Making Sense

We established a tactical short here as discussed in the morning post  with SL at 1.0945 as the PMIs point to improving prospects for the EZ but Germany and France (two of the largest economies in EZ) weigh on the EZ recovery. Eurozone PMIs painted a mixed picture EZ Mfg PMI 46.6 prior 44.4 German Mfg PMI 45.40 prior 43.70 France Mfg PMI 43.2 prior 42.21 EZ Services PMI 48.40 prior 48.80 German Services PMI 47.60 Prior 49.30 France Services PMI 45.00 prior 45.70 Key Takeaways Recession persists into 2024 though the Jan decline was the smallest since July 2023 The downturn continued to be led by France , where output fell for an eighth successive month and at the sharpest rate since last September thanks to steepening contractions in both manufacturing and services. Output also fell at a steep and accelerating rate in Germany , albeit a moderating downturn in manufacturing helping offset a worsening service sector situation. In contrast, the rest of the eurozone as a whole returned...

Just in, PBOC would cut the CRR by 50 bps from Feb 5 and cut re-lending and re-discount rates interest rates bby 25 bps for the rural sector and small firms from Jan 25.  Overnight, U.S equities continued the trend higher after breaking out of the right-angled triangle. Three targets are in sight for the S&P 500. AB=CD Target of 4908, Right Angled Triangle break out target of 4935 and Trendline resistance close to 5075. If we cross the trendline resistance, then the next meaningful resistance comes in at 5180 which is the 1.27% of the move from 4820 to 3492. The implied market pricing for Fed Fund Rates moved 4 bps lower to 137 bps of cumulative rate cuts and March is now pricing in 12.5 bps of rate cuts. The US2s10s tightened 4.4 bps to 24 bps. Yields High Low Close DoD ▲ US 2Y          4.42          4.37 ...

Risk Sentiment is off to a poor start as Asian Equities are trading in the red to the exception of Japanese Equities. USDCNH is trading higher on PBoC Easing speculation which could come in as early as Monday and TWD is bearing the brunt on account of Election uncertainty. USD Index consolidated overnight closing 0.23% higher on the day ahead of the much anticipated CPI Report. Implied pricing for Fed Fund Rates shows 138 bps of rate cuts into 2024. Major Overnight Headlines An "Unauthorized" Post On X stated “Approval Of Bitcoin Spot ETF ”. Bitcoin prices dropped 1.85% after touching a high of 47897 post the SEC Clarification. Crude Oil prices continued to chop around and rose 1.5% The Atlanta Fed's GDPNow forecast for Q4 GDP was revised down to 2.2% from 2.5% in the previous estimate. World economy is estimated to have grown 2.6% during 2023, down from 3% in 2022 but stronger than the 2.1% growth it projected in June . Global growth, however, is expected to slow to 2.4...

EURUSD is currently trading at 1.0880 steadily climbing for 83 trading days off lows of 0.9534 in Sep 2022 shortly after the peak in natural gas prices and a peak in trade deficit . A steady run of 14.60%.  Look at how Euro Area trade deficit worsened in the aftermath of the Russia - Ukraine war. Do we see an opportunity to sell into the rally yet?  Let's look at two aspects here -  1. What are the interest rates telling you?                Key ECB Rates                Deposit facility     2.00 %                Main refinancing operations 2.50 %                Marginal lending facility   2.75 % Market implied interest rates are pricing in a peak terminal rate of 3.5%. Next 5 policy meeting dates are 02 Feb 23 / 16 Mar 23 / 04 May 23 / 15 Jun 23 and 27 Jul 23 where in t...