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Intraday Market Thought: BreakEvens Cool off with Metals

by Adam Button | Feb 11, 2021 19:20
Just as inflation searches rose on Google, nominal yields pushed up faster....Ashraf showed this in today's tweet below...He also warned the WhatsApp Broadcast Group late Wednesday on the next round....Recent inflation fears – including from Powell's former colleague....DOW30 and SPX attempt at holding support at 31240 and 3882 respectively...More levels below from Ashraf...Profi-taking ensues in indices ahead of a light trading week after Wednesday....Up first was the US CPI report and it showed core inflation flat in January....2% rise expected...Headline inflation as also below consensus at 1...4% y/y vs 1...5% expected...The market reaction showed that traders are focusing in on inflation...The dollar dropped across the board on the headlines, sending the commodity....Powell speech took criticisms head on, saying that estimating output gaps is a....nbsp; He also left little doubt where he stands on rates and tapering, saying....quot; The comments initially lifted stocks and weighed on Treasury yields....What was mildly concerning was that low inflation and dovish comments ultimately....If a market can't move higher on good news, it's vulnerable...There was also some tension built up when former NY Fed President Bill Dudley....Lets focus on the aforementioned levels for indices, while XAUUSD tries to hold....nbsp;..
Intraday Market Thought: May Marches In

by Adam Button | May 3, 2021 13:17
Risk trades to a step back to end April but it was a strong month overall...We will have a look at May seasonal patterns...The Canadian dollar was the top performer last week while the yen lagged...CFTC positioning data showed the market slowly warming up to CAD...Last week's Premium trade is in the green and Friday's FX trade to the....Today is a Bank holiday in the UK, but will be a BUSY WEEK for GBP with the....US ISM manufacturing is next, followed by a Powell speech...nbsp;....Economic data continued to point to economic strength on Friday as the....1% in March on stimulus payments...Month end flows may have led to some profit taking but a study showing a....The new month kicks off with some strong seasonal patterns...Cable is a particularly notable one – it's fallen in May for 11....We may have seen some front-running of that with Friday's drop down to 1...3810...Another theme is dollar strength...At the start of the year, everyone was a dollar bear and that turned out to be a....The dollar gave back some ground in April but May has been the best month....On the soft side, it's the second-worst month for the kiwi...For equities the traditional 'sell in May and go away' doesn't hold....The S&P 500 has risen in May in 7 of the past 8 years...CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +81K vs +81K prior...GBP +29K vs +25K prior...JPY -49K vs -60K prior...CHF -1K vs +2K prior...CAD +16K vs +13K prior...AUD -1K vs -2K prior...NZD +7K vs +4K..
Intraday Market Thought: New Supply is Coming Home

by Adam Button | Jul 12, 2021 14:21
Is new bond supply coming come? First of all, big congratulations to our Italian....The bond market spooked everything else last week but once the fever broke, risk....That's created a tentative truce but with 3 and 10-year Treasury auctions on....The US dollar starts the week on a high note, stronger against all major....The yen was the top performer last week while the Canadian dollar led the way...nbsp;....It will be a slow start to the week in G10 FX on account of a multitude of....nbsp;....The economic calendar is generous to football fans with little on the agenda....The event to watch will be the 1300 GMT sale of 10-year notes...One of the theories about the drop in yields last week was a lack of new....That will be relieved with $38B on sale in a reopening followed by $24B in 30s....Recent sales have been strong but that was +15 bps ago...Whether it's lower or higher yields, expect the sale to set the tone for....The other move that caught markets off guard last week was China's cut to....To be sure, officials foreshadowed the move but most China-watchers thought....For the real economy, a sooner move and one that delivers it to all banks....The risk is that it hints at panic or an economy that's slowing too quickly...So far the market reaction has ben positive but the Chinese consumer has....nbsp; ..
Intraday Market Thought: Cyclicals, Inflation Hedges & Cardano

by Adam Button | Aug 13, 2021 11:25
Markets are set for a quiet end to the week with SPX and DOW closing at new....A strong US PPI reading helped to lift the US dollar on Thursday, highlighting....The consumer will be in the spotlight Friday with the UMich consumer sentiment....Below is the latest sign of Cardano's resilience against Ethereum as ADA/USD....00...Ashraf has constantly pointed out over the past 6 weeks how Cardano contine to....nbsp;....The latest trade in global appears to be based on the belief that inflation is....What's tricky about the trade is that no one knows what's coming next...Both the inflation and covid puzzles will take months to sort out and market....On Wednesday, the US dollar sold off on flat CPI number but on Thursday it....8% compared to 7...3% expected...Core producer prices were similarly strong...That ebb and flow is likely to be a microcosm of trading in the next year...The multitude of potential skews in pricing data makes it challenging to....CPI showed that auto prices are topping but how much of the gains they give back....Keep in mind that markets aren't just pricing in 2% vs 3...5% inflation or when those levels will be reached...The market has little reason to fear an overshoot in prices...The real risk is that a wage-price spiral puts the Fed behind the curve and....To be sure, that's a tail risk but given new highs in US equities, it&....Looking ahead, the UMich consumer sentiment survey will offer some insight....They survey includes 1-year and 5-10 year views on prices and if those shift..
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.