Money Market Mentor — 10 Jan 2023

Welcome to our weekly market snapshot. This is where we give you all a little taste of the kind of conversations we’re having behind the scenes and with our members.

After a lively start to the year, we’ve got our eyes firmly on the AUD, USD and Sterling this week. But first let’s look at the S&P.

After a disappointing 2022 — which saw the S&P 500 shed 19.4% over the year — it has seen in the New Year with mixed signals about its likely future direction of travel but at some point it’s going to have to make up its mind.

Having broken out higher yesterday, it has fallen back again today — not by much but enough to have found itself return to the recent consolidation zone. Despite chalking up a failed breakout, this is still a difficult market to call at the moment.

Range bound indices lead to range bound currency markets so it’s no surprise we’ve also seen the FX pairs entering a choppy period. This affected the US Dollar Index a lot last week but, if indices break higher, then we could see some USD weakness finally emerge. This could see a sustained break of 103 this week.

I was watching Sterling closely last week, as well as the Aussie Dollar. Not much follow through on any short positions and there doesn’t appear to be as much of a case for maintaining a short bias any longer with indices holding up.

Closing above the yearly pivot last week may also be a bullish sign for AUD, which has been the ultimate unreliable boyfriend recently, faking out on breakouts repeatedly. We’ll be looking for signs that yesterday’s breakout isn’t more of the same over the coming days. The level to watch for signs of another failed breakout is 0.6890 and, at that point, some traders will look to go short once again.

The charts for the NZD, CAD and Swiss aren’t as clear from my point of view so I’m waiting for a higher degree of confidence on the direction of these currencies. This could happen as early as later this week, but let’s see.

We go into a lot more detail about the emerging trends and levels to watch for in our weekly webinar and member newsletter, and cover many more markets. This week we covered the significance of non-reportables in the Gold market and took a look at the Japanese Yen and why it is back on my watchlist.

Hope to see you on there soon. Click here if you’d like to join us.