US markets pare gains as Mnuchin meets with top bankers
US futures fell today as traders tried to interpret the news from the United States. Yesterday, Treasury Secretary, Steve Mnuchin sent a tweet saying that he had talked to the top banking executives and confirmed that there was enough liquidity in the market. This news was big because it was the first time Mnuchin had done that in his tenure. Investors were worried that the secretary knew something that the market didn’t. The Dow, S&P and the Nasdaq declined by 115, 10 and 30 points respectively.
The market was thinly traded today as most markets remained closed while others opened for half a day. The US markets too will close early today as the world celebrates Christmas. Nonetheless, the market saw significantly large swings today with crude oil reversing previous gains to fall by more than a percentage point and FTSE declining by more than 60 basis points.
The US government shutdown continued today and there is a likelihood that it could continue. The government was shut down as the senate failed to pass a funding proposal passed by congress last week. Their main issue is that the funding contains more than $5 billion for Trump’s border wall. In an interview yesterday, the acting chief of staff, Mick Mulvaney said that the White House was ready to see the shutdown continue.
The EUR/USD pair moved higher today as the US government shutdown continued. It moved from a low of 1.1355 to a high of 1.1410. On the hourly chart, the current price of 1.1400 is along the 28-day EMA and lower than the 14-day EMA. The RSI has moved from the oversold territory of 30 to above 50. The same is true with the momentum indicator, which has moved to above the 100 level. While the pair could continue moving up, traders should be cautious because these are thin trades which could change when volume increases.
The GBP/USD was little changed today. The pair is currently trading at 1.2650, which is at the middle of the channel that has formed in the past few weeks. Because of this, the price is along the short and long-term moving averages. The pair will likely remain at these levels but traders should watch out for any major news including Brexit.
The USD/JPY pair dropped today as the market continued to wait on the progress of the government shutdown. The pair declined to a low of 110.95, which is closer to the lowest level since October this year. The pair’s RSI has remained at the oversold level for the last two trading sessions while the price is below the 28-day and 14-day EMAs. The price could continue to decline as the Fed starts to sound dovish.