Gold and Crypto shaping up for a more explosive move
I've put together a trading wrap video, with a focus on the day ahead, set-ups and ideas on the radar – I also add in a focus on the week ahead, so do take a look.
There’s been plenty of news from traders to navigate, with the BoE meeting causing ripples in FX markets and GBP getting smacked 70-pips on the statement. GBP has held Wednesday’s low of 1.3924 and the move lower reflective of a market that was long the pound into the meeting on a belief of a more confident central bank – so purely a position adjustment and for dip buyers, GBPJPY and GBPCHF are my play and certainly GBPJPY has scope here for 155.
US data was largely a sideshow, while a Biden and Pelosi bipartisan agreement on infrastructure was under in terms of size and may only really come to fruition if we see a Reconciliation Bill passed via the Senate – not enough to move the dial on the US bond market and subsequently FX markets – ex-GBP and MXN - have been quiet.
We’ve seen new highs seen in the S&P 500 and NAS100, with Tesla storming into $700 and as long as bond yields stay subdued, and economic data comes in as we’re seeing, then we should see equities continue to print higher highs – I stay bullish for now and note falling equity implied volatility, with the VIX into 14.2% at one stage which will just encourage more volatility-targeting funds into the market. Small caps are working well too, with the US2000 having the outperformance and with the US30 working well. Financials also caught a bid, with the S&P 500 financial sector +1.2% and 36bp hotter than the next best space (Energy), possibly helped by the Federal Reserve giving flying colours to the 23 banks they stressed tested – not to mention a view that this space is going to see some clear growth in share buy-back potential over the coming 12 months.
Our opening calls for Asian equity markets look constructive.
Gold has been well traded but needs to find a spark and maybe that comes in the coming 24 hours with US Core PCE and a raft of Fed speakers in the mix. Also, consider next week we get ADP payrolls, ISM manufacturing and non-farms, but the Gold price is consolidating and finding sellers too readily into 1795, while the bid is there into 1770 – I'm using these levels as a guide and when one gives way then it will shape the bias. I favour the downside, but price will guide as always. Crude, as suggested in the video yesterday is finding supply into $74 and looks destined to chop in a sideways move for the next 12 hours or so.
Crypto continues to find broad-based support and our client base is skewed long of the various coins – I focus on the space in the video, but I specifically want to see if 34400 can hold in Bitcoin and if it can and the buyer’s step in so would I. Link is also on the radar. A bit more work needs to play out, but if the downtrend gives way this could have an explosive move higher.
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