Market Report.
Today:
– Dollar down on Fed Hawk Waller hinting IR cuts. Dollar down vs Yen, AUD, GBP, EUR in that order. EQ up smalls across the Indexes, Crude up 2%, Gold continues to firm, Silver continues to outperform its bigger brother, BTC and ETH push higher, Treasuries up.
– Israel/Hamas truce breaches; OPEC+ meeting could be delayed further; US Consumer Confidence surpasses expectations; Richmond Fed disappoints; Poor US 7yr auction; PDD earnings beat; Hawkish ECB’s Nagel.
Upcoming:
Australian CPI, German CPI/Import Prices, EZ Economic Sentiment, US: GDP Est, PCE Prices, Advance Goods Trade Balance, Japanese IP Forecast Events: RBNZ Policy Announcement; Fed Beige Book Speakers: BoJ’s Adachi; BoE’s Bailey; Fed’s Mester
MAJORS:
DX As pointed out yesterday Fed hints are the Dollars focus and we had Fed Hawk Waller stating in his speech that he is “increasingly confident” policy is well positioned to slow the economy and get inflation back to 2%. The dovish tilt continued as stated in his post-speech commentary as saying that there are good economic arguments that if the inflation was to continue falling for several more months, then you could lower the policy rate. He continued that if inflation consistently declines, there is no reason to insist that rates remain really high. Fed speakers are now more-inline with market perception and will cap the Dollar for the foreseeable. Expect continued downward momentum. It must be noted Bowman remained Hawkish in her speech counterbalanced by dovish sentiment from Williams.
AUD Dollar weakness across the board pared a little into the afternoon session with the AUD touching 66.66 before drifting off to 66.50. Bullish in momentum and fundamentals but AUD data today will influence.
EUR “Look for a test of 91 the figure and back and forth with stops breaking and a retest.”
Yest Mkt Report
91.40 to 91.10 in morning trade before punching straight to 90.80, with a retrace to 91.10 twice before failing to hold and closing crucially below the 91 handle at 90.95. We may see a bounce to 91.30 as I feel the market is short and open to a squeeze but should continue to test the may 90 handle sometime this week.
Pound Pound “It’s a buy the dips situation although it wouldn’t surprise to see the 125 handle so don’t randomly jump on. 125.50 to 127 near term.”
Yest Mkt Report.
Called it well as at time of writing GBP was 126.35, traded down in the morn to 126.08 before rallying to see 127 (127.10) before coming off to 126.75. Trading at 1.2690. Pound has come from a 121 handle to 127. Momentum firmly north. 129 handle may not be far off. This week or next.
YEN Friday we called for a move to 147 even and we nearly touched it today, starting the US session around 148.75 we close just off lows at 147.40. This 147.60 area could see some back and forth with closes below indicating a 145 handle is on the cards.
Gold and Silver
Both metals up again 1.45%, we had called yesterday for further upside. GC at $2040 after treading water overnight at 2015. We went straight to 2040 and stayed there. 2100 could be looked at shortly. We also called a look at %25 the handle in SI and we got it. After hitting $24.60 early, riding big brothers coattails to hit and close above $25 ($25.05). Currently, markets assign a 50% chance the Fed will start rate cuts in May 2024, following Waller. $27 could be back in play next week.
US Equities
Stocks were choppy with no clear direction after fading the rally initially seen on the back of the dovish shift from Fed’s Waller (hawk) – who talked up the potential for rate cuts next year whilst pushing back on the need for more hikes. Now, the CME FedWatch Tool puts 96.1% odds the Fed holds rates steady in the January meeting, up from 89.4% on Monday. Dow up 0.25% at 35450, ES unch and ND holds over the 16k handle at 16035 +0.15%
Home Depot +0.8% to $313.8, Microsoft gained 1% to a record high of $382.7, Boeing +1.4% to a 12-week high of $222.3 (analyst upgrade). Morgan Stanley down 1.4% (analyst downgrade).
Oil
Thurs Oil prices firmer in choppy trade on Tuesday with dovish Fed commentary and Israel/Hamas truce breaches offsetting reports about a lack of OPEC+ progress. Crude tested the $75 handle before racing to hit $77, closing at $76.50. Traders now look to the weekly US energy inventory data with the private release due later Tuesday ahead of the official EIA figures on Wednesday.
Bond Yields:
1 Mo: 5.397 -0.014 6Mo 5.445 -0.027 1yr 5.199 -0.068 5yr 4.282 -0.108 10yr 4.325 -0.063 and the 30yr 4.505 –0.028 with 2’s/10’s -0.42
Crytpo
“Buy dips momentum still up, conversely go with momentum above.”
Yest Mkt Report
Strong day for crypto. BTC +925 at 38 even after touching 38250. At time of writing above BTC was 36975. Hopefully people jumped on momentum. Likewise ETH was 2012, it pushed to 2075 before settling at 2055.
40k and 2250 are on the cards. They’ve flushed out the weak longs. I wouldn’t expect to see a 36 handle or sub 2k now. Momentum is up.
Best of luck out there.
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