MARKET REPORT

Review:
– Dollar Down post Powell. Dollar down vs AUD at 66.71 +67 pips/+1%, UP SMALLS vs EUR at 91.89 +9 pips/0.1%, down 83 pips vs Pound 127.09 +0.65%, and smoked vs the Yen, 146.85 -135 pips/0.9%.
Dow/ES UP (D up 300 points) +0.9% & 0.6%, ND up smalls 0.3%, closes above 16k.
Crude down 2%, Gold and Silver kick. Coins surge with BTC +3%, ETH up 2.5%
– POWELL (more hawkish expected): “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease”, adding that the Fed is “prepared to tighten policy further if it becomes appropriate to do so.” The Fed Chair said the central bank is making decisions meeting-by-meeting and based on the totality of the incoming data. MORE DOVISH THAN EXPECTED.
– 130bps of cuts are now priced across 2024 vs 115bps before Powell, with a 10% implied cut now in January and a 75% implied cut in March
– Fed Goolsbee (Dovish remarks): “Fed is on track to achieve 2% inflation”, with inflation coming down exactly as the Fed wants, “there’s no evidence that we’ve stalled at 3%.” He said housing inflation is the “highlight” of what he is watching, saying if it returns to pre-COVID levels, then the Fed would be on the path to 2%.
– ISM Manu Exp: 47.6 Actual: 46.7
– Strong Chinese PMI data.

Upcoming:
US jobs report; China CPI, trade data; RBA, BoC rate decisions

MAJORS:

DX:
Dollar sold off against the Yen and Aussie, GBP to a lesser extent and unch vs Euro on Powell’s less than expected Hawkish comments. The resumption of the downtrend continues. Expect a re-test of 102.71 next week.

AUD:

AUD sold off and retraced back to 66.80 post Powell. I expect us to break above 67, hold and push to 67.75 next week. Go with Momentum. I doubt we’ll see sub 66.50, it’s a buy if so on a turn.

EUR:

“I’d expect further upside with a look to 92.50 in more short covering. 91.60 to 92.60 would be my immediate call with another look to the upside.”
Yest Mkt Report.
Overnight Pre Powell we went from 91.8 to 92.3. So the expected strength did materialize as I called, but again, all calls are EVERYTHING ELSE UNCHANGED. Please don’t take as gospel as eg Powell today say us sell straight back to 91.8. Powell’s speech SHOULD cap the E at last nights 92.30 highs for the foreseeable. Anything near that level should be a sell on a turn. 92.20- 91.15 early next week. Expect a choppy sell off with action 91.60 & 91.25

Pound
Pound:
126.15 Pre Jerome. Immediately up to 127.15 where we stayed. 125 handle now out of picture for foreseeable. Bullish Pound should continue with 129 next stop next week.

Yen: Strongest of the majors today we broke 147 handle and hit 146.65 on stops. I put out a buy lookout at 146.89 and a buy call at 146.72 after a bottom and turn were established. Recommended hedging vs Selling Euro at 91.82. Think this is a good trade and will see 147.30 and 91.50 next week. Yen is overall bearish momentum with 145 on the cards next week. Id def be stop reversing at 147.30 early next week with a look at another move down.

Gold and Silver:

“any dollar weakness will see $2100…”
Yest Mkt Report.
We saw dollar weakness and we saw Gold kick +$35/+1.7% to close on highs at 2092. SI reaffirmed $25 as firm support moving to $25.90 +25 pips/1%. Early Monday follow on strength to $2110 will turn into a $35 long squeeze to $2070 before next run up with new highs. Bullish medium term. Silver might test $25. SI huge buy on a $25 test. Gold a buy at $2070 on a turn.

US Equities:
SPX +0.59% at 4,594, NDX +0.31% at 15,997, DJIA +1.82% at 36,245, RUT +2.96% at 1,862.
Real Estate +2.11%, Industrials +1.57%, Consumer Discretionary +1.27%, Utilities +1.25%, Materials +1.09%, Financials +0.74%, Energy +0.48%, Consumer Staples +0.38%, Health +0.36%, Technology +0.17%, Communication Services -0.23%
All the three major US stock averages advanced on Friday as investors weighed Fed Chair Powell’s comments and economic data. The S&P 500 and the Dow Jones added 0.5% and 0.8%, respectively to mark a fresh 2023 closing high, the Nasdaq gained 0.5%. Powell resisted the market’s anticipation of interest rate reductions, yet emphasized that monetary policy is “sufficiently” restrictive, making markets believe that the Fed may have concluded its course of rate hikes. Earlier, ISM data showed US factory activity contracted more than expected. Among stocks, Tesla lost 0.6% after its Cybertruck was priced at $60.99K, above $40K previously announced in 2019. Also, Pfizer declined 5% after the company announced that it would stop a Phase 3 trial of its weight-loss pills. Shares of Salesforce continued its recent rally, up 3.2%. Paramount jumped 9.4% after a report that the entertainment company and Apple (+0.7%) are in talks to bundle their streaming platforms.
Equities courtesy of Trading Economics
https://tradingeconomics.com/

Oil:
The crude complex was largely sideways after Thursday’s OPEC+ debacle, until the weekly Baker Hughes rig count saw oil tumble to session lows. On the latter, on account of oil rigs rising 5 to 505 (leaving the total +5 to 559) WTI and Brent trundled to session lows at the settlement, with WTI and Brent breaching beneath USD 74.50/bbl and 79.50/bbl, respectively, marking slight losses on the week after the rally earlier in the week faded post-OPEC+. Additionally, as the complex saw downside (in wake of Baker Hughes) the US DoE said oil companies will return 4mln barrels of oil to US SPR by February from the previous exchange, and the US seeks to buy up to 3mln more barrels for SPR for February delivery. Elsewhere, energy-specific newsflow was rather thin on Friday. Prices saw little reaction from a weak ISM Mfg. report, nor from Fed Chair Powell, who ignited a broad dovish market reaction, highlighted by 131bps of cuts priced in by end-’24 (116bps before Powell). Looking to next week, highlights include Chinese CPI and US Jobs report (Fri).
Oil report courtesy of https://www.zerohedge.com/

Bond Yields:

1 Mo: 5.398 +0.002 6Mo 5.375 -0.032 1yr 5.047 -0.095 5yr 4.14 -0.158 10yr 4.209 -0.141 and the 30yr 4.392 -0.119
2’s/10’s -0.34

Crytpo:
“Still like buying dips for another leg upward. 40k and 2250 are favoured. May see an opportunity for weakness to exploit. Anything close to 36.5 and sub 2000 is gold. Doubt will see those levels, but look for near.”
Yest mkt report.
BTC & ETH stronger on the day.
BTC +1000 to 38750 +2.5%
ETH +40 to 2090 +2%
Although we didn’t get the pullback, as Ive stated trade the concept not the strategy. If I say I like upward projection but give a price on pullback for entry the OCO is to jump on momentum if no pullback IE trade the IDEA, not the mechanics.
Favour hitting 40k stops to 41.5 and 2250 in the upcoming.

Best of luck out there.

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