Risk appetite continues to recover as US PCE data came in lower than expected on Friday and most major stock indexes rallied after the Christmas holiday.
- The year-end risk build-up sparked by last Friday’s lower-than-expected US PCE price index data (the Fed’s preferred inflation metric) looks set to continue, with most major stock indexes up from today’s Tokyo open. China’s HSI and Japan’s Nikkei 225 rose more than 1% on the day, while NASDAQ 100 and S&P 500 futures also traded higher.
- Bitcoin rallied quite a bit after MicroStrategy announced plans to issue more shares, although it’s still trading just below the big round number at $100,000.
- The Governor of the Bank of Japan spoke publicly yesterday but gave no hint on the timing of the eagerly anticipated 2025 interest rate hike.
- In the forex market, since the opening of Tokyo today, trading has been quiet due to the ongoing Christmas holidays, with the strongest currency the Swiss Franc and the weakest currency the Japanese Yen. 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.
- 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 a cocoa exchange-traded commodity (ETC) ticker COCO available on the London Stock Exchange (but closed today) 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.”
- US jobless claims data will be released today.
- As it is the day after Christmas, several key markets such as the UK will continue their public holidays after Christmas yesterday, meaning liquidity may be thin in some currencies and some equity and commodity markets will remain closed today.
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