Market in review 1/18/2024

MARKET REPORT

Review:
– Philly Fed up, (albeit less than expected)
– Bostic reiterated willingness to cut rates before July if data permits
– Housing starts ease vs building permits rise
– Jobless Claims down
– US Senate stopgap funding bill to avert government shutdown secures enough votes to pass.
– Apple strongest day in months
– post on X from WSJ’s Timiraos citing analyst forecasts for next Friday’s PCE showing progress on the Fed’s inflation battle helped afternoon stock rally

– Dollar flat 103.20
– Gold firms $2025 +1%
– Equities firmer NASDAQ record highs (+1.5% 17125)
– Crypto off -3.5% & -2.5%
– Crude +2%

DOLLAR:
– AUD up: 65.74                      +0.3% (65.45 – 65.75) close highs
– EUR flat: 91.92                      UNCH (91.66 – 92.15) close mid rge
– GPB up: 127.07                     +0.23% (126.50 – 127.08) close highs
– JPY flat: 148.11                      UNCH (147.68 – 148.28) close off highs

GOLD UP: $2025                    +1.0% (2008 – 2025) close highs
DOW/ES/ND:                          37660 +0.54%, 4810 +0.83%, 17125 +1.5%
CRYPTO: BTC/ETH:                -1500/-3.5% 41165, -70/-2.74% 2457
CRUDE: $74.09                       +$1.53/+2.11%

Upcoming:

Japanese Tertiary Index
UK Retail Sales
German Producer Prices
US UoM Inflation Prelim

Speakers:
– ECB: Lagarde
– US: Fed’s Daly, Barr.

MAJORS:

DX:
“My position is the same as yesterday. The Dollar has a floor for the foreseeable, buy dips.
102.65 – 103.44”
Yest Mkt report.

Early dip to 102.91 before rallying to 103.40, settled mid range 103.20

Buck had an initial jump post initial jobless claims with a further pop amid the rise in Treasury yields. Initial Jobless Claims, for the week coinciding with the usual BLS survey period, tumbled to the lowest since Sep. ’22 printing 187k from 203k, despite expectations of a rise to 207k. Meanwhile, Philly Fed improved, albeit less than expected, but alleviated some concerns after the Empire survey plunged to the lowest level since COVID earlier this week. Finally on the data front, housing starts eased but building permits rose.

No call.

1-

AUD:
The AUD saw modest strength as it was cushioned by firmer commodity prices, highlighted by gains in iron ore despite a mixed Australian jobs print.
Unemployment rate was unchanged at 3.8%, as expected, while employment change saw a surprise fall to 65k (prev. +72.6k). Since the report, Citi retains its call for a February 25bps hike from the RBA, though it does all depend on quarterly inflation (Jan 31st).

I can see the AUD forming a base around low 65 handle for the short term and having a look back into the 66 handle. Anything sub 65.50 should see a return to low-mid 66’s. Buy a dip on turn or go with upward momentum to at least 66 handle.

65.44 – 66.36

EUR:
“Buy Dips
91.44 – 92.36”

We had a 91.66 to 92.15 range in another relatively stagnant session for the Euro. My range was 20 pips too wide on either side, but achieved on direction and flow.

– ECB Minutes garnered little reaction and gave a stale account of the December meeting and offered little new to investors.
– Reports that Germany’s construction union has demanded a pay rise of more than 20%, in what could be just a first omen for the ECB which has been harking on the need for lower wage growth before it considers rate cuts later this year

No call.

9-

POUND:
Traders looking at Retail Sales in the UK this Friday for direction.
Another relatively quiet 50 pip range as we drifted higher on dollar afternoon malaise.

No call pre RS.

1

YEN:
The Yen saw strength during Tokyo trade which was attributed to importers supporting the currency at the Tokyo fix, but later fell victim to overall risk sentiment and the Dollar bid after the US data. In the London morning, Asahi citing sources said, “The possibility of the BoJ being behind the curve in addressing inflationary risks is small; “There’s no pressure to rush towards the exit”.

Friday, participants await Japanese CPI.

No call

1

GOLD & SILVER:
Expected gold weakness to continue, I was wrong, initially at least.
Longer term I cant see upside as my view of Dollar floor remains.
We rallied 1% today to $2025 in a relatively quiet but short squeezy session from 2008 to close on highs.
Silver also put on 1% closing 22.88, but again, only 23pips. Feel this is more short covering/squeeze than change in sentiment.
I expect longer term gold weakness, with treasuries and dollar at current levels.

No short term call.

EQUITIES:
US:
– SPX +0.88% 4,780
– NDX +1.47% 16,982
– DJIA +0.54% 37,468
– RUT +0.55% at 1,923

EUR:
– DAX +0.82% 16,566.03
– FTSE 100 +0.18% 7,459.45
– CAC 40 +1.13% 7,401.35
– Euro Stoxx 50 +1.15% 4,453.85

SECTORS (S to W): Technology +2.03%, Communication Services +1.38%, Industrials +1.34%, Consumer Discretionary +0.62%, Materials +0.39%, Financials +0.23%, Health +0.01%, Consumer Staples -0.11%, Energy -0.22%, Real Estate -0.61%, Utilities -1.05%

TSMC +8.6%: Reported better than expected Q4 profits and revenue. Received a boost from demand for Nvidia’s AI chips in 2023, offsetting a slump in global smartphones. As such, provided tailwinds to the broader tech/semiconductor space.
Apple +3.3% was upgraded at Bank of America; cited a stronger multiyear iPhone upgrade cycle as well as higher growth in services as Apple better monetizes its existing base of customers.
Boeing +4.2%: India’s Akasa Air placed an order for 150 Boeing 737 MAX planes, marking the first significant order for Boeing’s MAX program since the recent cabin panel issue.
Spirit Airlines -7.3%: Stated it is not pursuing nor involved in a statutory restructuring. Earlier, WSJ sources suggested SAVE is examining options to address financial challenges after its JetBlue Airways (JBLU) merger was blocked.


OIL
:
WTI (H4) SETTLED USD 1.47 HIGHER AT 73.95/BBL; BRENT (H4) SETTLED USD 1.22 HIGHER AT 79.10/BBL

Oil prices were firmer through the US session on Thursday amid mixed inventory data, supply headaches, and the widening and deepening of geopolitical risk. Oil prices were on the front foot out of the Asia session and in the European morning before better selling developed into the NY handover, coming alongside reports in the FT that Arab nations had developed a plan to end the Israel-Hamas war with WTI and Brent March contracts troughing for the session at USD 72.10/bbl and USD 77.33/bbl, respectively, only to recover through the rest of the session to peak at USD 74.19/bbl and 79.30/bbl ahead of settlement. On the demand side, a very low jobless claims print and improving housing starts/permits provided some tailwinds from the US economy. IEA also upgraded its world oil demand growth forecast for the year by 180k BPD to 1.24mln BPD. While on supply, the EIA reported a 2.5mln bbl crude stock draw last week, including a 2.1mln bbl draw at the Cushing delivery hub, although the products saw a net build of 5.5mln bbls. Crude production remained at 13.3mln BPD, although the latest extreme weather conditions may see that figure dip in the weeks ahead. Meanwhile, Bloomberg reported Chevron’s (CVX) huge Kazakh oil expansion may be delayed until 2025.
Oil report courtesy of newsquark

BOND YIELDS:

US 1-MO 5.365 -0.024 US 6-MO 5.225 -0.001 US 1-YR 4.836 +0.008 US 5-YR 4.045 +0.021 US 10-YR 4.142 +0.028 US 30-YR 4.365

CRYPTO
BTH off 3% and ETH of 2.255 to 41.3K & 2466. We are hitting crucial support around 40.8 – 41.1k in BTC. May test, but itll hold. Cannot see a sustained break below to a 39 handle.
ETH 2466 could have a little more down to a high 23 handle but watch for a turn on both (as always)

Having some charting issues here ladies and gents so apologies the late report.

Best of luck out there. Let the market come to you

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