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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; ..
Intraday Market Thought: Indices Heat up, USD Cools on Relations Thaw

by Adam Button | May 22, 2018 11:57
Monday's equity rally was another confirmation that the year's....Improved relations and detente over the past 2 days have led to a rally in risk....Earlier today, BoE's Carney reiterated that interest rates will rise....Silver and the ppund are the highest gainers since Tuesday's Asia open...The DOW30 Premium was stopped out at 25050 (High was 25085)....Yesterday's trade is +70 pips in the green...مطاردة القيعان (فيديو المشتركين)....The US-China trade war going 'on hold' was cheered by markets as the....China has offered to import more US energy and commodities in something we....But if it's good enough for Trump and Mnuchin, then it's good enough....It was instructive that the Australian dollar was the top beneficiary in FX...AUD/USD jumped to the highest since late April...Even cable showed some signs of life...After hitting a fresh 2018 low of 1...3391 it bounced back to 1...3433 to finish only narrowly lower...The risk to the improved tone in markets is bonds...Treasury yields inched higher Monday but are now back within striking distance....Keep a close eye on that market Tuesday.
Intraday Market Thought: USD Shrugs Services ISM

by Adam Button | Feb 5, 2019 15:19
Risk assets remain continue to push higher as China remains on vacation....The January services ISM fell to 56...7 from 58...0, posting its 2nd consecutive monthly decline (more below)....USD prevails holds on to strength after last night's remarks from hawkish....The Aussie is the day's highest performing currency of the day thanks to....A new commodities trade for Premium susbcribers is to be posted later this....The US ISM non-manufacturing report fell to 56...7 from 58...0, vs expectations of a 57...1 reading...It was the 2nd monthly decline, something not seen since the June-July....Bad news on the new orders component, which had its biggest percentage decline....Prices paid and employment components both rose...Aussie Rebound....AUDUSD initially fell as low as 0...7194 after the a disappointing retail sales report overnight, and it sparked....Instead, the guidance in the statement was identical...Inflation and growth forecasts were trimmed but by less than feared...As a result, AUD/USD jumped to 0...7265 in what's shaping up to be an outside bullish reversal day...Australian retail sales fell 0...4% in December compared to a flat reading expected...For the quarter sales were up just 0...1% after accounting for inflation, far short of the 0...5% rise expected...It's a rare recent win for a currency on a central bank decision day...That's in line with better sentiment in markets more broadly...The S&P 500 gained 0...7% on Monday after a flat start...Worries about China are on hold with markets there closed for the week...USD/JPY rallied for the second day and hit 110...00, edging over the January highs...Watch for a definitive break in the day ahead or a retreat.
Intraday Market Thought: Eroding the one-two punch

by Adam Button | Mar 5, 2020 15:15
Markets erase 80% of Wednesday's gains 40 mins into the cash session amid....Also some US senators have announced the White House's goal of setting 1-....If you were to sketch out an ideal scenario to counteract market sentiment....The one-two punch of central banks and politics is exactly what unfolded and it....Until things changed again...Market developments will entirely hinge on the outlook for the virus...Signs of spread continue to percolate but many questions remain unanswered....We don't have answers to those questions but the central bank and....The BoC cut 50 basis points (as we warned) on Wednesday to follow the Fed....An MNI sources story also said the ECB was pondering rate cuts next week while....All are forecast to continue to ease...Had there been no virus, that would have been an extremely powerful signal...Combine that with the latest political developments...Just four days ago Bernie Sanders was a 70% favourite for the Democratic....A Trump vs Biden election is a significantly more market-friendly....Wednesday's one-two punch of central banks and politics is the market's....When the virus does turn for the better, it sets risk assets up for a....For now however it's competing against a virus that threatens to....Just 12 days ago there were 5 confirmed cases in Italy and today the government....The European Commission is already warning about a recession in Italy and....The aforementioned one-two punch appears to be the market's best chance at a..
Intraday Market Thought: Mnuchin's Bazooka & best vs worst stocks

by Adam Button | Mar 17, 2020 23:49
Monday's bazooka from the Federal Reserve fizzled and on Tuesday Treasury....The initial results were better with a modest bounce in risk, but there are....Futures are already down 4%, US crude oil is below 27 and gold above 1540...The US dollar climbed across the board earlier on Tuesday, as the funding....Moments ago, Ashraf has issued a 3rd Premium trade, backed by charts &....Below are the best and worst performing stocks of the S&P500's consumer....nbsp;....The fiscal plans that are leaking out of the White House and Congress to fight....The latest is a $1...2 trillion program that will include direct payments to Americans of about....That dwarfs the $700B crisis-era TARP bailout...It would be a shock if we didn't exceed the $1...4T crisis-era deficit this year...It could be triple as revenues collapse on the slowdown...The bailouts could also balloon the number...Yesterday there was talk of a $50B airline loan, today Boeing is seeking a....Shares of the company are down more than 70% in a month...The long-end of the US Treasury curve pushed much higher Tuesday and that'....It's not just the US, Spain unveiled plans for up to 200B, which would be 15%....Again, much of that is in credit backstops but every big business bailout....In turn that demands a consumer bailout, and it's banks that are holding....To illustrate, there are $1...2 trillion in low-grade leveraged loans in the US...Those are trading at 84-cents at the moment...Shale companies have $300B in bank debt and virtually all of the companies are....The deeper you look, the more daunting it appears...Even more daunting are the growing political concerns...There is some level of belief in markets that both sides in the US can come....Some Democrats are pushing for a higher minimum wage, bans on buybacks and zero....Some Republicans have other priorities...In FX, the dollar funding squeeze continues despite the swap lines...That argues for severe stress in the financial system despite dramatic Fed....They added to that with a 90-day loans to primary dealers backed by collateral....That's a sign of panic and something far worse than even the drastic..
Intraday Market Thought: Oil Spill Shrugs the Rest

by Adam Button | Mar 30, 2020 23:50
Each of equities indices, bonds and the US dollar rallied to start the week,....Is it a sign of a bottom, or quarter-end rebalancing? The Australian dollar was....China's official PMIs are due up next...In the Premium Insights, Wednesday's USDJPY short at 111...20 hits final target 108...00 on Friday, while the DOW30 short and EURUSD long were closed on Friday for....nbsp; Below is Ashraf's video for subscribers on Gold/Silver/Indices open....We're hesitant to take a signal from Monday's trading because of uarter-....On the fundamental side, we highlighted the Dallas Fed yesterday and it was far....0 vs +1...2 previously...Comments in the report highlighted strains on cashflow and worries about....The area is being hit particularly hard because of low oil prices...On that front, Brent hit at 17-year low of $21...65 and WTI fell below $20 once again...In Canada, oil is trading at less than $4 and that showed in the loonie...However it's clear that quarter-end flows were a factor in trading on the....Flow-driven trading may continue into Tuesday as the new month gets underway....From Ashraf's Tweets....A few tweets from Ashraf on seeking bottom signs...On sector-driven rally...On why Lombardia...Ashraf's Gold Poll....Increasingly the market will turn to data as March numbers begin to roll in...One coming up at 0100 GMT is the China PMI for March...The manufacturing number is forecast to rebound to 44...8 from 35...7 and services to 42...0 from 29...6...Real-time numbers like car sales and vehicle traffic show a spotty rebound in..
Intraday Market Thought: Johnson Hospitalised, Oil Awaits Treatment

by Adam Button | Apr 6, 2020 22:59
Sterling slipped after UK Prime Minister Boris Johnson was moved to the....The Australian dollar was the top performer while the yen lagged...As both gold and silver rally, the Gold/Silver ratio has fallen to as low as 107....The RBA decision is up next...A new Premium trade was posted at the close of the NY session, backed by 3....nbsp;....A statement from 10 Downing said PM Johnson was taken to the ICU for....Cable quickly fell 80 pips to 1...2215 on the report but held the lows from earlier in the day on the report in....In the US, the S&P 500 rallied 7% and broke around a cluster of resistance....That level was the late-March high and the 38...2% retracement of the coronavirus drop...A Fox Business news report indicated that Congressional leaders had briefed....5 trillion stimulus package that's in the works, and will be ready by month....It's another sign of the endless appetite for spending from governments....It's also another reminder of the costs that will need to be paid one day,....In OPEC news, the battle lines for cuts on Thursday continue to harden with more....They have to know that it's virtually impossible to execute a....If that's the case, then the entire call is a public relations exercise...Given the stakes, this would be an odd time for that kind of stunt...A more-likely outcome is a cut and a statement that says they expect the US....When that invariably doesn't happen, they will have cover to cheat or hike....Oil fell nearly 8% on the day...Looking ahead, the RBA is entirely expected to leave rates unchanged at 0...25% in the 0430 GMT rate decision...The latest minutes said there was no appetite for negative rates and the....In normal circumstances it would be far too early to anticipate any kind of....A statement indicating that the pace of bond buying could increase could weigh..