Some interesting price feedback from FX here aside the equity rally has continued. Although the US$ is continuing to make good strength vs sterling and the euro she has scored failure patterns vs several currencies inc the AUD and SGD, CAD and others. This could be a meaningful indicator that the US$’s strength could take a breather very soon and commodities are likely to be the net beneficiaries. This would feed into the sell the rumor buy the new euro weakness scenario. ECB news next week. (GS’s target point on the pair from 1.045 to 1.055).
The long end of the yield curve, especially internationally, have moved 15 basis points in the last week, downward yields, upward price. Should it continue it would be highly supportive of am equity Reit/defensive price rebound.
Without more delay here the swiss team, note they are on holiday next week.
Next up GS with their usual weekly tech entry/exit report on the major asset classes:
And here GS on mm q4 view:
And here Yardeni tech:
I have more reports to add but hopefully as an update later today folks.
All the best
Rich
As an update..
Here MS from last friday with their FX report:
We are very close to the take profit area Eurusd which would confirm the relative strength of a basket of other currencies that are showing relative strength vs the USD index. The GBP should also bounce off around these levels so i would also take profits at these sort of levels to return to the trade short gbp and euro at higher levels. Worth repeating that the Euro has (post OMT) become a global funding currency. Therefore her dynamics have shifted. She is an off risk allocation with an inverse to risk. Speculators are borrowing euros to fund global longs. In terms of the near term the ECB OMT + trade is probably 80% priced into this market as so well flagged. The risk is therefore set up for a sell the news type disappointment from Draghi. The disappointment could be the timing of OMT+ or the asset class extension categories.
Also worth mentioning the GS long on the SGD vs the USD which if you bought at the resistance and went long yielding defensive Sgd assets it should provide for a great swing trade with currency and asset appreciation upside as the long end of their yield curve adjusts from oversold levels. I’m in this allocation.
Account wise its been a draw down 6 weeks or so. I’m on catch up for the end of year numbers now.
Here finally some more useful yardeni reports:
yardeni-globalequity-25-11yardeni–metrics
And a GS FI report here:
The FED appears backed into a corner here. The market is fully pricing the Dec meeting rate rise of 25 basis points. Any back track will likely provide a a risk off event and a reversal of the US$ longs, at least momentarily. IMO its far from a done deal for a 25 basis point rise. More likely a baby step 12.5 basis points or zippo. (Carney this week saying a rate cut is more appropriate for the UK at present). Of course this all plays into the greatly speculator unloved yellow metal allocation. Note, something Bloomberg and CNBC seem not willing to report on, China’s 2015 gold physical purchases are likely higher than their 2013 peak purchases. 2015 has provided record gold physical purchases by the EM world. The secular gold bull market appears alive and well judging the physical numbers.
Here Commerze
Onwards
All the best
Rich