With the ASX200 testing the ATH's seen in August 2021, the question of what exactly is driving the flows has been asked more liberally by clients - While we can point to macro factors, such as a belief that we're closer to an end in the hiking cycle, USD weakness, and a China re-opening, our analysts look at 7 of the key attractions driving the strong performance...
Well, the broad-based USD rally on Friday was certainly impressive and caused shockwaves in commodities, with XAUUSD -2.8%, silver -4.8% and crude -3.6%. USD shorts, of which the market had built a sizeable position in, saw a change in the flow and covered.
As I explain below, I am not in the camp that we’re on for a new one-way USD bull market, as this would...
The BoE may have one more hike in them, but its 25bp at best with the market pricing terminal BoE rates at 4.27% by June – let’s see the next UK CPI print on 23 March and that could possibly seal the deal on a pause in the hiking cycle - the language from gov Bailey suggests a higher conviction of this playing out. UK gilts have found big buyers (10yr was -30bp,...
Westy and Blake will be back on their regular day this week and what a week it is!! If you're in need of some guidance during this event risk blockbuster week, be sure to tune in to The Trade Off: the big macro themes, juicy setups and more, every week.
A monster week of event risk awaits, with the FOMC, ECB & BoE announcing policy; a packed slate of big tech earnings; and key data releases galore, including the latest US nonfarm payrolls release.
Plenty for Michael Brown & Ryan Littlestone to discuss an
It has been clear of late that the ECB is one of, if not the most, determined G10 central banks when it comes to raising rates, tightening financial conditions, and attempting to bring inflation back under control. The battle against rampant inflation will continue at the February meeting, with another 50bps hike expected, as well as guidance accompanying the move...
Time – The FOMC statement comes out on 2 Feb at 06:00 AEDT/ 1 Feb 19:30 GMT. Chair Powell’s press conference comes out at 06:30 AEDT / 19:30 GMT
Trading considerations:
Positioning – Investment banks who manage flow across spot FX, swaps, and FX forwards report that clients are net short USDs, notably by real money and leveraged, although the position is not at...
As we look at what is an incredible level of event risk in the week ahead – we can take our vision out slightly further, where the RBA meeting on 7 Feb could be lively. In the lead-up AUD exposures will be impacted by risk and sentiment in markets, where the tone will predominantly be driven by the reaction to the FOMC meeting (2 Feb 06:00 AEDT), as well as...
There's massive event risk coming up next week, so don't miss this special guest episode, where Blake and Westy are joined by TradingView GM Pierce Crosby to talk about all things trading andTradingView's recent 'Best Broker of 2022' award for Pepperstone
A tough day for the equity bears or those positioned short risk – but why we’ve seen such upbeat risk flow is the subject of debate – for me, the idea of not overthinking things is advantageous - always trying to justify a move doesn’t offer much edge when trading – it’s about extracting the most out of a trade (if on the right side of the move), but reacting and...
With the weakness in the USD - where the DXY holds the potential to crack the consolidation lows and EURUSD looks to break the 1.0875 and 1.0750 range - married with the grind lower in US real rates (lower pane) - we’re seeing new cycle highs in gold.
A range break in the DXY would certainly be helpful in the quest to push price to $2000, which is the big...
Welcome to the first Trade Off episode of 2023! A lot to catch up in all the moving markets but luckily, Westy and Blake have you covered! Expect a wide-ranging discussion from big macro themes, to spicy setups and actionable trade ideas. See you there!
As detailed in the BoJ meeting preview yesterday, the market is on edge for significant movement – case in point, USDJPY 1-day implied volatility (vol) currently sits at 49% - for context, this equates to a 279-pip move (higher or lower) on the day (with a 68% level of confidence), where the market feels fairly confident the upside should be contained into...
It’s been many years since Bank of Japan (BoJ) meetings posed significant risks for traders, but this Wednesday’s BoJ meeting holds the potential for significant volatility in USDJPY, as well as the JPY crosses, and JPN225.
The risk manager
The job of the trader is to manage risk, as well as achieving correct position sizing for every trade.
So, when I look at...
Having returned from three weeks of annual leave with a renewed focus, it feels like the transitioning market expectations and positioning from a hard-landing economic scenario to one that is less bad one still has legs, and the positive risk sentiment should hold for now, although we must be prepared to react to changes in sentiment and price. The drivers; EU Nat...
US500 -2.8%, NAS100 -3.3%
GER40 -3.3%, EUStoxx -3.5%
VIX +2.3 vols at 23.45%
DXY +0.8%
AUDUSD -2.4% (the weakest link in G10 FX), GBPUSD -1.9%
XAUUSD -1.6%, XAGUSD -3.5%
The markets saw yesterday’s Fed meeting as hawkish, but there was enough in Powell’s press conference to keep us believing they will move to an even slower pace of hikes and risk was subsequently...
Having seen US core CPI come in at 6% the strong reaction in rates, US Treasuries, gold, and the USD makes sense – somewhat more puzzling, after an initial spike of 3% in the US500, we’ve seen a sizeable reversal in US equity markets and perhaps this shows trepidation to hold exposures over the upcoming FOMC meeting.
Certainly, USD pairs are getting a strong...
Having reached the double top target, we see that Crude is now 15% below from its 50 day MA - in the past 2 years we've been as stretched as 17% below this average before we saw solid mean reversion kick in - we are in oversold territory and that offers an elevated risk of short covering
By way of flow, we now see 67% of open positions in crude are now held long...
