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Jan 23, 2017

5 Things You Need to Know to Start Your Day | Bloomberg Markets - January 23, 2017

 by Lorcan Roche Kelly

Get caught up on what's moving markets.
The dollar drops on Trump's 'America first' speech, there's a showdown looming in the U.S. Treasury market, and it's a big week for the U.K. Here are some of the things people in markets are talking about today.

Dollar falls

The U.S. dollar was lower against all G-10 currencies this morning as traders became increasingly nervous President Donald Trump will pursue protectionist trade policies following his inauguration speech on Friday. Emerging market stocks and currencies also gained, and are headed for the highest level in 11 weeks. Analysts are watching the yen to gauge whether early Trump optimism is waning, with the 115 yen to the dollar level seen as an inflection point. The weaker dollar and policy uncertainty is also lifting gold, which was at $1213.27 an ounce at 5:13 a.m. ET.

Treasury showdown

Hedge funds and institutional investors are taking opposite sides of the Treasury market. Speculators upped their bearish bets, with leveraged funds' short positions on five-year notes exceeding longs by a record 1.1 million contracts, data compiled by the U.S. Commodity Futures Trading Commission show. Institutional investors, on the other hand, boosted their long positions in the same notes to an all-time high in January. The winner in this showdown will be decided by what kind of policies the new president decides to implement.

OPEC shrugs off Trump

The two biggest OPEC suppliers of crude to the U.S. said that despite Trump's stated commitment to achieve energy independence, the U.S. will still need to import oil. Investors seem to be siding with OPEC, with bets on rising West Texas Intermediate prices reaching the highest level since June 2014. A barrel of WTI for March delivery was trading lower at $52.42 as of 5:40 a.m. ET.

Markets slip

Overnight, the MSCI Asia Pacific Index gained 0.3 percent, while Japan's Topix index dropped 1.2 percent on the weaker dollar. In Europe, the Stoxx 600 Index was 0.3 percent lower at 5:45 a.m. ET, with exporters and banks leading the losses. S&P 500 futures fell 0.2 percent.

Big Brexit week

At 4:30 a.m. ET tomorrow the U.K.
Supreme Court will rule
on whether parliament or the government can trigger Article 50 of the Lisbon Treaty to start the two-year countdown to the Britain's exit from the European Union. On Thursday, U.K. GDP data for 2016 will be released. Economists expect the economy 
performed well
 in the period, despite the referendum. Prime Minister Theresa May will become the
first foreign leader
to meet the new president on Friday, when she is due to visit the White House. 

What we've been reading 

This is what's caught our eye over the last 24 hours.