The technicals in crude continue to break down as the buyers stand aside – the 26 Sept swing low looks close to being taken out at $76.61 and a break here sees $65 come into play – it does feel like these lows will be tested, so a short bias is preferred. The fact we see crude down 4% when copper is up 1% speaks to the EU price caps as the driver, over just a...
Top-level view - Long and strong for 4200, cutting on a 3- & 8-day EMA crossover
On the day we see the US500 cash closing +1.4% and above 4000, taking the bear market rally to 14.6% from the 13 Oct low.
All sectors rallied with energy the best performer gaining 3.2% - breadth was broad at a stock level and we see 89% of stocks in the index closing higher – hard...
When we think of the USD, and what drives capital, the USD ‘smile’ theory is an interesting and logical model to conceptualise the fundamental drivers of price action.
The basic principle is we can think more strategically about the regime that drives the USD, and this has consequences for price, and by extension commodities and other second-order derivatives of...
The world’s market participants continue to debate whether long-end bonds are a good buy as we roll into 2023, given the consensus view of a recession in Europe, the UK, and the US – while China should see a tough 1H23 but a more prosperous 2H23. We debate whether the USD has indeed peaked and whether the seasonal rally in risky assets into the end of the year is...
Scanning through the charts, it's not hard to find a whole array of markets pushing key levels – USDCAD jumps out as it holds the July highs and looks to be turning higher – a potential long idea on a swing timeframe, adding on a bullish 3 & 8 EMA crossover. The US500 also gets close attention as it eyes the 200-day MA at 4057, although sellers are impacting on...
Gold (XAUUSD) remains one of, if not the most, traded instrument at Pepperstone and with momentum firm many are asking if the yellow metal can take out $1800, but go on to have a far more prosperous 2023.
Technically, after finding solid bids into $1620 and a solid platform to progress, we’ve seen price breaking the bear channel drawn from the March high – bulls...
The crypto markets work through their MF Global moment, with investors running the ruler over the exchanges and many questioning if we see another run on an exchange early this week. It feels ominously like we will see some further big changes in the crypto exchanges, but whether this proves to hold systemic challenges through broad financial ecosystem seems...
While we wait for news on the US midterms and tomorrow's US CPI print, many have been closely following and trading the incredible saga unfolding in the crypto exchanges, and coins, with Binance making its non-binding bid for FTX – clearly there are views that CZ (CEO of Binance) walks away from this and some are rightly or wrongly running the ruler over the other...
Core macro themes traders need to roll with:
• China reopening plans – after Friday’s incredible moves will the market buy the expected early weakness? Consider copper had a 4 standard deviation move on Friday (+7.6%) and the HShares closed its best week since 2015.
• Central bank divergence is even more pronounced – several central banks have underwhelmed on...
Time – 3 Nov 5am AEDT / 6PM GMT (Jay Powell speaks at 05:30 AEDT)
Central bank meetings are just so important to sentiment and market structure – when we’re trading a major market theme, such as inflation and rising interest rates, this is the market’s chance to mark-to-market policy changes and how the collective in the bank guide our expectations for future...
As we look ahead to the US midterms on 9 November, the question traders ask is whether it has the potential to be a risk event and promote increased cross-market volatility – as part of the risks assessment, the election has implications on whether to reduce trading exposures over the event.
Anecdotally it feels like traders aren’t giving the elections too much...
Key event risk summary:
• FOMC meeting (3 Nov 5 am AEDT) and chair Jay Powell press conference – the Fed hike 75bp, but it’s all about the guidance
• RBA meeting (1 Nov 14:30 AEDT) – A 25bp hike is expected, watch for the optionality of a bigger hike in the December meeting
• BoE meeting (3 Nov 23:00 AEDT) – a 75bp expected – Comments from members Mann and Pill...
It's quite the sell-down in the USD today with the USD lower by 1% and down against all major currencies. While the SEK has worked best on a percentage basis, it’s the GBPUSD that has been the star performer for me, gaining 1.7% - while most will put this down as the “Rishi rally”, it feels its feeding off the relief from lower gilts yields as well as the broad...
Key event risks traders need to navigate in the week ahead:
• A huge week of US corporate earnings – we see 47% of S&P500 market cap reporting – Apple, Microsoft, Amazon, and Google among others
• The Tory Leadership battle – the bulk of recent betting capital is for a Sunak win
• ECB meeting (Thurs 23:15 AEDT) – a 75bp hike is fully expected – with Eurozone...
After much anticipation, Liz Truss leaves Downing Street after 44 days in the job and the process of finding a new PM kicks in – 100 Tory MP nominations are needed (out of a possible 357) , and that means we should see 2 or 3 candidate in the running early next week – Rishi Sunak is the clear front-runner but Boris Johnson is making a play and the flow of betting...
One of the more watched interest rate settings in markets is the so-called ‘terminal’ interest rate – the point in the interest rate futures curve that reflects the highest point of future rate expectations – said differently, where the market feels a central bank could take its key policy rate by a specific date.
For those who really want to understand fed funds...
UK politics commands the international spotlight from time to time and that time is now. Yet, while we fraternise over Fed policy and how high the Fed could take the fed funds rate into 2023, UK politics and the impact on the UK gilt (bond) market and the GBP is firmly front and centre – the connection between British politics and the capital markets will almost...
We saw CADJPY finally reverse around 111.00 after an extended run to the upside. This was then followed by a monthly shooting star candle on the monthly chart, signaling a potential reversal. Sellers stepped in and we saw a drop to 104.50.
We've since then seen a pullback into 107.00 resistance, whilst market consolidated in a potential bear flag.
Could we see...
