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Intraday Market Thought: Will Powell go Deep?

by Adam Button | Aug 27, 2020 12:16
Hurricane Laura hit the heart of the US refining region as a major storm early....Traders are fixated on Fed chair Powell's speech coming up at 9:00 Eastern....Half hour before the speech, markets receive the 2nd reading of US Q2 GDP and....106mln...Jul pending home sales follow 90 mins later, exp +2% m/m from the prev 17% m/m...nbsp; , The New Zealand dollar was the top performer while the euro lagged...nbsp; Below is the JOINTEnglish-Arabic Premium Video, detailing the case for....nbsp;....The major refining area stretching from Beamont, TX to Lake Charles, LA was....The storm made landfall with higher windspeeds than either Katrina or Harvey....It's far too early to evaluate this storm and it's hitting a less-....The day ahead though belongs to Powell...Expect him to recommit to doing everything in the Fed's power to....Anything less than that would sour the market...At the same time, you have to wonder if the Fed is considering the potential....Retail margin costs are as low as 0...75% and those rates almost beg mom-and-pop investors to lever up...The topic of Powell's speech at 1310 GMT is the Fed's framework review....That would add more fuel to the risk fire and it could reinvigorate precious....The larger risks may be on the downside though if he offers less than expected...The latest equity market moves show signs of classic euphoria with (for..
Intraday Market Thought: Game Changers & Setters

by Adam Button | Nov 12, 2020 0:08
Indices are caught between the threat of surging cases (and deaths) prompting....After Wednesday's closing bell, Moderna said its vaccine trial got....Is OIL showing a gravestone doji daily candle? Does GOLD show vulnerability at....40s? Below is a sample of Wednesday's trades to the WhatsApp Broadcast Group....A new Premium trade was also issued to all subscribers...Bonds & Indices....We continue to watch 1...00% in the US 10-year yield and how market behaves if/when it breaks...Will a breakout be a reflection of outright risk-on surge and optimism to....Outside of that, the mode in markets continues to be selling the US dollar....There is a mountain of money parked in the US bond market that's waiting....News of a vaccine that could potentially eradicate the virus may be that trigger....GBP and Brexit ....Just 24 hours ago it seemed like crunch time in Brexit talks as EU and UK....As cable hit the 1...3290s, we were reminded that the pair never dipped below 1...40 for decades before Brexit...At present, the contours of the new deal don't appear to be onerous and....See in the above WhatsApp snapshots how Ashraf called cable's peak near 1...3330s for members of the WhatsApp Broadcast Group, minutes before 1...3312 was hit and held ....nbsp;..
Intraday Market Thought: Peak Virus World, Post-Virus Market

by Adam Button | Nov 16, 2020 23:34
The Moderna vaccine news on Monday is wonderful news and it solidifies the....Yields rose, dragging down gold and silver off their Asia Monday session....More on the VIX and Cryptos below...Then after the NY close, S&P announced the addition of Tesla to its....The chart belows highights the importance of 22...0 on the VIX...More below...Moderna revealed preliminary vaccine data Monday and it showed similarly....Two candidates will further speed progress to delivery and even better....This comes at the same time as virus cases are hitting new daily peaks....It's a horrible human tragedy and we urge all our readers to stay safe....For the markets, it's clear now that the pandemic hardly matters...Governments have taken all the fiscal weight and central banks have made....From an equity market perspective, traders are watching the crucial 22....Why should this year and 2021 matter? So long as companies can be debt and cash-....And why not? There is no safe yield so even zero earnings or a small dividend....This same thinking is helping to boost emerging market currencies...RUB, ZAR and MXN all started the week strong and event the beaten-down....The important question going forward will be how long the fiscal and monetary....Central bankers have tied their own hands and governments have no reason to....Looking towards Tuesday, the week's top data point is due out at 1330 GMT....The consumer has shown no signs of slowing down and the Fed's Clarida....The consensus is for a 0...5% rise following September's 1...9% climb.
Intraday Market Thought: The Summer Sizzle is Coming

by Adam Button | Apr 26, 2021 13:19
Just how strong will the economy be in 2021? Resilient through recent lockdowns....EURUSD had its first test of the December trendline resistance after....Expect gold to retest and break above its own 100-DMA this week...nbsp; It will be a busy week with the Fed, Biden's tax plan and more....The CFTC positioning data showed renewed bets on the Canadian dollar...Both EUR and CAD have done well...Here's a monthly chart of EURCAD...What do you think? US Drable goods orders...are next...nbsp;....There's no post-pandemic playbook...Economists were in uncharted territory heading into the pandemic and will be....Almost every step of the way so far, the returns are better than anticipated...As the US reopens, the latest signs are impressive...Survey data is the most-forward looking and on Friday the Markit services PMI....1 compared to 61...5 expected...It was the same thing in similar surveys elsewhere and nearly all of them cited....Some of the anecdotal reports are so glowing, they were hard to believe at....ldquo;Restaurants spent much of the past year trying to win back customers...Now, they are struggling to win back employees,” the WSJ wrote on....A similar boom is brewing in the UK, which is just behind the US in vaccines...The BOE's Broadbent highlighted “very rapid “ growth on the....Forecasts are nearing +7% for the year...The week ahead is very heavy on economic data and earnings, with the FOMC....It starts with the US durable goods orders report for March at 1230 GMT...CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +81K vs +67K prior...GBP +25K vs +26K prior...JPY -60K vs -58K prior...CHF +2K vs +1K prior...CAD +13K vs +2K prior...AUD -2K vs +4K prior...NZD +4K vs +3K prior...What's fascinating about the rise in CAD longs is that it came on Tuesday,....The loonie fell hard in the day ahead of the decision but someone was clearly....Expect CAD positioning to stretch further in next week's report.
Intraday Market Thought: Complex Trajectory

by Adam Button | May 17, 2021 14:06
Today, the UK fully reopens its restaurants and cafes but bad weather....So far this month we've gotten surprise reports on US jobs, inflation....The numbers sent markets on a wild ride, but ultimately very little changed in....CFTC positioning data showed rising bets against the US dollar...nbsp; Gold regained its 200-DMA for the 1st time in 3 months...Take a look at the 4 key points on gold in Friday's video...Euro and yen were the strongest currencies of the day by the end of the....Our Whatsapp Broadcast Group members told of bolstering longs in EURNZD....Euro and yen ended up the strongest of the day and NZD the weakest...nbsp; FX is a relative game--need to optimize the strongest vs weakest (see....nbsp; http://ashraflaidi...com/admin/content/preview/36664....https://www...binance...com/en?ref=13288560...Friday's data added to the murky economic situation in the US...Retail sales and consumer confidence were both on the soft side but inflation....6% compared to 3...5% expected...That's the highest since 2008...It's especially notable because last week several Fed officials specifically....At the same time, the bond market continues to exhibit calm...On Friday, US 10-year yields fell 2...9 bps to 1...63%....We see both side of the inflation argument and expect it to continue for....Ultimately though, it's incredibly difficult to bet against both the Fed....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +94K vs +85K prior...GBP +28K vs +20K prior...JPY -42K vs -41K prior...CHF -3K vs 0K prior...CAD +39K vs +26K prior...AUD +2K vs +1K prior...NZD +9K vs +9K prior...This is one of the larger one-week shifts in a year but it only encompasses....The whipsaw from CPI likely unwound some of this month with some of those dollar....An ongoing trend in the past three weeks is aggressive CAD buying and given how....nbsp;..
Intraday Market Thought: Oil Breaks, Will CAD Follow?

by Adam Button | Jun 2, 2021 13:14
Crude oil broke out as OPEC+ confirmed it will follow its script to slowly....Much of that may have been the result of a strong bid in the US dollar to start....With regards to Ashraf's latest Video on gold, some have misunderstood....That is false...Ashraf is basically explaining that in order for gold to repeat such a crash, a....Below is the performance of CAD vs metals and currencies Year-to-Date...nbsp;....Oil challenged the March highs five times in May before finally breaking....The OPEC+ decision was no surprise but the commentary from oil ministers was....OPEC, like everyone else in the oil market, is now waiting to see what....We tend to think that a return of that oil is fully priced in but how fast....For now the market is signaling that crude is destined to follow other....So why then didn't the loonie follow it? USD/CAD touched a marginal new two-....2005 but couldn't break through the figure and climbed to 1...2075...The answer is that a broad US dollar bid hit that was likely flow driven...ISM manufacturing data was close to expectations as supply bottlenecks....The numbers likely weren't behind the dollar bid, which was also....For USD/CAD it may only be a matter of time...The 1...20 level is a key psychological level but is also the 2018 low, making it....If oil can hold at these levels through an Iran deal, it would be an incredibly....Seasonally, there is also some good news for commodity currencies...June is the 2nd strongest month for CAD, AUD and NZD over the past 20 years...It's also a stronger month for oil...In general, it's a soft month for the US dollar, with USD/CHF particularly....It's also the third best month for EUR/USD...In equities, there's an interesting divergence were it's a solid month..
Intraday Market Thought: Watch the 2023 Dots

by Adam Button | Jun 16, 2021 15:03
All eyes are on this evening's FOMC decision/forecasts/press conference...Tuesday's soft US retail sales report was one more reason for the Fed....NZD and AUD are the top performers, while CHF and EUR are the weakest of the....Canadian CPI y/y edge up over expectations but CAD remains unchanged...Comments from BoC's Macklem will also be in focus on Fed day...To understand what this downward-heading chart of the Goldbugs ratio means, ....US retail sales fell 1...3% in May, well shy of the -0...8% expected but the headline didn't tell the whole story...The prior was revised to +0...9% from 0...0% and that left the overall sales numbers close to expectations...It was a similar story in the control group, where a big revision higher....The Fed will note the slowing trajectory though and mixed signals from the....Spending is shifting towards restaurants and travel from durables and home....The overall pace of spending is still high but that's just after some large....The main factor for the Fed is jobs...Disappointing readings on the past two jobs reports weighed heavily on yields....Expectations for a direct hint to tapering are low...Powell is also likely to push back the timeline for taper discussions to August....One market mover is likely to be the dot plot...The current median forecast is for no hikes in 2023 but we could see a shift....The prior dots showed 11 forecasting no 2023 move and 7 forecasting a hike...If there's a shift it would boost the US dollar but risks are two way: some of....Part of the reaction will depend on how well Powell navigates questions about....He's sure to point to transitory factors and bottlenecks, while also adding a....Lately, that messages has resonated with markets and bond yields have fallen but....Also in focus is BoC's Macklem speech at 2230 GMT, where he's more....Lately the loonie hasn't responded to higher oil prices but if the climb..
Intraday Market Thought: Powell Possibilities

by Adam Button | Aug 27, 2021 13:02
The week-long build up to Powell's Jackson Hole speech will come to an end....There was some trepidation in risk assets on Thursday ahead of the speech....We break down what to watch for...All major currencies have gained back ground vs USD with the exception of JPY...Keep an eye for the release of US core PCE price index in less 30 mins from now...Exp 3...5% from 3...6%....One thing is certian: Powell's address will not be a game-changer...This speech is wildly overhyped because nothing else is happening and because....None of the underlying fundamentals of the market are going to change on Friday....That said, here is what to watch out for...1) Acknowledging delta will slow the recovery...At the July 28 FOMC press conference, Powell brushed aside delta, saying it....By simply acknowledging that it will be a drag on Q3 (some banks have cut Q3 GDP....2) The caveat could be that lost growth will materialize later....Delta may simply push the Q3 recovery trade back by a quarter...On its own, that wouldn't worry the Fed...If Powell strongly emphasizes that line of thinking, then it will be seen as a....The caveat to the caveat is that if he points out that delta and other variants....3) Inflation and bottlenecks....The message at the July 28 FOMC and since then has been that bottlenecks and....This theme is no longer at the top of markets' minds, but if Powell....At the same time, his personal view remains that price pressures are....Finally, Powell's overall tone will be important...If he converys a message that Fed will support the recovery and is in no rush....At the same time, Powell isn't going to tip his hand on the Sept FOMC yet...There's plenty of data to come and he likely intends to take his time....All that argues for focusing on continued improvements in the virus....nbsp;..
Intraday Market Thought: Demand Destruction or Delay?

by Adam Button | Sep 13, 2021 12:52
The week ahead starts quietly but the main highlight comes on Tuesday with the....Many economists believe this report could show the crest in pricing....US president Biden does not need US US inflation to be come the latest "....At the confluence of consumer-demand, covid-shutdowns and the supply....Hardly a Fed speech passes without a reference to the 45% y/y jump in used....New auto sales also spiked during the pandemic and were on track for their....As inventories were depleted, consumers slowly lost the ability to negotiate....If you arrive at a car lot today in the US, you'll almost certainly pay full....If not, the next customer through the door will...Naturally, this continues to put pressure on auto prices but,....That drop – and similar declines in other durable goods – will be a....The question beyond that is whether the demand for those cars has been destroyed....Moreover, at what prices will those transactions take place...Naturally, that's a sliding scale but for the Fed, the answer is clear:....That makes perfect sense because if they believed prices were going to stay flat....So we're seeing a real life example of how inflation expectations are....It will be crucial to watch the industry and how pricing evolves...In an extremely competitive industry like autos, with spare manufacturing....Yet, the longer the shortages last, the more that's jeopardized...More broadly, not every industry is as competitive as autos...In other industries where there are shortages, companies may try to boost....In short, inflation is perhaps the most-difficult economic force to predict,....There are plenty of good reasons to expect a higher inflation regime and....The answer will be in the data and the automotive industry is the single best..
Intraday Market Thought: Reality Bites GBP, Team Transitory Feels Heat

by Adam Button | Sep 29, 2021 5:09
Stocks took a fresh hit after a Powell-Yellen double warning on US govt credit....from twin warning from The growing energy and supply chain problems are....The British pound is the biggest loser of the week so far after BoE's....Sterling's damage came 24 hrs after the long EURGBP trade was issued to the....nbsp; Ashraf is in Dubai this week, so feel free to stop by the Orbex....Central banks around the world adjusted mandates last year to tolerate inflation....Like a bad trader, they might have tossed out the old playbook at the worst....Supply chain bottlenecks, commodity prices rises and the inability to find....With energy curbs now hitting China and potentially India, the resulting....In any case, the timeline for a return to a 'normal' economic....Moreover, while many economists are fretting about current bottlenecks, we&....The natural reaction will be for companies to build higher-than-usual....This week, BoE's Bailey offered a nod to that thinking...While he offered the usual nod to Team Transitory, the message is beginning to....ldquo;Our view is that the price pressures will be transient,” he....On persistently higher prices, he said “I take this risk very seriously...rdquo;....In the US, the Fed's Williams repeated much of what Powell said but....These are starting to sound like a slow climbdown on inflation, or at least a....This debate won't be settled any time soon but rising yields and....nbsp;..