The Bank of Japan met this week and failed to signal a clear end to their negative interest rate policy. This allowed the JPY to weaken and lifted the JPY crosses higher. However, the big picture has not changed! The Bank of Japan is still expected to end negative interest rates around the spring of 2024, so that should mean any moves lower in the JPY find dip buyers.
The so called Santa Rally could be alive and well for the UK! Over the last 10 years the FTSE 100 has gained 100% of the time from December 18 through to December 29!
So, is this a chance to get a free gift from the UK’s stock market this year? Time for gains in the FTSE?
Has the Fed just given the green light for gold to gain into the start of 2024? With a dovish dot plot forecasting 3 Fed rate cuts next year bonds were heavily bought last night and the USD was convincingly sold.
The Hang Seng Index (HSI) stands as a free-float market capitalisation-weighted index encompassing the sixty most influential companies trading on the Hong Kong Exchange (HKEx).
Today is the Federal Reserve’s hotly anticipated interest rate meeting. Expectations in short-term interest rate markets are for the Federal Reserve to cut interest rates four times next year. Now this seems a very dovish expectation.
A major risk event is coming up for the US on Tuesday ahead of the Federal Reserve’s interest rate meeting on Wednesday. Although US CPI data is unlikely to change the Fed’s mind for Wednesday it will certainly set the mood and tone.
If you notice you can see that the seasonal pattern becomes very strong after the middle of December. That is not for no reason. The middle of December marks the last Fed meeting, so investors are often confident to take their gold position once the path for US yields and the USD is more predictable with the Fed having finished their last interest rate meeting for the year.
Short-term interest rate markets see the bank of Canada making four 25bps interest rate cuts next year. With expectations that the bank of Canada will leave current interest rates unchanged at 5% this week. Could there be some significant selling in the Canadian dollar?
The seasonals are saying that gold could be about to break its all-time high. The average return in gold between the 13th of December and February the 20th is over 4%. If the seasonal pattern repeats this year, according to its average, that will take gold to fresh all time new highs!
Markets have been happy to sell the dollar recently on the narrative that the US is seeing slowing economic data, inflation is falling, and the prospect of federal reserve interest rate cuts are growing ever closer. This dollar weakness is expected to continue as long as the Federal reserve doesn’t signal any more rate hikes.
