Daily Alert – Friday 7th July 2023: Equities fall for some reason or another

Mark NugentDaily Alert, July 2023

Daily Alert – Friday 7th July 2023: Equities fall for some reason or another

Good afternoon.

The combination of bullish Fed minutes on Wednesday and a stellar ADP Employment Change print on Thursday caused equities to fall around the world on the expectation of further Fed hikes and the underlying message that inflation is far from conquered, (and a recession seems far away). But is this news? It seems a bit over-done to me. The FedWatch tool already shows an expectation of a Fed hike in July. Is it an over-reaction and therefore should we trade the reversal next week? Hmmm.

The health of the US economy was (again) reflected today in strong Average Hourly Earnings numbers. However, the party was ruined by the important (too important?) NFP number, which missed expectation but only by a wee bit. The fall in equities has been arrested.

I went long on GBPCAD on Wednesday night. The theme for the trade is a strong GBP. You might wonder why I chose the CAD as the counter-currency. It’s not a pair I often trade. I explain it in the video. The trade is doing quite nicely, thank you very much.

That’s it for this week. I’ll be back on Monday for more fun and games.

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