Analysts at TD Securities are out with a note detailing their take on the overall market’s stance heading into Tuesday.
Key quotes
“Last week’s announcement on US/China import tariffs continues to weigh on market sentiment with US equities posting a modest decline.
The USD saw muted gains against G10 FX amid a quiet session for data. Antipodeans were the weakest performing currencies.
RBA minutes and the ECB’s Sintra Conference will serve as the main drivers of risk sentiment on Tuesday.
Markets continue to digest last week’s Fed/ECB policy switcheroo. At this juncture, EURUSD’s profile may be more of a “dollar trade” with ECB punting major policy changes deep into 2019. This may trigger a reassessment and reduction of stale EURUSD longs within the large institutional investor base. As such, EURUSD rallies are likely to be capped in the short-term.
There is little time for markets to rest on their laurels however as a slew of event risks are ahead, including ongoing Sintra, OPEC, and BoE/NoBa decisions. We continue to see upside potential in USDCAD, with 1.3350/1.3500 a notable topside attractor.
Treasuries will focus on trade war headlines and central bank speeches for direction in the near-term. Fears of trade war have continued to drive risk-off sentiment, bull steepening the curve.”
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