With the US tariff issue temporarily defused, certain commodities continue to rise to or close to new record highs, notably Gold, Coffee, and Corn.
- Gold is making market headlines today as it continues its strong bullish rise to new all-time high prices. At the time of writing, the price is sitting bullishly on its high at $2,860. Trend and momentum traders will be interested in being long of Gold now, and many analysts see a profit target at the next big round number of $3,000.
- Two other commodities are in focus, having traded at or near new all-time highs yesterday: Coffee and Corn. Coffee is the stronger bullish trend, having risen by approximately 10% in just a few days, and with a more long-term bullish technical picture. Corn is close to its 1-year high which was made a few days ago, but some analysts think this rise will probably not have much further to run. Trend traders will probably be interested in positioning long here. Although Coffee futures can be expensive, retail traders and investors can gain exposure to Coffee via the COFF ETF, although US taxpayers should beware this is probably a PFIC for tax purposes.
- US President Trump has made a bold move against the Iranian axis following his meeting with Israeli Prime Minister Netanyahu a few hours ago, stating that the US would take over and clean up Gaza, which would become a peaceful place despite currently being unfit for human habitation, again raising the possibility of a temporary relocation of the Gazan population and possibly facilitating voluntary migration. President Trump also made clear that Hamas would not govern the strip. Trump also decreed the return of the "maximum pressure" strategy on Iran having earlier stated that if he were assassinated by Iran, the US military has orders to obliterate the country. These moves are probably best seen as an opening negotiating position, with the true goals of the US and Israel likely being the removal of Hamas from power and the pacification of Gaza, and possibly the participation of some kind of international peacekeeping force, as well as the temporary hosting of a number of Palestinian refugees. The only impact on the markets these moves seem to have had so far is a firming of the price of Crude Oil.
- The Japanese Yen rose quite strongly during the earlier Asian session following the release of strong Japanese wages data for December, which is seen as the main driver towards a more hawkish monetary policy by the Bank of Japan. The USD/JPY currency pair is now trading at a 6-week low and looks likely to fall further and is in focus anyway as the Japanese Yen has been the strongest major currency since the Tokyo open, while the US Dollar has been the weakest.
- The US postal service has suspended delivery of all parcels from China, including Hong Kong. This has rattled the Chinese stock market a bit. President Trump has also removed the legal exception where US residents could order up to $800 worth of imports tax-free. The USPS has not given a reason for its suspension of parcel deliveries but it is obviously related to these trade issues.
- Yesterday's releases of:
- US JOLTS Job Openings came in lower than expected.
- New Zealand Unemployment Rate data was as expected, showing a rate of 5.1%.
- There will be releases today of the ADP US Non-Farm Payrolls forecast and US ISM Services PMI data.
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