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Intraday Market Thought: Fed, RBNZ Manoeuvre Around Zero

by Ashraf Laidi | May 13, 2020 15:57
Fed Chair Powell manoeuvred his way around the negative rates verbal....The Kiwi is the biggest loser of the day after the Reserve Bank of New Zealand....That's good news for our Premium NZD trades, opened earlier this week...Here's open access to this week's Premium Video...إنتهاز كسر التداول العرضي...Powell: "With interest rates at ZLB and no desire to use negative interest....rdquo; Basically, Powell is seeking new ways to say negative rates are not an....Even hawkish Cleveland Fed's Mester is personalizing the issue, saying "....Meanwhile, the RBNZ increased bond purchases to a NZ$ 60 billion,....quot; For currencies, the implications of one central bank going to zero may....USDX fluctuations are at their tightest since early February, keeping key USD....GBPUSD, however, merits a close look as it breaks below 1...2250s...More importantly, EURUSD is undergoing some key RSI patterns, seen only in....nbsp;....We said in yesterday's IMT “we're watching … the NASDAQ'....the semiconductors index 1800 resistance ”, hours before indices began....There was no trade issued to Premium subscribers, but a suggested trade was..
Intraday Market Thought: Stocks Jump, Yields Soar on Jobs, ECB, Corona Narrative

by Ashraf Laidi | Jun 5, 2020 18:06
Thursday's bond yield break out was joined by broad and intense rallies in....US 10-year yield jumps 43% for the week, its biggest rise on record and double....DOW30 shot-up more than 3% to break further away from its 200-DMA, while....The US dollar extended its longest losing streak in three years and EURUSD....أهم سؤال في الاسواق...The new wave of buying intensified in Friday's Asia session on a....Let's look at some trading questions below...In the US, the bond market painted a positive picture in a different way as....In that case, it's a sign of dwindling demand for safety as the....Given that the Nasdaq hit a record high, the trade has already run a great deal....That paradigm continues to draw dollars out of the US...Trading Questions....The question I raised in this week's English and Arabic videos as to whether....This now helps us figure out whether sell EURUSD for the 1...10s, or wait for further pullbacks to buy for higher targets...Gold traders watch the 1677 support and bonds fixated on the 100-DMA at 1...01%, with the highest daily RSI since October 2018.
Intraday Market Thought: Hotspot Hopscotch

by Adam Button | Jun 15, 2020 15:15
Rising virus cases in a number of US and China hotspots have put risk trades on....CHF and EUR are the highest performers, while gold and silver attempt to recover....CFTC positioning data showed euro net longs at the highest in two years...It is also interesting to mention last week'snote from JP Morgan's....The re-opening narrative is running into a hard truth: That many people won'....Those who are overzealous might face a second wave...The US remains the main focus and a number of primarily southern states....Florida reported record numbers on Saturday and Texas hospitalizations....Headlines from those hotspots began to move the market late last week but it&....The overall number of new cases on Saturday hit a record of 142,672 with....However Saudi new cases hit a record Sunday and deaths in Iran hit a two-....Tokyo reported the most cases in 5 weeks with half traced back to nightclubs...Even China is slipping backwards with Beijing forced to lockdown part of the....In a sense, none of this is particularly surprising so what happens next will be....Early-week indications are soft but certainly not insurmountable...Kolanovic's latest note....Marko Kolanovic, JPM's quant guru said last week “With the recent....nbsp;“Positioning in equities did not increase significantly and China....rdquo; Kolanovic, who's had a solid track record in calling major troughs....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +96K vs +81K prior...GBP -24K vs -36K prior...JPY +17K vs +33K prior...CHF +2K vs +9K prior...CAD -23K vs -33K prior...AUD -37K vs -41K prior...NZD -11K vs -13K prior...The specs largely disbelieve the reopening story but the enormous long-..
Intraday Market Thought: Election Scenario #1: Blue Wave

by Adam Button | Oct 30, 2020 20:06
In the run-up to the election we will look at the most likely outcomes and how....The first scenario is a "blue wave"; a scenario where Biden wins and....There are currently 4 existing Premium trades open, short FB at 275 (now 261)....nbsp; Below is the Premium video for subscribers, ahead of US Polling Day...nbsp;....This scenario would give Democrats the most power, similar to Obama's first....Given deep partisan divisions, it's a rare opportunity to be able to deliver....In this election, it's also the most-likely scenario as measure by polls and....That said, it's a narrow probability, in the Senate in particular where....Given that and the high uncertainty around the election, this outcome is not....For risk assets, this is the most-bullish scenario...It would mean a large stimulus package as soon as Biden takes office in January....In FX, the US dollar would generally weaken and emerging market currencies....On the other border, CAD may see some initial softness on worries about....With the dollar weakness and the promise of deep deficit spending, precious....How strongly Biden can deliver on his promises may depend on how strong the....A one-seat majority in the Senate would leave every initiative at the mercy of a....A larger wave would raise the odds of more-aggressive measures and that could....In particular, Biden has promised to reverse Trump's corporate tax cut....On corporate taxes, Democratic House leader Pelosi hinted Thursday that might....Meanwhile, taxing higher incomes is unlikely to hurt the market but fears of..
Intraday Market Thought: Sic Transit Gloria Mundi

by Adam Button | Nov 25, 2020 23:15
The death of Maradona saddens us and it's a reminder that even the greats....On that note, the dollar lagged again Wednesday despite a risk averse tone....A wave of US economic data ahead of the holiday highlighted several continuing....The chart below raises doubts over gold's direction in absolute and....1) Housing boom...The boom in housing isn't a uniquely American phenomenon but it's....New home sales in October rose 999K compared to 975K expected...The prior was also revised higher and sales are up 41% y/y...This is a secular trend but also highlights the greatest power of all in....2) Trade....One of Donald Trump's most powerful promises was to improve US trade but the....There was an $80...2B deficit, which was nearly in-line with estimates but the larger picture is....That steady flow of money out of the US is a powerful force and a long-term....3) The power of government spending....The US, UK and Canada are the three biggest spenders during the pandemic....That spending kept a human tragedy from turning into an economic one but in the....Wednesday's PCE report showed income dropping a surprise 0...7% versus +0...4% expected...On the flipside, there's renewed talk of US student loan forgiveness...4) Manufacturing strength....We're still in the dark about the underlying strength of the manufacturing....We recently got two Fed reports that showed some softening but core....One of the big surprises of the pandemic has been how well that sector has held..
Intraday Market Thought: China FX Pass-Through Conundrum

by Adam Button | Dec 9, 2020 18:03
Metals pulling back after Chinese CPI inflation fell into negative territory....Ashraf repetitively warned Premium members about the need for Gold/Silver....But the 75 support held up once more, prompting renewed downside in both....That's what we call the currency-pass through (more below)....nbsp;Elsewhere, the risk trade continues to improve after a slow start to the....Ashraf issued a new Premium trade moments ago, backed by 2 charts & 5....nbsp;....In year-over-year terms, Chinese CPI fell 0...5% in November...That's the first fall in 11 years and it was much softer than the flat....A big reason for the miss was food prices, which fell 2...0% in large part due to a fall in pork prices but even without food, CPI would....1%....The miss highlights some lingering questions about the Chinese and global....Despite its rapid handling of the virus, the Chinese consumer is struggling...Through October, Chinese retail sales are down 5...9% year-to-date compared to 2019...The broader economy is strong but that's mainly owing to vast government....One line of thinking is that the Chinese consumer simply retrenches in times of....That may be the case but it may also be a sign that the global consumer might....An alternate thought is that China may be on the leading edge of the post-covid....nbsp;Large importing economies such as China with strengthening currencies tend....nbsp; The Chinese yuan on Wednesday rose to the best levels against the US....How the export-sensitive economy responds to the strengthening currency....For now though the focus will be on Boris Johnson's trip to Brussels...Negotiations are in the end-game and Johnson has played his usual game of....It's worked before and a deal is in everyone's interest at a delicate..
Intraday Market Thought: Onto Plan B.1.1.7

by Adam Button | Dec 22, 2020 16:22
The US dollal is once again the top perfomer of the day as indices struggle....Ashraf has a few thoughts on XAU and XAG below...A new, more-transmissible covid variant circulating in the UK called B...1...1...7 gave markets a genuine scare to start the week but the subsequent recovery....A new premium trade was posted before Monday's NY cash close...The trade was issued last week to our WhatsApp Broadcast Group members...nbsp;....There are far more questions than answers about the new covid varient but....It explains why UK cases have continued to surge despite the latest lockdowns....The Spanish variant earlier in the year was first thought to be a similar....It's now clear that the quick spread of that virus was a result of many....What's different this time is that this strain has 17 mutations compared to....Scientists believe it incubated in a single, immunodeficient patient in a&....Secondly, this strain is competing with other ones in the UK, where there have....On Nov 18, a total of 28% of London cases were this variant...That had risen to 62% by Dec 9...On the economic side, it means that more countries will need to go into March-....It risks a deeper contraction in Q1 GDP and a slower recovery, especially in....What it's not likely to change is the vaccine...US officials Monday said 50m Americans could receive a first dose of the....Other countries are also moving forward vaccine timelines...Given the strength of the bounce in risk assets Monday, the message is that so....That said, we will be keeping a close eye on UK cases in the coming days along....Ashraf is closely watching the Gold/Silver ratio and whether it retests the....Thus, any rebound from, 73 to 75 will mean fresh selling in XAUUSD (to 1863/4)....80s) until we hit the 75 ceiling in the Mint Ratio...nbsp; ..
Intraday Market Thought: GBP Party & China Yield Spread

by Ashraf Laidi | Feb 9, 2021 17:20
Ashraf tells us it's time for G10-FX traders to start monitoring the US-....Here is a chart below of US-China 10 yr yield spread vs DXY...There are leads and lags but it's worth adding to your FX toolbox...nbsp; Meanwhile, indices attempt at maintaining the risk-on mood...This is especially visible in GBP/USD, which has risen to a fresh high since....GBP is the 2nd highest performing currency YTD (after NOK)....The dollar is broadly weaker this week so far...CFTC positioning data finally showed a crack in the crowded euro long...nbsp;....If this was a 'normal' year then all the talk in the FX market might be....The UK's Brexit deal and pivot away from austerity puts it in a spot to....It's the best performer so far in 2021 despite being ravaged by a new....The market everywhere is laser-focused on the post-covid economy and the UK is....Data Tuesday from Barclaycard showed overall consumer spending down 16...3% y/y with spending in pubs and bars down nearly 94%....There is tremendous pent-up demand in the UK that's been doubly held down....We're now months away from the end of both and the UK is also preparing....To be sure, cable is benefiting from broad USD weakness today but there are....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +137K vs +163K prior...GBP +10K vs +18 prior...JPY +45K vs +45K prior...CHF +15K vs +10K prior...CAD +14K vs +14K prior...AUD -1K vs +1K prior...NZD +12K vs +15K prior...We've been lamenting the lack of enthusiasm in speculative forex futures....The brief moment in the sun for the euro is looking more vulnerable even if the....20 has been bought.
Intraday Market Thought: Subtle Clarida Pivot May be Lasting

by Adam Button | May 18, 2021 16:07
Gold continued to break higher, while USD depeened its selloff...This is unlikely to change after a subtle change from the Fed vice chair....NZD and GBP are leading currencies at the expense of JPY and CHF...Below is the alert to the WhatsApp Broadcast Group of the breakdow in....0, implications of which were forwarned in Friday's gold video...nbsp;....Fed vice chair Clarida spoke at a web conference Monday and at first blush....He responded by saying that because he expected it to rise due to transitory....Few people picked up on the comment but it could be an important shift at the....There are clearly worries about inflation but officials are nearly....Barring a change of heart, that makes incoming inflation data almost....So 'significant further progress' is really an employment metric...Though that's a deliberately vague target, officials continue to cite 8....By that measure, would 4 million jobs be a reasonable benchmark? If so, that....3 million per month ahead of Jackson Hole, where many expect a tapering....That's an extremely high bar and it raises the risk that the Fed waits....That's the kind of thing that would add further fuel to the precious metals....It was also notable that the market reaction to inflationary metrics in the....Both the 'prices paid' and 'prices received' indexes hit records....On the whole, Monday's price action was modestly negative for the US dollar...Is this an early sign that markets will begin to weigh employment more heavily....Keep in mind that even with the huge upside surprise in inflation last week,....We may have seen the worst already...nbsp;..
Intraday Market Thought: Fed Hastens, BoE Hikes, ECB Balks

by Ashraf Laidi | Dec 16, 2021 17:41
Market reaction to Wednesday's FOMC decision differs from most other....This is especially relevant for bond yields and metals...So why did USD and bond yields fail to break higher despite the...Fed's decision to double its tapering from $15 bln to $30 bn to....And more on what we did with our WhatsApp Broadcast Group after the FOMC....The chart shows how the red graph of OIS curve (Overnight Index curve) disagrees....Said differently, the red graph links the red dots of median projections for....Thus, the red graph for 2023 is substantially lower than the yellow....nbsp;....The reason markets assert the US economy cannot handle that much tightening is....As opposed to demand-driven inflation, which lift up prices thanks to....Even if some of the inflation ends up remaining (sticking), the US consumer....nbsp;....Both of the Bank of England decision to hike rates in the midst of a....The BoE rate hike's short-lived positive impact on GBP clearly indicate....nbsp;....Minutes before the Wednesday FOMC decision, we informed our WhatsApp....The gold trade was also complemented with long XAGUSD at 22...05 targeting 22...35 and opened another trade subsequently...The signals basis we used for entering metals during the FOMC/Powell noise....nbsp;....nbsp;..