Pepperstone logo
Pepperstone logo
  • English
  • 简体中文
  • 繁体中文
  • ไทย
  • Tiếng Việt
  • Español
  • Português
  • لغة عربية
  • Ways to trade

    Pricing

    Trading accounts

    Pro

    Premium clients

    Active Trader Program

    Refer a friend

    Trading hours

    24-hour trading

    Maintenance

  • Trading platforms

    Trading platforms

    TradingView

    MetaTrader 5

    MetaTrader 4

    CopyTrading

    Pepperstone platform

    cTrader

    Trading integrations

    Trading tools

  • Markets

    Markets to trade

    Forex

    Shares

    Indices

    Commodities

    Cryptocurrency

    Currency Indices

    Dividends for Index CFDs

    Dividends for Share CFDs

    CFD Forwards

    ETFs

  • Market analysis

    Market analysis

    Navigating Markets

    The Daily Fix

    Meet the Analysts

  • Learn to trade

    Trading guides

    CFD trading

    Copy trading

    Forex trading

    Commodity trading

    Stock trading

    Cryptocurrency trading

    Bitcoin trading

    Technical analysis

    Day trading

    Scalping trading

    Upcoming IPOs

    Gold trading

    Oil trading

    Webinars

  • Pepperstone Pro

  • Partners

  • About us

  • Help and support

  • English
  • 简体中文
  • 繁体中文
  • ไทย
  • Tiếng Việt
  • Español
  • Português
  • لغة عربية
  • Launch webtrader

  • Ways to trade

  • Trading platforms

  • Markets

  • Market analysis

  • Learn to trade

  • Pepperstone Pro

  • Partners

  • About us

  • Help and support

Analysis

USDJPY
NAS100
Gold

The Daily Fix – It's Showtime

Chris Weston
Chris Weston
Head of Research
Sep 17, 2024
Share
On a day when the Atlanta Fed Q3 GDP Nowcast Model was revised higher to show the US economy tracking at 3% y/y, courtesy of a better-than-expected US retail sales and industrial production report, many viewing this impressive tracking rate may find it hard to reconcile the Fed potentially cutting rates by 50bp.

But here we are, and we stare down with great anticipation at today's Fed meeting - where the tone of the messaging and the level of concern or control that we read in the statement and hear from Jay Powell will be the deciding factor that guides broad market sentiment.

Preview

Portfolio positioning and risk management have been the central focus today, and have been the factors driving moves in equity, US Treasuries, the USD, and gold. Traders and money managers have weighed up the propensity and the possible extent of cross-asset volatility and have massaged exposures according to their risk framework. We saw this play out in US equity, where the buyers initially stepped in on the open before a punchy 1441-stock sell program (seen in the NYSE TICK index) hit the market 3 hours into trade – with the selling pushing both the NAS100 and S&P500 into the red before the respective indices flatlined in a tight range into the close.

The result was a largely unchanged close in the US equity indices, with the internals finely balanced, with 54% of S&P500 companies closing higher on the day. Energy, consumer discretionary and industrials outperformed, while healthcare, staples and REITs lost ground.

The better-than-expected US data and the Atlanta GDP Nowcast revision promoted selling and repositioning in US 2yr Treasuries with yields closing +5bp to 3.59%, resulting in the Treasury curve undergoing modest bear flattening. Near-term Fed cut expectations didn’t change and remain perfectly split on a 25bp vs 50bp outcome, with 39bp of cuts priced for today’s meeting, although we’ve seen around 7bp of cuts come out of the forward meeting pricing.

Fixed income traders remain heavily long of US Treasuries, and while that position has been reviewed, it feels a tall order to think we’ll see a sustained move higher in yields, as this would require significant repricing in expected rate cuts over the next two years.

With the market short of USDs, the rise in US bond yields triggered modest USD buying vs the GBP, EUR, and CHF, although USD repositioning has been most pronounced in USDJPY, with the spot rate trading above 142.

Asia has its chance to react to the rally in USDJPY, so we’ll see if further squaring can lift the pair towards 143 – it certainly seems prudent to reduce size positions and run very modest USD risk into the FOMC meeting - as the potential outcomes for USD risk are truly dispersed and if you ask 10 people how they see the FOMC meeting going down, you’ll likely get 10 different answers. We also see USDJPY closing above the 5-day EMA, which has defined the recent run lower from 2 September, so the downside momentum has clearly shifted.

The UK CPI report (16:00 AEST) due in the session ahead will obviously be a secondary consideration to the Fed meeting, but it could have some bearing on price action in GBP, so it’s still a minor consideration for our risk assessment. It would also require a significant deviation from consensus expectations to really move the dial though, and with core CPI expected to rise 30bp to 3.6% y/y, any rise in core inflation should only solidify pricing for the BoE to be on hold at this week’s meeting.

In commodity markets, we’ve seen a further push higher in crude, while some of the heat has come out of the recent gold move, with the yellow metal closing -0.5%. Gold is at ATHs for a reason though and I see the strong probability that pullbacks will be well supported, and on the day, should the US 2yr yield and the USD initially spike, I would be seeing how gold reacts (should it get there) into the former range highs and breakout level of $2525. Conversely, if the market hears something that truly inspires new money to be put to work in gold longs, and this may ironically require equity to also rally, then an upside break of $2589 is there for chasing.

Preview

Turning to Asia and our opening calls suggest the NKY225 will respond favourably to the JPY move and outperform. After hitting a new ATH yesterday (8150.5) the ASX200 looks to open on the back foot, and with the Fed meeting holding the potential to significantly volatility, there are clearly enough reasons for would-be buyers to sit on their hands, and while shorts may look to cover, the prospect of a day where we see a grind lower through trade on lighter volumes seems highly plausible.

Good luck to all,

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.

Other sites

  • The Trade Off
  • Partners
  • Group
  • Careers

Ways to trade

  • Pricing
  • Trading accounts
  • Pro
  • Active Trader program
  • Refer a friend
  • Trading hours

Platforms

  • Trading Platforms
  • Trading tools

Markets & Symbols

  • Forex
  • Shares
  • ETFs
  • Indices
  • Commodities
  • Currency indices
  • Cryptocurrencies
  • CFD Forwards

Analysis

  • Navigating Markets
  • The Daily Fix
  • Meet the analysts

Learn to Trade

  • Trading guides
  • Videos
  • Webinars
Pepperstone logo
support@pepperstone.com
1786 628 1209
#1 Pineapple House,
Old Fort Bay, Nassau,
New Providence, The Bahamas
  • Legal documents
  • Privacy policy
  • Website terms and conditions
  • Cookie policy
  • Sitemap

© 2025 Pepperstone Markets Limited | Company registration number 177174 B | SIA-F217

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

81% of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

You don't own or have rights in the underlying assets. Past performance is no indication of future performance and tax laws are subject to change. The information on this website is general in nature and doesn't take into account your or your client's personal objectives, financial circumstances, or needs. Please read our RDN and other legal documents and ensure you fully understand the risks before you make any trading decisions. We encourage you to seek independent advice.

Pepperstone Markets Limited is located at

#1 Pineapple House, Old Fort Bay, Nassau, New Providence, The Bahamas

and is licensed and regulated by The Securities Commission of The Bahamas,( SIA-F217).

The information on this site and the products and services offered are not intended for distribution to any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.