Five charts that are front of mind for traders’
AUDUSD – a confusing reaction to a hike
We had seen in interest rate futures pricing that the market had already gone some way to pricing a 25bp hike, and one suspects the leveraged community (hedge funds) had amassed a decent AUD long position. We can also see broad USD strength on the day, but the move we’ve seen from 0.6489 to 0.6404 has caught a few by surprise. The guidance in the statement was a trigger, with the wording tweaked from “some further tightening” will be needed to “whether further tightening” will be required. While there were other changes, the market took this one change as a dovish outlook. Aussie govt 3-year bond yields fell 9bp in response and looking at interest rate futures the market still sees more hikes in the future, but they have just pushed the timing back to a March/May window. Technically, the impetus to rally to 0.6600 has been lost and I expect some chop to play out now. It will take a day or two, but the market will forget this RBA meeting and the pair will revert to being a risk proxy and following S&P500 futures and HK50.
Crude – goodbye $100 crude, it wasn’t you, it was me
It's been an ugly session for the crude market, with our cash crude price down over 4% and the futures curve aggressively flattening out. Prior calls for $100 seem to be slipping away as the price breaks the 200-day MA and the August swing low. Middle East supply disruption premium has been fully priced out, and traders have focused on Russian crude exports pushing to four-month highs. China trade data – notably on the exports side - and Fed speakers have been touted as possible reasons for the sell-off. Some are talking to seasonal factors, where refineries typically buy less crude at this time of year. CTAs would likely have flipped to a sell signal, so we seeing some systematic flow playing out. It feels like there is a buyer strike underway.
NAS100 – the chase is heating up
We see the NAS100 up for 8 straight days, with price breaking the July downtrend and testing the 12 Oct swing high – a record closing high for Microsoft clearly helping. Naturally, we don’t see the NAS100 up for 8 days in a row too frequently, and since 2010 we’ve seen this run of form 32 times. It can be quite compelling to short a market having had such a stretch, but running the backtest I find if I bought the NAS100 on the 8th up day, 53% of the time I would rally for a 9th – in fact, five days later the index would be higher 65% of the time. Granted, in many of those years the US equity markets were in a bull market and pullbacks were buying opportunities, but it still suggests momentum favours the brave. Let’s not forget the NAS100 futures haven’t closed lower in the month of November since 2011 – although a 6.4% rally MTD is punchy.
EURNOK – nok-ing on YTD highs
Unsurprisingly, given the bearish trend in Brent crude, we see the NOK as the weakest currency and we’re seeing some solid momentum moves in the cross rates. NOKSEK is trending beautifully, and while oversold, rallies will likely continue to be sold in earnest. GBPNOK has broken convincingly through 13.7000, while EURNOK has smashed through 11.9000 and eyes YTD highs of 12.0680. For those who like momentum and buying swings in a trend, the NOK crosses are worth putting on the radar – until the trend in Brent turns around, the NOK is the weakest link.
BTCUSD – crypto fires up
We’ve seen some strong moves in crypto, notably in SOL and Tezos (XTZUSD) with some solid trends developing across our full crypto offering. BTCUSD and ETHUSD get the lion’s share of attention, where we see BTCUSD consolidating after a move from 26,500 into 35,500 – we’re on alert for a breakout, where I see the odds skewed for a fresh run higher on a close above the 24 Oct highs.
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