Markets poised for non-farm payrolls later today. The charts have been relatively calm over the last few days but all that could change in a few hours in the event of surprise US employment data. The headline figure is expected to come in at 160k new jobs, with unemployment remaining at 4.2%. Gold managed to get some momentum going this week, closing higher three days in a row and reaching $2,670 an ounce on Thursday. The precious metal remains over $100 below its record high set in October of last year. The rise came despite a renewed show of strength in the Dollar, which has also clawed its way higher over the last three days, pushing the DXY to 109.1 by yesterday’s close. The push contributed to significant woes for the Pound Sterling, which plunged below $1.23 on Thursday, a 14-month low for the currency. Bond traders will be aware that yields on UK gilts have been rising substantially in recent months. The 30-year gilt in particular has seen rates rise above 5.4% this week, the highest since 1998. The selloff in gilts, coupled with a weakness in the Pound, reflects a lack of fiscal confidence in the UK government. Stagnant growth, sticky inflation and more expensive debt servicing combine to paint a rather bleak tableau. Across the Channel, things are not looking much brighter for the Euro. The common currency remains above parity but is facing a largely similar threat. The Greenback has reasserted itself and other currencies have every right to be fearful.
The typical new year resolution yields absolutely no results whatsoever. So instead of learning to fly a helicopter, going on a diet or hitting a four-plate bench-press, try opting for something a little more pragmatic. Here are five new year trading resolutions: We’ve all been there. Sometimes it can feel like the entire world is conspiring to stop you from making money. Somehow every trade seems to go wrong, in a way that seems astronomically implausible. You go long only to find you sniped the absolute top with microscopic precision. You abandon the trade to go short and by some miracle the trend reverses again the instant you place the order. If someone were to do the exact opposite of your trades, they would be unfathomably rich. The market is mocking you. You are the ultimate counter-signal. Everyone point and laugh. Of course, none of the above is true, but it can definitely feel like it. Take a step back from the screen. Get some air. Calm down. As much as we like to pretend otherwise, most of the time we are not rational creatures. Sometimes the best thing to do is to walk away and come back another day with a clear head. A lot of traders refuse to give up on a bad trade. We stubbornly cling on to a position in the hopes of extracting something out of it, deluding ourselves into believing we can get out of a massive drawdown. We hang on like grim death, adding funds to push the margin call just a little bit further away. 90% down on a position? No. Everyone else is wrong. I’ll show them. I’ll show them all. The truth is that even if a trader does manage to claw their way out of a sticky situation, trading and swap fees can quickly eat away at any profit. More importantly however is the opportunity cost of hanging on to a bad trade. The margin tied up in a losing battle could probably be used to much greater effect if it were deployed elsewhere. Revenge trading rarely leads to anything good. A bad trade is like a bad relationship. Better to rip off the bandage and move on. This one sounds easy but almost no one actually does it. The whole point of writing things down is to hammer home what went right and what went wrong. Why did this trade go badly? Write down the reason. Learn from your mistakes. Much harder to ignore failure when you have to settle down and justify it. This has never been easier. There are a bunch of online trading journals that will synchronise with your trading platform and provide a detailed analysis of your performance. This will allow you to identify recurring errors and eliminate them. A lot of the time a trader may have a winning strategy but fail anyway because they don’t stick with it or simply because they close trades too early. A journal will help rectify this. An alternative is to physically write down your trades. Pen and paper. Bring forth your inner aristocrat. Go and buy a leather-bound ledger and a quill. Like Ebenezer Scrooge. There are times when pushing forward in the face of adversity can be very rewarding, but when it comes to trading this is usually not so. As hard as it is to admit, sometimes we are just wrong. We may have worked hard on carving out an advantage, carefully tailoring our system, perfecting it, adopting it. We grow attached to it. Unfortunately, if a certain strategy fails more often than it succeeds then it needs to be mercilessly abandoned. As someone may or may not have said: “insanity is doing the same thing over and over again and expecting different results”. The world of trading is not an isolated ecosystem. It is easy to fall into the trap of thinking that market movements are totally detached from reality but this simply is not true. Entire books of intricate trading setups will be swept aside in an instant should a significant financial event suddenly hit the newswires. A surprise interest rate decision? Poor non-farm payroll data? A sudden declaration of war? Kiss your setup goodbye. The Federal Reserve laughs at your Elliott Wave analysis. Tanks are being loaded onto military cargo planes as we speak. Get those candlesticks out of here. Like many other aspects of your trading journey, this is something we at RADEX MARKETS can help you with. The economic calendar and regular financial news updates we provide will put your trades into context and give you the bigger picture. Here’s to a successful 2025.
Focuses returned to the US economy yesterday. A couple of data points in particular raised eyebrows, namely higher than expected job openings and stronger services PMI figures. According to the Bureau of Labour Statistics, there were 8.1 million job openings in November, much higher than the expected figure of 7.7 million. The ISM and S&P Global services PMI figures both confirmed a sector firmly in expansion at 54.1 and 56.8 respectively. The two data points point to potential inflationary pressures further down the line, which in turn are tempering expectations for interest rate cuts on the Dollar. The Fed has practically said as much. Markets are now pricing in a 95% chance of no change for the next Fed decision on the 29th of January. In fact, markets are not looking at a rate cut until the summer. US indices took the news poorly. The Dow lost 0.4% yesterday, the S&P 500 shed 1.1% and the Nasdaq fell 1.9%. The Euro and Pound Sterling clawed back some dignity over the last few sessions, but remain close to multi-month local lows. The Japanese Yen is also currently challenging six-month lows, with USDJPY breaching 158 this morning. Japanese monetary authorities were prompted into a response yesterday, stating that the government will take appropriate action against excessive FX moves, as it was forced to do last year. The Bank of Japan’s reluctance to hike rates on the Yen, coupled with the Fed’s newfound hawkish stance, mean that the differential between the two currencies is not likely to close just yet.
New Year – new beginnings. Financial markets are back in full swing after a well-deserved break over the festive season. The Dollar wasted no time in setting the tone, surging higher on the first trading day of the year and wreaking havoc on the major currency pairs. The Pound Sterling and the Euro recovered somewhat the following day but remain perched above multi-month and multi-year lows respectively. Gold appears uncommitted to a particular direction so far and remains below its pre-election record high. Nevertheless, the precious metal gained $18 last week to close at $2,640 an ounce. The more interesting development in commodities however is a potential uptick in interest in crude oil. After months of languishing in the doldrums, oil prices gained some ground last week, pushing Brent Crude to $76 and WTI to $73 a barrel. The cold weather front in much of the northern hemisphere is playing its part to increase demand in the immediate term, but on longer time frames oil markets are also factoring in the promise of economic stimulus measures in China. In a bid to encourage growth, Beijing plans to increase funding via the bond market whereas the People’s Bank of China will slash reserve requirements and reduce lending rates. Last year, oil imports decreased in Asia for the first time since 2021, with China in particular importing around 2% less than the previous year according to figures up until November. Then there is the possibility of sanctions against Iran, which could further tighten global oil supplies and increase prices as a result. Just like the rest of the financial world, the economic calendar is also finally emerging from winter hibernation. Services PMIs from around the world scatter the schedule today, before European CPI and employment data on Tuesday. FOMC minutes for the December meeting are set to be released on Wednesday, coupled with remarks from Fed Governor Christopher Waller. Many other board members will also deliver comments the following day. NFPs are back on the menu on Friday after being carried over from last week. Happy New Year.
Back to work. Markets have reopened following New Year revelries and by the looks of things, traders were desperate to get back to business. If the first trading day of the year is anything to go by, then 2025 will be the year of the Dollar. The Greenback continued its relentless push higher on Thursday, in a show of strength that was particularly detrimental to the Euro and Pound Sterling. The common currency closed at $1.026 yesterday and now sits at two-year lows versus the Dollar. The last time this happened, the Euro went on to fall below parity, something it has only done twice in its history. The situation is looking equally grim for Cable, which nose-dived down to an eight-month low of $1.237. European manufacturing data made for bleak reading yesterday, with France and Germany now reporting in the low 40s and the Eurozone in general reporting just 45. The UK manufacturing sector showed some degree of resilience last year but it too is now succumbing to structural pressure, falling to 47 on the latest release. On the other side of the pond, US manufacturing came in ahead of expectations at 49.4 according to S&P Global; the ISM figure will be published later today. Gold saw some positive momentum yesterday, gaining around $40 to close the day at $2,658 an ounce. Nothing earth shattering but a two-week high nevertheless. Bitcoin experienced a similar move, climbing up to $97k and dragging the rest of the crypto markets along with it. Very little to get excited about on the economic calendar today. Non-Farm Payrolls is delayed until Friday the 10th. Markets are not quite out of hibernation just yet.
Markets are in limbo. Christmas festivities are giving way to New Year celebrations and traders are in no hurry to return to their desks. Just as last week, much of the current will be occupied by market closures and low-liquidity conditions. International markets were predictably subdued over the Christmas period. Currencies had almost nothing to offer; the Dollar stayed strong but did not venture any further to the upside; the DXY remains around 108. The Greenback will be one of the major talking points as we move into 2025. Its resurgence over the past three months has been impressive to say the least – how long can the aggressive push be sustained? A strong Dollar extends far beyond mere currency trading; it affects financial markets in general and factors into the developing geopolitical landscape. With Donald Trump’s inauguration a mere three weeks away, there is no world in which the Dollar does not take centre stage. Gold wrapped up one of the most boring weeks it has had in a long time. The precious metal barely moved out of a $30 trading range all week, leaving behind an entirely unimpressive weekly candle. Gold is still over $100 down from the US election, illustrating the shift in sentiment towards the safe-haven narrative. If the incoming administration can indeed muster an aura of implacability, then flights to precious metals may potentially become less appealing. The economic calendar is looking as cold and gloomy as the weather outside, at least for those of us in the northern hemisphere. Bleak promises of manufacturing PMIs are the only thing on the menu for us wretched souls this week, starting with China tomorrow then Europe and America on Thursday.
