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Intraday Market Thought: Food ex USD

by Ashraf Laidi | Feb 8, 2022 17:59
Most composite indices of food prices are pointing to multi-year highs, some....More specifically, the CRB's Food Index has just surpassed its previous....The confluence of 8-year highs in energy prices and decade highs in wheat, soya....Yet, all this occurred despite a strengthening US dollar...Would the surge in food prices have been higher, had the US dollar not....nbsp;....The 2008 record in food prices was a function of a commodity surpercycle,....nbsp; The 2011 food price boom was also helped by a fresh commodities rally....nbsp;....WHAT HAPPENS NOW? Supply-driven pressures in energy and metals may....WHAT IF if US dollar makes the transition from range-bound to outright....Could the food crisis be exacerbated by a weak USD?....We've definitely entered a new phase--where this is no longer about monetary....It is about BoE's Bailey cautioning people against demanding wage hikes (he....nbsp;....Central bank tightening is surely here to stay...As long as there policy errors from from overtightening are avoided, food....nbsp; ....nbsp;..
Intraday Market Thought: Gold's Silver Signals on Point

by Ashraf Laidi | Mar 2, 2023 16:45
What is behind gold's resilience in the face of soaring bond yields? 2-year....The chart below shows gold to have posted three consecutive daily gains,....The last time this happened was in April of last year...The flood of solid US data (NFP, unemp rate and retail sales) has reduced....Most recent Fed speeches stuck to the message of 5...50-5...75% Fed Funds rate, but the possibility of a 50-bp hike remains only around 30%....nbsp;....Can things change? Sure, next week's NFP/AHE/Unemp report will provide....nbsp;....Fundamentals may be indicating that higher yields are not a necessary danger....So what are some technicals telling us? ....1) Gold/Silver ratio (Mint Ratio) remains capped below 90—coinciding....8% retracement of the decline from the Sep high to the Dec low...For instructions on how to glean gold signals from the Mint Ratio, take a look....nbsp;....2) Silver remains comfortably above its rising trendline support –usually....3) Once you have correctly concluded the positive correlation between the US....The September 1st high of 96...55 on the Mint Ratio occurred 27 days before that DXY high of 114...8...nbsp;....The 96...55 high also happened to be the 50% retracement of the greater downmove (in....nbsp; ....Could the latest retracement/resistance on the Mint Ratio continue to hold? It....But it's also useful to heed key technical levels across the intermarket....nbsp; ....nbsp;..
Intraday Market Thought: USD's Biggest Decline in 17 Months

by Adam Button | Jun 25, 2019 15:21
Three days remaining til the end of the month (and quarter) The US dollar index....EURUSD hit a three-month high on Monday and rose above 1...14 to hit Ashraf's target...Gold hit a fresh 6-year in Asia and returns near the highs after a 8%....Eatch out for Powell's speech about the US economy at 13:00 Eastern (18:00....5 hrs later...The Premium short in USDCAD has been closed at 1...3160 for 200 pip-gain...The latest Premium video is below contains some impirtant mechanics about....The euro gain to start the week came on a solid IFO survey and continued US....The dollar fell after Treasury yields gave back last week's mini rally...The US 10-year yields fell 4 basis points on the day and stocks dipped....The Fed's Kaplan argued for patience before cutting rates but also indicated....Trump continued to tweet about the Fed and markets continued to ignore him...His actions on Iran had a larger effect as the White House announced fresh....That helped to reverse oil losses and boost it to a modest gain...Overall moves to start the week were modest but gold has continued to surge,....It's on track for the best month since 2016 with an 8% gain...Oil faces resistance at the 59...40 trendline resistance, hence Ashraf's closing of the Premium short in....3160 for a 200-pip gain...Looking ahead, we await Powell's speech at 6 pm London time discussing....Also important, is St Louis Fed's Bullard speech, where he will surely..
Intraday Market Thought: Earnings Absorb Market Fears for now

by Adam Button | Jan 28, 2020 12:19
Markets pare losses from Monday's global slide as traders divide their....The number of confirmed cases has now reached 106, up more than 100-fold since....News of a planned 10% production hike by Apple has helped their suppliers and....USDJPY regains 109, US crude at 53...40s and US 10 yr yield at 1...62% from 1...57%....US durable goods orders and consumer confidence are due up next...The Premium Video below focuses on a 2-part trading strategy for Thursday's....China confirmed 4,515 cases of coronavirus on Wednesday, up from 2,744....The pace of cases accelerated on the day but has been at just above 50% since....That pace would surpass the SARS total by Friday and push it over 100,000 by....What's especially worrisome is that it's not just Hubei province, the....While it's certainly possible to believe that Hubei is too overwhelmed to....Internationally, Thailand remains the place to watch for signs of an....The baht was Asia's top performing currency last year but has fallen for....The Fed meeting this week is suddenly more meaningful...US 2s/5s inverted on Monday and the spread between 3 month bills and 10-year....Judging by the Fed's recent playbook, there will be a dovish tilt in an....All eyes will be on the surging debate about the Fed's repo injections...It's early but the Fed is right to worry...SARS cut 0...8-2...0 pp of GDP growth from China in 2003...The economy is completely paralyzed right now and many shutdowns through the....China railway traffic and passenger flights were down 42% y/y on Saturday,....First , the Fed will get some final pieces of data on Tuesday with durable....Apple earnings are due after the bell.
Intraday Market Thought: Gold Breaks 1800, USD Vulnerable to China

by Adam Button | Jul 8, 2020 16:23
Gold's breakout to $1800 for the first time since August 8, 2012 and the....Before we mention the latest turn in the US-China rift below, we should remind....For the day, silver outperforms all currencies, including gold...More on gold's relative ascent below)....nbsp;We also caution watching for a new pattern in Fed communication below...nbsp;2 new FX Premium trades were posted before the start of the US session....Below is the subscribers' video, containing Ashraf's analysis behind....nbsp;....Ashraf adds that one of the factors weighing on USD specfically today, is....nbsp;How can the Trump administration seriously consider taking on the world&....Back to Virus cases...The market initially cheered some US state coronavirus numbers released on....Florida and Arizona both reported numbers below the 7-day average and the....The market later soured and details of the numbers were one reason why...The declines in both numbers were entirely a result of lower testing,....Both states recorded a higher percentage of positive cases including 33% in....Deaths have also been gaining more attention but after just 235 in Monday&....Note though that it's still far below the 3000 daily mortalities from....Early Wednesday, Texas reported 10,028cases with hospitalizations hitting....The day ahead will be an especially stern test of the market's resolve....Under normal circumstances the market would have already anticipated that but....Along the same lines, Atlanta Fed President Bostic introduced the idea....He later repeated the same line and so did Philly Fed President Mester with....Watch for that talk to work its way up the Fed ladder to Governors, the....Again, the market should start to anticipate something along those lines,..
Intraday Market Thought: Down the Jackson Hole

by Adam Button | Aug 24, 2020 19:02
Will Thursday's speech from Powell at the Fed's Jackson Hole virtual....More on the Fed below, but note that in today's SPX session, as many as 76%....The chart below shows the % of Nasdaq members above their 50 DMA fell....nbsp;Last week's Premium short in NASDAQ was stopped out, but Ashraf says....Moments ago, a new FX trade based on a Triple Confluence was issued for Premium....nbsp;....The Jackson Hole symposium will be held virtually this year but it will be no....Powell's topic will be the Fed's long-run framework and specifically,....Currently, the Fed aims to hit 2% inflation and if it undershoots, it....A new regime could see the central bank overshoot to make up for lost ground...The hope is that it will act as a natural stabilizer that signals easier....It's fraught with pitfalls...At the heart of the Fed's thinking is that it believes it can control....It's as simple as raising rates and at the moment, the Fed doesn't see....Yet officials don't need to look any further that US housing for an....ldquo;The housing market is past the recovery phase and is now in a booming....The Fed is right that it has the tools but the Fed has always had the tools to....Why? Political risks is a big one...It's simply hard to raise rates and demand that all borrowers pay more...With Wall Street firmly in control of the Fed and increasing politicization at....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +197K vs +200K prior...GBP +7K vs -3K prior...JPY +21K vs +27K prior...CHF +15K vs +17K prior...CAD -34K vs -30K prior...AUD -3K vs -1K prior...NZD +4K vs 0K prior...The recent rally in the pound appears to have caught the speculative market by....Expect a slow burn with the never-ending Brexit saga as a constant headwind.
Intraday Market Thought: US Left Out on Stimulus

by Adam Button | Oct 1, 2020 18:58
Hopes for a US stimulus package made no progress on Thursday, but talks will....Check out below October's performance during US presidential....The kiwi was the top performer while the pound lagged...Gold pushed higher thanks to higher inflation and slipping real rates...Economic data recently has been shining a light on inflation...Friday's US jobs report will not matter at all...Below is the solution to Wednesday's Mystery Chart...The EURUSD's recent moves show tight smilarity with Mar-Oct 2017...You can decipher the rest...nbsp;....The US is at risk of being left behind in this round of stimulus...A number of developed countries are working towards more spending, including....Late in the day, there were some signs of an easing in the Senate Republican....The problem is that at the same time, Democratic numbers are rising and that&....It continues to be tough to see how a deal is made...The stimulus story is bouncing US stocks around but the FX market has mostly....A lack of stimulus will certainly raise the stakes for markets in the election...A Democratic sweep would ensure a large package in January, while a divided....Growing debt will be a long term problem but it's tough to see the market....Instead the next year will be all about growth and money will flow to places....Another spot we're watching closely is economic data...The latest numbers out of China continue to reflect an impressive comeback...There are also great signs on manufacturing in the US and globally...The Markit Canada and US PMIs were strong Thursday...The ISM manufacturing survey was a touch below estimates but still at a very-....4 level...One issue that's completely off the radar is inflation...US PCE core rose 1...6% in August compared to 1...4% expected...The PMI surveys all showed pressures as well, with the ISM prices paid component....Much of that comes from supply chain disruption but it risks becoming....That's a dangerous mix...As we enter October, note that it's generally a positive month for the S&....2016 -1...94%....2012 -1...98%....2008 -16...94%....2004 +1...4%....2000 -0...49%....The other negative headline Wednesday was Moderna saying its vaccine won't....That leaves Pfizer's version as the lone candidate for before the election...Finally, quarter-end flows appeared to be a significant drag for the dollar...Even with higher stocks and Treasury yields, USD/JPY struggled...For Q3 as a whole, the euro was the top performer while the US dollar lagged...In stocks, the S&P 500 gained 8...5% and the FTSE 100 fell 4...9%..
Intraday Market Thought: A November to Remember

by Adam Button | Nov 30, 2020 17:37
November was a sensational month for risk assets in the aftermath of the US....Equity markets finish the month with some of their best monthly gains ever....Ashraf posted charts of Gold vs USD and Gold vs EUR, highlighting the....Early week data continues to show the global economy recovering at a strong....A new trade was issued after Monday's London close...nbsp; The DAX trade hit the Premium stop, but avoided the 13445 addressed in the....nbsp;....The monthly equity numbers for November are staggering...It started with a huge bid for option protection into the US election that....The result was a monthly gain in global equities that stretched from 11% (S&....This was clearly the month the market began to look beyond the pandemic and....It slumped late in the month and that continued with a decline to $1781 on....What's troubling for gold bulls is that all the declines are coming as the....Who'd have known that energy and financials would be the month's best....nbsp;....The US dollar was the worst performing major in November while the kiwi led the....5%....In emerging markets it was the beaten-down BRL leading the way with a 7...6% gain...It all begs the question: Can this keep on going?....There's no fundamental answer...The pandemic clearly continues to rage but the market stopped caring about the....Fresh restrictions in Europe and elsewhere barely led to a flinch in....It's tough to see that changing...At the same time, the defining characteristic of the recovery is how it&....Though the pace of improvement is slowing, the data continued to impress....We concluded long ago that we're in a post-pandemic market but how far it....Yet, there is no sign that easy money from central banks and governments are....There are still a number of markets playing catch-up, particularly emerging....That's going to draw capital out of US dollars and other safe havens and....Be cautious of swings at month end then into December...Given the magnitude of these equity moves, the flows will be overwhelming in....The moves anticipated in Friday's Premium video seem to be underway today...Let's see how far they'll extend...nbsp;..
Intraday Market Thought: Dollar's Monthlies

by Ashraf Laidi | Jun 1, 2022 18:10
You must've seen May's monthly charts, highlighting the wild doji....7% and +4...5% intra-month downside and upside respectively...This should fortify the position of both bulls and bears --the former stating....transitory)....nbsp; But, what about the US monthly charts for various USD indices? [Click....The upper left chart shows the Bloomberg USD index (BBDXY) – a basket of....7%, JPY 14...6%, CAD 11...94%, GBP 11...5%, MXN 9...95%, AUD 5...15%, KRW 3...43%, CNH 3...0% and INR 2...96%....Bloomberg has been (righly) active in pushing their index...It is a more accurate and an increasingly used USD index as far as....And unlike the Fed's Broad USD index (not included here), the BBDXY is not....nbsp;....The upper right chart shows the Bloomberg JP Morgan Asian Dollar Index....NOTE: A rising graph indicates strengthening in Asian FX vs USD and not....This trading bloc is well known for its disparate economic cycles relative to....This means Asian monetary policies often lead the US by 6 or 9 months...The widening (and broadening) role of the Chinese yuan is starting to make the....The usefulness of distinguishing the ADX from DXY indices can usually be....This is covered in more detail in a previous post in here ....The bottom chart shows USDX Index (DXY), the most widely traded/followed US....This is a basket of 6 currencies (EUR 57...6%, JPY 13...6%, GBP 11...9% and CAD 9...0% and SEK 4...2% and CHF 3...6%....The heavy euro weighting means the index is largely a mirror image of the euro....nbsp;....What stands out....The lower highs in the Bloomberg USD Index (BBDXY) over the past 5 years....This failure is best highlighted in the May close...Nonetheless, USD bears have little reason to worry as long as 1180 in BBDXY....The deep drop in ADX during April and May was mainly a result of easing....The stabilization around 102 could appear as a right shoulder support, but....Finally, DXY is the best performing index of the three due to its....USD bears could point to DXY's failed attempt to close above the highs....Looking ahead....FX traders focusing on USD pairs need to figure out two things this month: i) to....We could add the obvious third factor of Ukraine-Russia war, but at present, the....The 1st factor can be invalidated once US-10 year yields break (and holds)....0%....This means, once 3% is broken to the upside, inflation concerns would revert....e...bond yields will restore the negative correlation with indices seen so far....Thursday's ISM manufacturing figures showed no signs of the slowdown alerted....In fact, markets are gradualy getting rid of factor (i) and reverting to fully....This month's June FOMC/dotplots/press conference will help in....nbsp;....The latest trades with our Whatsapp Broadcast Group included 3 successfully....The short USDJPY at 127 worked for three days until nearing the verge of being....nbsp;..
Intraday Market Thought: 3 Takes on Gold's Response to CPI

by Ashraf Laidi | Jun 10, 2022 18:17
US inflation hit a new 41-year high of 8...6%, bond yields surged back towards their 4-year high of 2...0%, so why gold did rally $50 to $1870? Those who say “gold is a hedge....Remember this time last year, when gold broke down on the mere mention of taper?....NOTE: if you made money going “long gold” this week you will read....nbsp; That's how the mind usually works...Here is my take on the 3 possible reasons to the rally in gold...nbsp;....The 1st reaosn is obvious, the 2nd not so obvious and the 3rd reason needs some....One possible reason (not the best reason) is that annual core inflation slowed....0% in May from 6...0%, posting its 2nd straight monthly decline...This may not be so significant due to base factors and the removal of surging....But it may be telling us that inflation is starting to consolidate, when....nbsp;....The better explanation for today's surge in metals is what emerged 90 mins....The University of Michigan consumer sentiment plunged to a record low of 50...2 in June from 58...4, highlighting people's pessimism with surging fuel prices, broad rise in....When the consumer is suffering at the same time the Fed is expected to raise....Why? They're anticipating either a policy error by the Fed (hiking too much....Either outcome, should see inflation peak or pull down modestly, but not as....Such an outcome would be negative for real bond yields...nbsp; ....Should we wait for the Conference Board's own index of consumer confidence....nbsp;....How about a 3rd reason (far from obvious) to the rise in gold? Let's....As gasoline prices picked up fresh momentum two weeks ago, inflation....More in breakevens here...nbsp; ....Most specifically, 2-year breakeven inflation has accelerated its pace of....And so in order to highlight the difference between near-term and longer-....Regardless of whether the Fed hikes through the autumn or not, gold will....nbsp;....1st Positive Signal since April 2020...Many of your are tempted to short indices on Fed week, with the intention....The problem with this, is the ensuing volatility...How deep will the whispaws be? Between the rate hike, dissents, Fed dot plot,....But there's a trade that's fairly inversely correlated with indices....4) without the volatility of indices or the JPY (no, it is not a JPY or AUD or....We stuck to it with the WhatsApp Broadcast Group over the past 4 weeks....More importantly, it's just given me a crucially positive signal for the 1st....nbsp; ..