Lots of chatter in the market about the US yield curve headed ever closer towards inversion – clearly, much of this move has been driven by short-term rates which have seen 2yr Treasuries push to 1.19% (the highest since Feb 2020), with fed funds futures pricing close to 5 hikes through 2022.
I have shown the US 2s v 10s spread, but US 5s v 30s is certainly...
XAUUSD is testing the August 2020 downtrend and requires a close above 1850 to get the bulls excited – if gold is going to have a more explosive upside move it requires far greater involvement from CTAs (systematic trend-following funds) and FOMO buyers.
The near-term flow has been bullish, but the long-term downtrend could be an area of greater supply – a...
Rates and bond markets continue to dictate sentiment and selling across the bond curve has pushed yields to new highs (in this run) – in turn, the cost of capital rises and the present value of expected equity cash flow falls. The change in equity risk premium (ERP) offers equity markets a lower cushion which matters when valuation is still highly elevated –...
CADJPY is breaking out of its 91.75 double top and eyeing a move into the 138.2% fibo extension of the December rally at 93.30. Momentum traders should have this front and centre on the radar.
Momentum studies (ROC, RSI) highlight the strength of the move suggesting if price can print a daily close above the breakout point, then the risk of a move into 93.30...
Time for some mean reversion in GBPNZD after a very strong run into and above the 2-handle - we now see price closing outside of the Keltner bands, with various oscillators at extremes - the elastic band is primed with price finding supply into the July/Aug double top - a break of Friday's lows and we should see a move back into 1.9920/00, potentially 1.9800....
As we approach a world where the Fed look set to hike in March, with 3.4 hikes priced by Dec 2022- we are also now hearing an open discussion around allowing maturing securities on its $8.8t balance sheet to run off (QT) -so, it's worth going back to the Dec FOMC minutes for real insight.
With the market having had time to pour over the wording, it feels clear...
In an environment where companies like Nvidia and Microsoft are doing everything right, Alibaba (BABA) seems to be headed in the opposite direction. Granted, the investment cases are vastly different, but when you’re hot you’re hot and when you’re not the negative news is heard far more frequently.
When trading it often pays to follow the flow of capital, and...
With many debating if the Fed (and other central banks) are behind the curve, precious metals are finding good flow and hedging activity. As we know, in a truly bullish environment for gold, silver, platinum and palladium, if the market sees the Fed as dangerously behind the curve, and not taking notice of the ever deeper negative real rates, the hedge is precious...
Gold (XAU) has been one of the most unloved instruments in the markets through 2021.
in a world where Commodities and Crypto have been on a tear and US equity indices are bull trending, XAU has been shunned – is it now time to add some exposure as Gold potentially plays catch up to almost every other asset class?
Certainly, the signs are starting to look...
GBPJPY is shaping up rather nicely - we see price breaking the May downtrend and pushing resistance into 152.19 - its not on the chart, but price has also broken out of the i-cloud and we're now eyeing the 100-day MA and 14 Sept spike...its' hard to chase here, but this has the feel that it can work into 153.30 over a week or so..one for the patient, as weekly...
We’ve been waiting for a break of the -1.0% to -1.1% range in US TIPS, and one suspects when we do see a break it will marry with a corresponding move in XAUUSD too – as it stands, the weekly (options) straddle breakeven range sits at 1827 to 1780 – with the market putting a 68.2% probability price is contained in this range over the coming week - you can also see...
In these moribund markets you have to move further out on the risk curve and look at more exotic currency pairs for vol and sizeable pip moves - my former place of birth's currency, the rand, doesn't disappoint in this regard. For example, the 14 period ATR currently reads just above 2000 pips. Price has retraced its risk-off losses from 2 weeks prior. There are a...
The FTSE is looking primed for a potential breakout. We have a flat sided ascending triangle which tends to resolve to the upside. The 7200 resistance will be tough to overcome as it was strong former support back throughout 2019. Recently price has been rangebound between 7k and 7.2k, seeking a new catalyst for a sustained move. The RSI has plenty of room to run...
The NASDAQ100, given its composition has a high beta to movements in yields. Hence, what J Powell decides tomorrow could cause some volatility for the high growth tech heavy index. My guess is Powell avoids rocking the boat and the NASDAQ100 drifts along or moves slightly higher.
Price is close to its upper trend line of the ascending channel in place since...
Is this another dip to be bought or the beginning of a deeper correction?
Price bounced off its 21-day EMA to finish above the 200-day SMA. The $49.2k resistance (former range support) is providing some stickiness for bulls to take price higher. The RSI has moved out of overbought territory and approaching the 55 level of support which ensure price dips were...
We have upside trend resistance drawn from the April highs, while the upper Bollinger Band (not shown) has also been a good guide on daily upside limits. This should limit the movement in the near term and increases the prospect of a grind than an explosive move up, although Jackson Hole has the potential to change sentiment where I suspect the risks are skewed to...
The pound tends to come under pressure when the risk environment turns sour. Given its sensitivity to risk, I’m not surprised by the move higher we saw in EURGBP. Also, UK data was a bit softer last week too. PMI data out yesterday was poor for both the eurozone and UK, however, manufacturing in the UK did beat expectations. Also, some are saying sterling saw...
AUDNZD is looking like a good range trade between the bounds of 1.05 and 1.04. The 1.05 area is also where the 21-day EMA is sitting providing further resistance to price rallies. Negative divergence has appeared on the RSI which would have stemmed selling pressure around 1.04. The head and shoulders pattern predicts a move to 1.0250. To get here we’d have to take...
