Intraday Market Thoughts Archives

Several reasons have been cited for sharp USD rally and resulting gold decline. Stocks jumped on Wednesday but failed to follow on Friday as oil extended its pullback. We issued a special video on Friday for Premium subscribers, tackling the key dynamics in USD, gold, oil, US and global equity indices with a close look at the trades that worked and that have not as well as what's ahead.

نعالج ثلاثة أسباب جعلت الأسواق تقوم بالارتدادات المذهلة في إعقاب فوز دوانلد ترامب.

Maybe populism isn't so bad after all? The pound & USD were the top performers for the second day while the Japanese yen lagged. Our Premium EURGBP trade was stopped out.

FX markets continued to reward the US dollar for the election results. Congressional leaders have said comprehensive tax reform will be one of the top priorities and that has people salivating about the idea of lower corporate tax rates, waived repatriation penalties and business investment. In addition, talk of removing regulation has been cheered by the financial and energy sectors.

The sudden embrace of trade-deal renegotiation by the market has helped to take some of the fear out of Brexit. That's left an opening for a GBP recovery and it gained strongly across the board Thursday. Cable climbed 150 pips to the best levels in five weeks. Note that GBP/JPY climbed and closed above the 100-day moving average for only the third day this year in what could be a technical break.

Economic data Thursday included an improvement in initial jobless claims to 254K from 265K and Bullard said the Fed will have to wait-and-see on the economic results of the election. That sounds like a continued endorsement of a December hike.

The market is focused on comments from Trump at the moment. Some traders noted that certain rhetoric regarding health and banning Muslims was removed from his campaign website. Meanwhile, commentary on building a wall on the Mexican border remained. That and signals that Canada is also open to renegotiating NAFTA sent the peso back down to the election lows.

Murmurs about the top spots on Trump's cabinet continue to do the rounds. The choice for Treasury Secretary and other key allies will send signals about how anti-establishment he plans to be; or if it was all just campaign rhetoric.

In the short term, we continue to watch CNY moves on jitters Trump could take on Chinese trade. The calendar is light with only Japan's tertiary index due at 0430 GMT. The reading for Sept is expected to be down 0.2% m/m.

We look at three reasons why markets made an astonishing comeback in the aftermath of Trump's victory. The British pound was the top performer while the Aussie lagged. Japanese machine orders data is due next. The RBNZ made a not-so dovish rate cut of 25 bps. Ashraf's Premium Insights opened one trade an in an equity index. There are 7 trades in progress.

The executive and legislative branches of the US government are united behind Republicans. That result will break the gridlock in Washington and unlock the fiscal reserves of the United States.

As the results were first counted yesterday we wrote that eventually there would be a case for buying the dollar on fiscal stimulus because of an all-Republican House, Senate and White House. That sentiment unfolded much more quickly than anticipated as USD/JPY rallied more than 550 pips from the lows and S&P 500 futures rebounded 134 points.

Evidence of change in expectations on fiscal spending was in the bond market, which was absolutely battered. Thirty-year note yields rose 24 basis points to 2.85%; that's the highest since January and the largest one-day rise since 1996.

Second is that Trump struck a gracious tone in his victory speech, especially toward the Republican establishment. He talked about infrastructure spending and taking care of veterans while avoiding his more-contentious issues. That was taken as a sign he may abandon them.

Third is that it's easier to separate winners from losers in the new regime. For instance, shares in defense, infrastructure construction, prisons and pharma jumped Wednesday. Aside from Mexico, it's tougher to pick out losers. Yes, Trump may punish companies that move production offshore but, for now, the market thinks he will back down.

All of this requires a leap of faith and selective blinders. The risks relating to trade, taxes and foreign relations are real. Moreover, the bulk of the Republican establishment has been preaching fiscal discipline for 8 years. They may not be so keep to run larger deficits.

In the short term, Japanese futures suggest a huge rebound in the Nikkei. In terms of economic data, Japanese Sept machine orders are due at 2350 GMT and expected to fall 1.5% m/m but rise 4.1% y/y. Expect Presidential fallout to continue to dominate.

Shock descended on markets as Donald Trump defied polls showing not far behind to become the 45th President of the United States. USD/JPY is down nearly 400 pips and USD/MXN up 12% as the shocking turn unfolded. Markets will be sifting through the wreckage for weeks as everything from trade deals to the December Fed hike is firmly back on the table. The Clinton campaign manager called on supporters to go home as there are a few states too close to call such as Pennsylvania. Odds of a Dec Fed hike fell from +80% to less than 50%. A recount of the vote is likely at this point. Premium trades in the Eurostoxx, USDJPY, gold, silver and EURCAD all deepened into the green. AUDNZD was stopped out.

The parallels with Brexit are unmistakable but even more stark. Trump was further behind in far more polls than the Leave side in the closing days of the campaign. His path to victory was miniscule but he outperformed by more than 5 points in many places. The nail in the coffin came in Wisconsin where he scored an upset.

In the day ahead, the aim will be to focus on the small picture first. S&P 500 and Nasdaq futures touched 5% limit-down circuit breakers. The drop in USD/JPY will give Japanese leaders fits but intervention isn't likely until 95.00, despite quick jawboning.

At the moment, fast money trades are still driving the moves and there is still a sense of disbelief. Once the magnitude of the uncertainty hits, real money risk aversion will overwhelm markets. There is no certainty on foreign policy, the Supreme Court, key government positions, trade and even Janet Yellen's future at the Fed.

More broadly, it rekindles the questions on trade and immigration dissatisfaction. This will not be a one-day event in markets, it will last four years at the very least. There are no short-term dips to buy in risk trades. These moves will extend and dip buyers will be cleared out.

Eventually, there will may be a case to buy the dollar on fiscal stimulus because of an all-Republican House, Senate and White House but that's at least a month away.

Here is a 3-minute video tracking the emerging moves in JPY, SPY, gold and EURUSD on better than expected Trump performance in Florida at the early stages. Gold & USDJPY are the stonger correlation as seen in the video.

تأثير الانتخابات الرئاسية والانقسامات في الكونغرس على الأسواق

We have finally arrived at election day and it's with a flurry of risk-on trades as the market senses a Clinton win because of the FBI dismissal, polls and Democratic turnout numbers in swing states. The FTSE short in the Premium Inisghts was closed at 6790 from entry 7060, for 270-pt gain. NZDJPY was stopped out. The latest video of charts & trades for Premium subscribers is below.

1) Watch the Clock

The market is leaning heavily towards Clinton and that may continue through what should be a quiet 24 hours. Beyond that, the focus will start on the US east coast and move west. Polls from parts of Florida will hit first at 7 pm ET. Exit polls will be the first indication but real data should follow close behind. Thirty minutes later, numbers from North Carolina and Ohio will hit. If Clinton wins any of those states, it's almost surely all over.

2) Trump Has No Room For Error

Every realistic scenario for Trump getting to the White House requires him to win Florida, North Carolina, Ohio and at least two of New Hampshire, New Mexico, Colorado and Nevada.

3) Watch the Breakdowns

As state numbers are reported it will be important to understand exactly which counties they are coming from. As a strong rule of thumb, urban areas favor Clinton and rural lean towards Trump. If Trump is ahead in Florida (for example) in the first results that cross, it may be a false signal if results are rural and vice versa.

4) Clinton is Done if she Loses the Great Lakes

Ohio and Indiana may go towards Trump but Clinton likely can't afford to lose any other contested state bordering the Great Lakes. That means, Minnesota, Wisconsin, Pennsylvania and Michigan along with New York and Illinois (which will surely got to Clinton). If she loses any of those, she's almost certainly done.

5) Don't Wait for the Networks

The 'sell the fact' trade on election day will be on the official election calls from the main networks and newswires. These generally land around 11 pm ET when polls on the west coast close. Media organization are ultra-cautious after the 2000 election debacle but markets will have figured it out already. Look for one final burst of momentum on the official calls but that's likely to be the time traders start to take profits.

Stepping away from US Elections and into the charts, the S&P500 looks to bounce off its 200-DMA after testing it for the 1^st time in 5 months (Point C on the right chart), which is similar to the 5-month duration spanning the 200-DMA retest in Jul 2015 (point B on left chart) and yields crash low on October 2014 (point A on left chart). More significantly, Friday's retest of the 200-DMA spans a 186-day period from the February low, again, similar to the 182 days between the October 2014 low and July 2015.  The parallel in structure of the intermediate lows and their relative positioning as well as the shape of the 200-DMA cannot be ignored. Recall the SPX consolidated for 4-weeks following the July 2015 bounce off its 200-DMA before collapsing in that infamous August Monday 2015. Is it time for these charts patterns to break out of the pattern?  I will discuss this in tonight's Premium video and shed light on the decision to close our Premium trades in the DOW30, DAX30 and USCRUDE over the last 6 days for a 1085-pt gain (Dow 295 pts, DAX 470 pts and 320 pts). There are remaining shorts in indices as well as open trades in FX and indices.

ندوة عبر الإنترنت مع أشرف العايدي قبل الانتخابات الامريكية يوم الثلاثاء 18:00 لندن، 21:00 المملكة العربية السعودية   احجز مقعدك

USD stabilized briefly in early Monday Pacific trade after the FBI cleared Hillary Clinton of any wrongdoing in the latest series of emails. USDJPY soared to 104.30s from 103.20s before retreating back to 103.80s.  On Friday saw the ninth consecutive day of losses in the S&P 500, a pattern not seen since 1980. Most exposure should be hedged or sidelined by now and markets will revert to searching for signals about the vote. Last week, NZD and GBP were the top performers while CAD and USD lagged. CFTC positioning showed increasing AUD longs and euro shorts. The latest in the Premium Insights closed the USCrude short at 48.10 for a 320-pt gain.

US dollar weakness last week underscores the stakes in the election as the race appears to narrow. Trump clearly has some momentum. A WSJ/NBC poll released Friday showed Clinton leading by 4 points but the same pollster showed her up 11 points in mid-October.

The final polls will be rolling out ahead of election day.

Indications from States will also be drivers. Florida officials report that 45% of registered voters had already cast a ballot as of Friday. They show 2.26m registered Democrats and 2.21m registered Republicans having already voted along with another 1.2m independents.

Florida will be among the first States to report final results and it's imperative for Trump that he wins it. If he does, election night may come down to Nevada, where voting closes three hours later.

Polls in that State have been thin but tend to show Trump ahead. However markets on Monday may lean towards Hillary because early voting shows huge turnout in the area around Las Vegas, which is a Democratic stronghold. Moreover, data shows that 6 percentage points more Democrats have voted early compared to Republicans. It's also a State where 70% of voters cast ballots early in 2012 so the lead may be virtually insurmountable.

If that angle gains traction on Monday/Tuesday, look for risk assets and USD/JPY to climb ahead of the results.

In terms of economic data, the BOJ minutes for the Sept 21 decision are due at 2350 GMT. That's followed 10 minutes later by Japanese labor cash earnings for Sept. They're expected to rise 0.2%.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -137K vs -124K prior JPY +43K vs +45K prior GBP -83K vs -84K prior CHF -20K vs -19K prior AUD +41K vs +32K prior CAD -16K vs -13K prior NZD 0K vs 0K prior