Sentiments arising from the prospect of the US Federal Reserve finally beginning to cut rates is driving Gold and the Japanese Yen to new long-term high prices.
- Markets are currently dominated by anticipation of the US Federal Reserve’s meeting this Wednesday, at which it is universally expected to begin a process of cutting its interest rate for the first time in 4 years. Over the weekend, sentiment has shifted in favour of a 0.50% cut, with 59% expecting this compared to 41% expecting a 0.25% cut, according to the CME FedWatch tool. This is pushing the US Dollar lower and certain other currencies and assets higher, notably Gold and the Japanese Yen.
- Gold is looking bullish and trading very close to the record high it made earlier today close to $2,600. Gold is trading in blue sky and could keep rising higher and higher. Trend and momentum traders will be interested in being long of Gold.
- The Japanese Yen is continuing to strengthen as a currency with a divergent monetary policy from the dovish moves to cut rates which are being seen almost everywhere else. The USD/JPY currency pair traded at a new 1-year low below the round number of ¥140 just a few hours ago. Trend and momentum traders will be interested in being long of the Yen.
- In the Forex market, the Japanese Yen has been the strongest major currency today, while the US Dollar has been the weakest, putting the USD/JPY in focus.
- The US 2-Year Treasury Yield is looking bearish as the US Dollar declines – recent hours saw it briefly trade at a new 2-year low. Trend traders will be interested in being short here if they can access this asset (micro futures contracts are available on the CME).
- A few hours ago, there was an assassination attempt against former President Trump at a golf course. It seems that President Trump was never in direct danger. Betting markets currently give Vice President Harris a very slight edge as favourite, but polls in swing states are showing Trump right on the brink of a narrow victory in the electoral college. Most analysts believe Harris performed better in the debate a few days ago, but the polls remain close, although Harris has a clear edge for the nationwide popular vote.
- The Governor of the Bank of Canada said that he is open to increasing the pace of rate hikes in an interview with the Financial Times. This may be causing some weakness in the Loonie (Canadian Dollar) today.
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