Inflation, naturally, remains the topic at the forefront of the minds of both market participants and policymakers alike. As price pressures continue to fade, and the majority of developed economies enter the ‘last mile’ of prices returning to target, whether the immaculate disinflation seen to date can continue, or whether the inflationary beast may yet still...
The greenback’s recent rally shows few signs of slowing soon, with the USD printing new YTD highs against a basket of peers, fuelled by a continued hawkish reassessment of Fed policy expectations, and a handful of chunky upside economic surprises. All in all, the ‘path of least resistance’ seems likely to continue to lead higher for the buck over the short- and...
Much focus remains on the Chinese equity space, with major indices having recently printed multi-year lows, as stocks have continued to slump amid ongoing disappointment over the lack of significant fiscal stimulus to attempt to breathe some life into the ailing economy. Many, however, are now wondering whether a catalyst may have emerged to reverse the market’s...
With US 10-year real rates pushing higher into 1.90% and rate cut expectations being priced out of the US interest rate and swap curve, and with the USD breaking out, gold longs should be enthused by the yellow metals inability to roll over and head into $2000. The ability to absorb several traditional negative catalysts suggests there are big counterweights in...
As US economic data continues to come in above expectations and Fed chatter pushes back on imminent rate hikes, we see the yield premium that US Treasury’s hold over German debt blowing out. For example, the yield premium to hold US2yr Treasuries over 2yr German bonds has pushed to 185bp (or 1.85%), having been at 154bp in mid-Jan. This is putting a bid into the...
The downside break of the 1.2800 to 1.2600 range the pair has held since 14 Dec has been well traded by clients. Looking at the current skew in open interest, traders see a higher risk of a move back to the breakout point, with 71% of open positions currently held long. I see the risk of modest short covering through late Asia but would take the timeframe in and...
A quieter period likely awaits financial markets over the coming week, as the dust settles on last week’s plethora of event risk, and with the January US CPI report on 13th February standing out as the next major highlight. In such an environment, this provides a good opportunity to take stock of where the ‘path of least resistance’ for major assets likely...
We move past an important week for markets, one where a one-two punch from Jay Powell’s FOMC presser and a very strong nonfarm payrolls report have essentially closed the door on a March rate cut. With US economic exceptionalism coming back into the narrative, we see this play out in the bond market with the US 2-year Treasury pushing back to the top of the range...
Time: Tuesday at 14:30 AEDT
With the Fed, ECB and BoE now having offered their guidance on policy and all largely pushing back on the pricing of imminent cuts, it’s the RBA who steps up as a risk event for traders on Tuesday.
Like the aforementioned central banks, the timing and the extent of RBA rate cuts are the subject of much debate among local market...
As the dust continues to settle on the FOMC’s first policy decision of the year, and calmer heads prevail after the market choppiness of Wednesday as Chair Powell was speaking, the Committee’s actions, and Powell’s press conference, appear increasingly intriguing and, to give credit where it’s due, clever.
Firstly, as markets had expected, the dovish pivot that...
Westy and Blake are back with The Trade Off! There is a LOT going on this week, and as always, they're talking macro themes (FOMC, FX, NAS & NFP), juicy setups (USDJPY, AAPL, DXY & USDMXN) and trade ideas (AUDJPY & NZDUSD)
As expected, and fully priced, the FOMC left the target range for the fed funds rate unchanged at 5.25% - 5.50% at the conclusion of the first policy meeting of the year. However, the Committee did offer up fresh policy guidance, dropping the explicit tightening bias, though noting that more ‘confidence’ on the sustainable return of inflation to target is needed...
This webinar covers Zone Identification for entry/exit, Order Flow Analysis for quick decisions, and Price Action Confirmation to boost accuracy in volatile markets.
Aus Q4 CPI came in at 4.1% yoy, with the trimmed mean measure at 4.2% yoy – both were nicely below the economist's median forecast, and importantly below the RBA’s own forecasts of 4.5% for both metrics.
We also saw the more timely monthly (December) CPI print coming in at 3.4%; a 90bp improvement – and just 40bp away from the 2-3% target band.
Next week’s...
A jam-packed week for financial markets concludes with the first US labour market report of the year, with expectations for there to have been a modest cooling in the pace of job creation as 2024 got underway, adding further to the body of evidence pointing towards the economy achieving a ‘soft landing’, and unlocking the possibility of Fed cuts as the year...
While the AUS200 revisits the all-time highs set in Aug 2021, the index absorbs a positive mix of sentiment towards global risk, as well as local factors, and many question if this time around we see the illustrious bullish break the bulls are positioned for. While global macro issues remain paramount, one catalyst to look towards is ASX200 1H24 earnings, with...
After a rally into 1.7935, the structure in the flow and the set-up has changed, and the sellers are starting to dominate. We’ve seen a daily close through the rising uptrend (drawn from the Jan lows), with a strong rejection of the 200-day MA.
Fundamentally we’ve heard a more hawkish assessment today from the RBNZ chief economist Paul Conway that “non-tradeable...
