Daily Alert – Wednesday 26th May 2021: Markets quiet as month-end approaches
Markets are quiet as we head into month-end. Equity indices are up, with the bulk of the move occurring on Monday. WTI (oil) has behaved similarly. My bias on currencies is not fully reflected in price movements: the USD (bias – down) and the EUR (bias – up) are behaving, but the GBP is not behaving as it takes a leg down (bias – up). The JPY is wandering around without any strong sentiment to drive it and the commodity currencies are being moved by a myriad of internal domestic issues.
My weekly trading experiment on currencies is progressing – the EURUSD is in the money and the GBPUSD is at the entry price with moves down in both the GBP and USD nullifying each other. My S&P500 and Japan225 longs are both in the money but with no real momentum. I closed my WTI long a few hours as it approached resistance for a gain of around 1.8x risk.
Looking ahead, the major risk event may be Core PCE in the US on Friday. This is the Fed’s chosen measure of inflation. The expectation is for 0.6 percent. My dataset, which goes back to 2005, shows no figure greater than 0.3 percent. A deviation from the expectation could well move the USD. I need to be aware of this if I am still in my GBPUSD and EURUSD trades when the figure is published at 1.30pm UK-time on Friday. A “beat” would push the USD upwards and a “miss” would push it downwards.
I will be back on Friday.
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