Risk appetite continues Friday’s recovery after the US PCE inflation data came in lower than expected.
- Friday’s risk build-up triggered by a lower-than-expected US PCE price index (the Fed’s preferred inflation metric) appeared to have continued into the weekend, with most major stock indexes rising from the week’s opening in Tokyo. The Nikkei 225, HSI and NASDAQ 100 are up around 1% today. Markets expect the Fed’s next rate cut won’t happen until March 2025.
- Cocoa futures hit a new all-time high just below $13,000 a tonne last week, although there has been a minor pullback from the highs in the past few days. Cocoa has seen a very strong rise in value (about 40% increase) in the past few weeks, and the market will remember the spectacular rally in Cocoa in 2023, when the price of the superfood tripled in just 4 or 5 months. Trend traders will be interested in going long cocoa futures. Unfortunately for retail traders, the smallest cocoa futures available is a $100,000 position, but there is an Exchange Traded Commodity Symbol Cocoa (ETC) on the London Stock Exchange that is very affordable. “ETC aims to replicate the Bloomberg Cocoa Sub Total Return Index (BCOMCCTR) by tracking the Bloomberg Cocoa Sub Excess Return Index.”
- On the Forex market, since today’s opening in Tokyo, the Canadian dollar was the biggest gainer and the Swiss franc the biggest loser. The EUR/USD currency pair remains in a valid long-term bearish trend after making a strong bearish move lower after the Fed meeting to trade not far from the multi-year low above $1.0300.
- Canada’s GDP data will be released today, which is expected to show a 0.2% month-on-month increase.
- Being Monday and just 2 days before the Christmas holidays, the markets could be relatively quiet today.
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