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  • Market Overview
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  • Forex
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    Dollar slumps on Powell’s comments; Yen benefits the most By Investing.com

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  • Market Overview
    Most Adani shares continue losses; founder loses $28 billion in month

    Most Adani shares continue losses; founder loses $28 billion in month

    Russia-Ukraine war updates for Nov.30, 2022

    Russia-Ukraine war updates for Nov.30, 2022

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    Young disgruntled workers are flocking to Reddit. Here’s why

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    U.S. appeals court rejects Biden’s bid to reinstate student debt plan

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    Trenches, endless mud and death: the Battle of Bakhmut

    Stock futures tick higher after Wednesday’s rally

    Stock futures tick higher after Wednesday’s rally

    MARKET LIVE: Sensex off 300pts from high, Nifty holds 18,800; ICICI slips

    MARKET LIVE: Sensex off 300pts from high, Nifty holds 18,800; ICICI slips

  • Stock Markets
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    Ryanair sees “robust” travel demand over Easter, summer holidays By Investing.com

    Marriott International: Cozy Fundamentals With A Costly Stock (NASDAQ:MAR)

    Marriott International: Cozy Fundamentals With A Costly Stock (NASDAQ:MAR)

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    Coppock Curve: Who Says ‘You Can’t Time The Market’?

    Rondure Global Advisors Q3 2022 Commentary

    Rondure Global Advisors Q3 2022 Commentary

    Adobe Stock: Buy The Dip In This Excellent Compounder (NASDAQ:ADBE)

    Adobe Stock: Buy The Dip In This Excellent Compounder (NASDAQ:ADBE)

    Macro Headwinds To Keep Pressure On Copper Prices

    Macro Headwinds To Keep Pressure On Copper Prices

    U.S. CFTC chair to be questioned over FTX collapse by lawmakers By Reuters

    Meta executive says holiday sales were earlier and bigger this year By Reuters

    Investors with $30 trln to push companies on human rights, social issues By Reuters

    Investors with $30 trln to push companies on human rights, social issues By Reuters

    Exclusive-U.S. Chamber of Commerce warns against draft EU plan to exclude non-EU cloud vendors By Reuters

    Exclusive-U.S. Chamber of Commerce warns against draft EU plan to exclude non-EU cloud vendors By Reuters

  • Analysis Forex
    Pension Investments in Private Credit Hit Eight-Year High

    Pension Investments in Private Credit Hit Eight-Year High

    Most Viewed Business News Articles, Top News Articles

    Most Viewed Business News Articles, Top News Articles

    stock recommendations: Hot Stocks: Gland Pharma, Mirza International and Agro Tech Foods could give 19-30% return

    stock recommendations: Hot Stocks: Gland Pharma, Mirza International and Agro Tech Foods could give 19-30% return

    tata play ipo: Tata Play becomes first firm to file confidential papers with Sebi for IPO

    tata play ipo: Tata Play becomes first firm to file confidential papers with Sebi for IPO

    Fundamental Radar: 6 reasons why TCI Express could rally 20% in next 12 months

    Fundamental Radar: 6 reasons why TCI Express could rally 20% in next 12 months

    Inequality in Society Drives Stock-Market Performance

    Inequality in Society Drives Stock-Market Performance

    Being a Cheap Date Is Suddenly a Major Plus

    Being a Cheap Date Is Suddenly a Major Plus

    Car Makers Face Bumpier Road in China

    Car Makers Face Bumpier Road in China

    Meet Kevin, the ETF – WSJ

    Meet Kevin, the ETF – WSJ

  • Economy
    Goldilocks and the three bears By Reuters

    Goldilocks and the three bears By Reuters

    U.S. Inflation Reduction Act ‘super aggressive,’ Macron tells lawmakers By Reuters

    U.S. Inflation Reduction Act ‘super aggressive,’ Macron tells lawmakers By Reuters

    Indonesia November inflation cools further but stays above target By Reuters

    U.S. appeals court rejects Biden’s bid to revive student debt plan By Reuters

    Thai central bank raises key interest rate by 25 bps to 1.25% By Reuters

    IMF strategy chief heads to China, to focus on speeding up debt treatments By Reuters

    Asian FX bulls loom on signs of slowing Fed rate hikes, China reopening: Reuters poll By Reuters

    European shares jump on Powell’s speech, China relief By Reuters

    Thai central bank raises key interest rate by 25 bps to 1.25% By Reuters

    Philippines central bank ready to adjust policy settings amid resilient economy By Reuters

    China factory, services activities slide to 7-month lows on COVID curbs By Reuters

    Zambia on track for debt restructuring next quarter -finance minister By Reuters

    Dollar slips from one-week high on China hopes as Powell speech looms By Reuters

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  • Cryptocurrency
    Secret Network validator shuts down nodes after leadership turmoil By Cointelegraph

    Secret Network validator shuts down nodes after leadership turmoil By Cointelegraph

    Digital identity platform integrates with zkSync for on-chain KYC By Cointelegraph

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    Legal professionals astonished as SBF admits failures, apologizes 12 times in interview

    Legal professionals astonished as SBF admits failures, apologizes 12 times in interview

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    Meta ‘powering through’ with Metaverse plans despite doubts — Zuckerberg

    Sam Bankman-Fried confronted over the fall of FTX in live interview By Cointelegraph

    Sam Bankman-Fried confronted over the fall of FTX in live interview By Cointelegraph

    EmpiresX ‘head trader’ to face 4 years of prison over $100M crypto ‘Ponzi’ By Cointelegraph

    EmpiresX ‘head trader’ to face 4 years of prison over $100M crypto ‘Ponzi’ By Cointelegraph

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    Porsche 911 NFTs, BMW files Web3 trademarks, Baby Shark’s NFT game and more… By Cointelegraph

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    U.S. CFTC chair to be questioned over FTX collapse by lawmakers By Reuters

  • Forex
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    Chinese yuan leads Asia FX higher in anticipation of Fed meeting By Investing.com

    Dollar slumps on Powell’s comments; Yen benefits the most By Investing.com

    Dollar slumps on Powell’s comments; Yen benefits the most By Investing.com

    S&P 500 Breaks Tight Range and Overtakes 200-Day Moving Average, Inflation and NFPs Ahead

    S&P 500 Breaks Tight Range and Overtakes 200-Day Moving Average, Inflation and NFPs Ahead

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    Japanese Yen Leaps as US Dollar Sinks Post Powell. Is the Peak in Place for USD/JPY?

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    Aussie Feeds Off Risk-On Sentiment Fueled by China and Fed

    Dollar slips lower; Powell speech, GDP data due By Investing.com

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    EUR/USD ignores positive inflation surprise ahead of busy U.S. schedule By Investing.com

    EUR/USD ignores positive inflation surprise ahead of busy U.S. schedule By Investing.com

    Swiss inflation steady at 3.0% in November as expected By Reuters

    Euro sags against sterling after euro zone inflation cools By Reuters

    Asia FX rallies, dollar sinks as Powell touts tepid rate hikes By Investing.com

    Asia FX rallies, dollar sinks as Powell touts tepid rate hikes By Investing.com

  • Commodities
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    Coterra Energy to pay $16.29 million for Pennsylvania water contamination plea By Reuters

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    Exclusive: China to allow home quarantine for some infected with COVID

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    OPEC oil output drops in November after cut pledged -survey By Reuters

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    Europe wary of Turkish hub to hide gas ‘made in Moscow’ By Reuters

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  • Bonds
  • More
    • Analysis Cryptocurrency
    • Economic Indicators
      Spain’s 12-month inflation rate inched up to 5.8% in January By Reuters

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      Investors need a different playbook for 2023

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      Thai central bank raises key interest rate by 25 bps to 1.25% By Reuters

      India’s jobless rate rises to three-month high of 8% in Nov

      Asian FX bulls loom on signs of slowing Fed rate hikes, China reopening: Reuters poll By Reuters

      India Nov factory activity hits 3-month high as inflation cools By Reuters

      Dollar slips from one-week high on China hopes as Powell speech looms By Reuters

      German retail sales fall in October as inflation takes hold By Reuters

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Home Forex

S&P 500 Breaks Tight Range and Overtakes 200-Day Moving Average, Inflation and NFPs Ahead

December 1, 2022
in Forex
S&P 500 Breaks Tight Range and Overtakes 200-Day Moving Average, Inflation and NFPs Ahead
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S&P 500, Dollar, Fed Forecast, Inflation and NFPs Talking Points:

  • The Market Perspective: USDJPY Bearish Below 137; EURUSD Bullish Above 1.0000; Gold Bearish Below 1,750
  • Fed Chairman Jerome Powell confirmed that the Fed is likely to downshift its tempo of rate hikes going forward, which should not have been a surprise, but it was an equity catalyst
  • While the S&P 500 jumped its tight range and 200-day SMA, the Dollar was noticeably more reserved in its retreat – the PCE deflator ahead could materially change that backdrop

Discover what kind of forex trader you are

It has finally happened: the narrow range on benchmark risk assets was finally cleared in the afternoon hours of this past US trading session. The technical milestone was as unmistakable as the fundamental catalyst that sparked the move. At 18:30 GMT, the US indices started a charge higher on comments from Fed Chairman Jerome Powell that support something that has been insinuated in different venues (economist observations, trader speculation and even other Fed officials’ remarks) that a moderation in the pace of rate hikes was close at hand. While this has been the leading expectation for the FOMC’s course moving forward for some weeks, the market nevertheless decided to interpret the echo as a rally call for the bulls. Not only did the S&P 500 managed to clear the 3.2 percent range it had trekked out the past 12 trading days, but it would go on to clear the 200-day moving average (first time since April 7th) and ultimately post its second largest daily rally (3.1 percent) since May of 2020. There are further technical barriers overhead, but the fundamental charge behind this move should draw serious scrutiny for those looking for the kind of conviction that would restore us to a long-term bull market.

Chart of the S&P 500 with 200-Day SMAs, 13-Day Range and 1-Day ROC (Daily)

image1.png

Chart Created on Tradingview Platform

What exactly was it that charge US indices to rally – and the Dow Jones Industrial Average to overtake the 20 percent advance from its September low milestone, marking a technical ‘bull market’? There was both a prepared statement and separate remarks offered by Chairman Powell. The comment that seemed to capture the market’s interest was that the time to slow the pace of rate hikes was soon at hand and could begin as early as December. While that same view was insinuated by a number of Fed officials in previous days and weeks – some saying it explicitly – the market was motivated by the affirmation. In practical terms, the probability that the central bank hikes 50 basis points at the meeting on December 14th ended the day at 76 percent according to Fed Funds futures….exactly the same level it was a week ago. Another restatement made by Powell during his prepared remarks was that the path of rate hikes would be higher than was projected in the September Summary of Economic Projections and they would need to be kept at ‘restrictive’ levels for ‘some time’. So rate forecasts are still seen as remarkably restrictive and the threat of recession still hangs prominently in the background, but appetites seemed to dictate the priority of the insights.

Chart of the US 10-Year to 2-Year Yield Spread Overlaid with the Implied Jun 2023 Fed Rate (Daily)

image2.png

Chart Created on Tradingview Platform

Markets have been extremely constricted over the past few weeks, that breakout pressure was set very high. Resolution from such narrow trading bands can come in two forms: a break of ‘necessity’ whereby it resolves without a distinct fundamental motivation or one of ‘conviction’. There was certainly a distinct even around for the traction, but the implications of the update don’t exactly reflect the enthusiasm measured in the market. A sanity check to this fundamental dubiety can be assessed in the performance of the US Dollar. While the DXY Index did slip on the day, it wouldn’t break its own range and 200-day SMA support as a mirror to the US index. To gauge how unusual that is, we look at the correlation between the two benchmarks below. I overlaid an inverted S&P 500 to give a visual comparison; but it is the 20-day rolling correlation that really signals how significant the deviation. Over the past month, the relationship between USD and SPX has been -0.96. A -1.0 reading would indicate they moved in a perfect mirror of each other.

Recommended by John Kicklighter

How to Trade USD/JPY

Chart of the DXY Dollar Index Overlaid with Inverted S&P 500 with 20-Day Correlation (Daily)

image3.png

Chart Created on Tradingview Platform

While I have concerns over the fundamental backing to the capital market’s relief rally, it is still possible to keep the expansion of volatility pointed in favor of the bulls. One of the most influential catalysts to extend the suspension of disbelief is Thursday’s top economic listing: the US PCE deflator. As innocuous as this indicator’s name may be, it is the Federal Reserve’s favorite inflation indicator. We saw what happened after the US CPI came in softer than was expected back on November 10th: the Dollar broke its bull trend and the S&P 500 posted an incredible 5.5 percent rally. Despite the central bank’s preference, the market hasn’t really treated this series with the same level of respect through repricing. Yet, if the data point reinforces the bullish sentiment from the less hawkish forecast; it may see its status elevated owing to the convenience. Further, if the PCE is ‘favorable’ it could warp the response scenarios of the NFPs to be interpreted positively despite the outcome: a strong reading registered as evidence of avoiding a recession while a weak one further pressuring the Fed to throttle back hikes.

Critical Macro Event Risk on Global Economic Calendar for the Next 48 Hours

Calendar Created by John Kicklighter

image4.png

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