Risk appetite continues its recovery since Friday’s US PCE data came in lower than expected, with most major equity indices trading higher after the Christmas holiday.
- The end of year risk rally sparked by the lower-than-expected US PCE Price Index data released last Friday (the Fed’s preferred inflation metric) seems to be continuing, with most major stock indices trading higher since today’s open in Tokyo. The Chinese HSI and the Japanese Nikkei 225 are up by more than 1% on the day, while futures in the NASDAQ 100 and the S&P 500 are also trading higher.
- Bitcoin has gained quite strongly following MicroStrategy’s announcement that it plans to issue more shares, although it is still trading a bit below the big round number at $100,000.
- The Governor of the Bank of Japan spoke publicly yesterday but gave no hint as to the timing of rate hikes in 2025, which are keenly anticipated.
- In the Forex market, since today’s Tokyo open, trading has been quiet due to the ongoing Christmas holiday, 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 down after the Fed meeting to trade not far from the multi-year low above $1.0300.
- Cocoa futures reached a new all-time high price just below $13,000 per ton last week, although the last couple of days have seen a minor bearish retracement from the high. Cocoa has seen a very strong increase in value (approximately a 40% gain) over the past few weeks, and the market will remember the spectacular rally in Cocoa in 2023 which saw the price of the superfood triple within only 4 or 5 months. Trend traders will be interested in being long of Cocoa futures. Unfortunately for retail traders, the smallest Cocoa future available has a position size of $100,000 but there is a Cocoa exchange-traded commodity (ETC) ticker COCO available on the London Stock Exchange (but closed today) which is very affordable. The “ETC aims to replicate the Bloomberg Cocoa Sub Total Return Index (BCOMCCTR) by tracking the Bloomberg Cocoa Sub Excess Return Index.”
- There will be a release of US Unemployment Claims data today.
- As it is the day after Christmas, several key markets such as the UK will continue their public holiday following on from Christmas day yesterday, meaning liquidity can be thin in some currencies, and some equity and commodity markets will remain closed today.
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