forming, the dollar come storming back in the late evening. The surprising thing about Friday is that we spent most of the day flirting with a potential US government shutdown, you would expect the market to sell dollars on this news and maybe a flight to US yields – but the exact opposite happened. This leaves the market in a precarious position this morning, the market could perhaps have been pricing in the belief that the market would come to some form of agreement. Late on Friday, the inconceivable happened and the US government shut down and so I would like to see how the market reacts this morning.
I am in two minds, there have been these temporary shutdowns before and eventually things get sorted and people get paid, this will definitely not be the last time this happens. The market reaction to me suggests that they are getting comfortable with the fact that this may be the new norm, my concern is that at some point there won’t be a solution – you can’t just continue to raise the debt ceiling. I wonder if we are getting to the point of “no return” and that the US government can no longer get to this point.
I am still keeping an eye on the EURUSD, this was the one pair that was most range bound last week. There was a ceiling that developed near 1.2300 and the floor at 1.2165, both levels held last week and the pair closed in the last week at 1.2225 which was slightly below the 100 hour MA, considering that this was the defining level it would normally mean that the sellers were in firm control, but I wonder if there will be a better opportunity to sell higher up.
There is a lot of event risk this week with both the US government shut down and Davos meeting this week – Trump has confirmed he will be attending this meeting and so I am a little bit cautious in trading this week.
Important Economic Data Due Today
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