Calendar Week 22-2023

 

With most of Europe and the US closed for holiday today, the market will rip higher thanks to the US debt ceiling being lifted as Biden and McCarthy come to an arrangement.

Friday’s PCE was also stronger suggesting inflation in the US is far from being contained. So odds of a rate hike also ripped higher on Friday, up to 70% chance that the Fed will raise another 25 basis points which supported US dollar.

 

Bitcoin jumped higher on the weekend news of the deal, indicating risk on party will continue for stocks too.

 

I suspect this week will see a roll out of bonds and into risk on assets (stocks) as US dollar is over hot, look for it to weaken this week, a retracement to the average.

 

Week ahead brings Australian inflation numbers, Chinese manufacturing surveys, European inflation and US jobs.

 

Currency Guidance

 

USD – Super hot, posting 10 higher closing prices in the last 12 trading days. With risk on it will struggle to stay this hot and I look for a pullback to mid 103’s

 

AUD – Aussie loves a round number to work off, bouncing nicely off 0.6500, should track back to 0.6575 now where you can look to fade it.

 

EUR – 1.07 support will see the Euro head to 1.0765 resistance before fading again.

 

GBP – Still looks tricky and preference still is to sell it, off 1.24 would be a good level.

 

JPY – Too far too fast but the Yen often does and makes it hard to jump on. Ideally I would like to see a pull back to 137.7 support to buy in, but we might not get that.