MARKET REPORT

Review:
Fed Speakers Reverse Powell
– NY Fed’s Wiliams “We aren’t really talking about rate cuts right now” 
– Powell DEC13th “cuts are something “that begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today.”
– More Fed Speakers also tempered Powell with Bostic needing several months to see enough data and gain confidence that inflation will continue to fall
– Fed’s Goolsbee saying that he expects rates to be lower next year than they are right now, but not significantly
– The S&P 500 is up 7 weeks in a row – its longest winning streak in six years (Nov 2017)
– It only took 48 days for the small-cap Russell 2,000 to go from 52-week low to 52-week high; the shortest turnaround in the index’s 45+ year history.
March rate-cut expectations tumbled from 100% to around 66%
– Dollar UP vs Euro & Pound, +0.9%/91.76 & -0.7% 126.75. Down smalls vs Yen +0.25% at 142.20, Flat vs AUD trading 67 flat.
– Gold off half a percent at 2032 on lower rate cut expectations
– Silver down 1% at 24.15 on dollar strength
– DOW flat 37200, ES flat 4715, ND flat 16560
– Crypto: BTC down 1.75% 42200, ETH down 2.25% 2250
– Crude flat on day

Upcoming:           – RBA Meeting Minutes
– BOJ IR Decision.

 

MAJORS:

DX:
Not one, not two but a Trifecta of Fed speakers were wheeled out today to walk back Powell’s ‘talking about cuts’ quote which had sent the dollar into freefall, Equities to new highs and Gold on a tear. This all put the proverbial brakes to this action with the dollar making back ground across the board excluding the Battler. Has the contrarian Fed talk halted the Dollars fall? For now it appears. One Fed chair vs 3 Regionals.

AUD:

Early sell off to 66.70 was quickly rejected. Close mid range at 67 even the figure.
RBA Minutes to set the tone next week.

EUR:

Trading 91 overnight we pushed on the open from 91.15 to 91.70 where we stayed rest of session. With the Fed not knowing what they actually talk about at meetings its tough to determine direction from here. A pause or continue Dollar weakness. To me the Data calls for further elevated rate levels (Hawish/dollar strength), But it IS an election year and Powell DID say “cuts were a discussion at our meeting today” (unless he meant the issue was raised then shot down in which case what an egregious thing to mention). 91 for a hold for the foreseeable. Guess we’re wishy washy for the time being. 91-93. Hell of a range but who the hell knows what the Fed are thinking.

Pound
Pound:
Also hit on Fedspeak. Overnight we came within 10 pips of 128 the handle before just a one way fall and rest, fall and rest to close on lows at 126.75. As above, price action is tough here. I think we’ll see futher downside to have a look at the 125 handle with settling into a 125-127 range.

Yen:

BoJ IR rate dec Monday. All. Bets. Are. Off. Snatch quote.

Gold and Silver:

One quick way to stop gold momentum is for 3 Fed speakers to contradict their chair.
Gold slipped only 0.5% hangin in at 2032 whilst Silver a little worse for wear off 1% to $24.15
With the wind out of the sails where too from here? Another long flush out? Or a great opp to buy? NO idea. I doubt we’ll see records either way. $2017-2052 Monday. Rangey. Figure Im not the only one who doesn’t have a clue what the Feds about. I know one chair and three regionals who don’t either.

US Equities:
Quiet close after a surging Nov and first half of Dec leads closing on or just off highs across all indexes. Thank you Jerome.

– APPL getting hit down 1% post market with Chinese Iphone rumors.

Oil:
Early weakness rejected as Crude Unch on the day. $71.75

Bond Yields:

1 Mo: 5.377 -0.009 6Mo 5.335 +0.022 1yr 4.977 +0.047 5yr 3.914 +0.004 10yr 3.913 -0.017 and the 30yr 4.012 -0.042
2’s/10’s -0.53

Crytpo:
Overnight weakness from 43 to 41750 by mid-morn, slow climb back to 42200 for the close.
ETH a touch worse down 2.25% at 2245 vs BTC -1.75%.
Dollar based assets taking a little sheen off the coins. Perhaps a little more weakness to a low 41 handle, another little leg down, wouldn’t surprise but is a buying opportunity. Longer flow is up.

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

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