- English
The weaker non-farm payrolls print pushed back expectations of this announcement to December, but has this materially stronger CPI print – the hottest on the core measure (+0.9% mom) since 1981 – brought Fed normalisation back into play?
I'm not so sure, but more importantly the fear in the market is with the Fed focused predominantly on the labour market and inflation kicking up, the risk of policy error has risen. Fed vice-chair Clarida emphasising the ‘transitory’ nature of this US inflation print may have just accelerated these concerns. Marry this with the exuberance and froth that’s discounted, and a market that's been forced to de-risk as options positioning has dictated, and you’ve seen volatility rise up across all markets. It was a genuine risk-off affair, with funds de-risk and de-grossing in equities spilling over into risk FX with the AUD and NZD getting a working over.
AUDCAD looks a compelling ‘sell into strength’ candidate given the current structure and I would be eyeing 0.9420 as an area of interest.
(Source: Tradingview)
Gold was certainly interesting, with huge client flow seen. However, for those who own the yellow metal as a hedge against inflation would have been disappointed to see the downside move into 1813. Maybe that day will come, but for now, the headwind has been rising bond yields and a stronger USD. Gold remains the anti-bond and I would personally own if I thought there's going to be a disinflationary shock – the opposite of what the textbooks say.
We’re seeing the vol continue in early Asia, notably in Crypto, with Musk saying he won’t accept BTC for Tesla on the environmental angle. We’ve seen Bitcoin trade into 51,428 – it seems after Musk’s comments through SNL that Crypto is losing one of its talismans. I continue to prefer the short BTCETH pairs trade and the trend, while clearly mature, is a thing of beauty. An interesting platform then, it seems, for us to roll out a number of new coins – here’s the suit currently set up to trade as a CFD.
(Source: Tradingview)
Tesla is interesting and in some capacity distancing the brand from Bitcoin could win some ESG love – either way, its lost the momo crowd which is key for a name like Tesla and this may be one of the most talked up trend breaks in years.
(Source: Tradingview)
Related articles
Ready to trade?
It's quick and easy to get started. Apply in minutes with our simple application process.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.