S&P 500 at Risk Despite US-China Trade Deal, GBP/USD Dips as BoE Rate Cut Bets Rise - US Market Open

2020-01-15 14:30:00

MARKET DEVELOPMENT

S&P 500 Correction Risks Rising
GBP/USD Hit on Soft Inflation, BoE Easing Bets Rise
Swiss Franc Continues to Rise

S&P 500: Equity futures relatively flat as investors wait for the US and China to officially sign the Phase 1 trade deal. However, with this largely priced in, the impact on equity markets are likely to be muted and thus we see increased risks in chasing the market higher. Alongside this, over 80% of the companies in the index are above its 200DMA, highest since the February 2018 crash.

US-China Trade Deal Schedule

Chinese Delegation to arrive around 1600GMT/1100ET
Deal signed around 1630GMT/1130ET

GBP: UK inflation dropped to a 3-year low of 1.3%, consequently, increasing the pressure for the Bank of England to ease monetary policy as money markets raise the likelihood of a cut in January. However, while this may tip the scales in favour for a rate cut, the BoE already expected headline inflation to drop to 1.25% by Spring, as such, the key data point to watch is the PMI figures. This will capture the post-election period, whereby a notable improvement, could see the BoE remain on hold. Looking forward, the BoE Chief economist is scheduled to speak tomorrow at 1800GMT.

GBP/USD Mixed

Data provided by

Change in	Longs	Shorts	OI
Daily	-6%	6%	-1%
Weekly	13%	4%	9%

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CHF: Once again the Swiss Franc is on the front-foot as investors continue to ponder where the next psychological line in the sand is for the SNB. Previously, intervention had seemingly took place around 1.0750-1.0800, however, with the latest Swiss sight deposits showing no intervention and with the US placing Switzerland on the currency manipulator list, the Swiss Franc has continued to strengthen.