Three themes for the open

- Fed changes tune
- Vaccine effectiveness
- Risk off

https://www.ausbiz.com.au/media/three-themes-for-the-open-fed-changes-tune-risk-off-and-vaccine-effectiveness?videoId=17596

Five thing traders need to know today

😟 Global major stocks ended the last trading day of November sharply lower as FED chair Powell changed the tone of inflation and signalled a faster taper in December. S&P 500 -1.90% on the day and -0.83% for the month, with VIX jumping 67% in November. Omicron uncertainty also weighed on the sentiment. Apple +3.16% and Tesla +0.68%.

🔻 Gold fell to one-month low of $1,774.78 after Powell’s testimony. WTI crude (SpotCrude) tumbled 4.49% to $67.45 on worries of travel demand impacted by the new Covid variant, with Moderna questioning the vaccine efficacy. NatGas -5.6%. Bitcoin was lower at $57,142.

💲 The US dollar index (USDX) dropped to 95.81 on the weak economic data, while the yield on two-year Treasury surged to 0.57% (+17.01%). ADP and ISM PMI data is on radar today. Safe-haven JPY and CHF became the outperformers overnight.

🇪🇺 EUR extended the recovery to 1.1339 helped by stronger-than-expected Eurozone CPI number, despite more EU nations re-imposing Covid restrictions. GBP edged lower to 1.3301, having hit a fresh 11-month low in the session.

🙃 AUD ended the day lower at 0.7128. Aussie Q3 GDP is scheduled for release today. NZD was little changed at 0.6823. CAD was hit hard by lower crude prices and confirmed Omicron cases in Canada.

Nice graphic from Wells Fargo on potential scenarios of omicron and the implications for different markets

Five things traders need to know today

😷 US stocks suffered the biggest two-day decline since October 2020 after reporting its first Omicron cases, with VIX soaring to the highest since February. Strong ADP employment and ISM manufacturing PMI data failed to boost the market sentiment. Major European and Asian indices closed higher on Wednesday.

🛢️ WTI crude fell to a three-month low of $66.19 on the uncertainty of the new Covid variant. OPEC+ is set to announce its production plan today. NatGas -7.32%. Gold edged higher to $1,781.76 and Bitcoin was down to $57,012.

🤑 The US dollar index (USDX) was higher at 95.95 with the yield curve further flattening. Safe-Haven JPY was the best-performing G10 currency overnight, closing near a two-month high against greenback.

↕️ EUR ended lower at 1.1319, sitting just below the 20-day SMA. The EU unemployment rate is due out today. GBP dropped for a third consecutive day to 1.3272, the lowest close price in one year.

🔻 AUD continued the downward trend to 0.7104 amid the risk-off mood, despite Australia’s better-than-expected GDP in Q3. NZD pushed lower to 0.6806, down for eight of the last nine sessions. USDCAD climbed to the highest level since September.

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Five things traders need to know today

😀 US stocks rebounded on Thursday after two-day Omicron-sparked selloff. All sub-sectors of the S&P 500 increased with industrials and energy leading the gains. The initial jobless claims beat estimates just ahead of today’s nonfarm payroll report. European indices closed the day lower.

🆙 WTI crude (SpotCrude) reversed intraday losses and ended higher at $67.88. While OPEC+ stuck to its plan to increase production in January, it is open to immediate adjustment in a worse scenario. Gold slumped to $1,768.16. Bitcoin closed just below $57,000.

💲 The US dollar index (USDX) climbed to 95.95 as the front-end bond yield continued the rally following FED’s hawkish comments. USDJPY found support at 112.62 amid improved risk sentiment.

🇪🇺 EUR dipped to 1.1301 despite the better-than-expected EU producer prices, with Germany announcing new restrictions on the unvaccinated people. GBP recovered from one-year low to 1.3301.

🌏 AUD extended its decline to 0.7092, the lowest since November 2020. NZD ended higher at 0.6818 as RBNZ may not change its outlook because of Omicron. USDCAD was slightly down to 1.2805, near the key resistance level and two-month high.

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Five things traders need to know today

😀 US stocks ended the week sharply higher as the fear over the Omicron variant faded, with S&P 500 hitting a new record close on Friday and VIX back below 20. Major European and Asian benchmarks posted weekly gains amid the improved risk sentiment.

🛢️ Gold traded within a narrow range last week, closing at $1,782.76 below the 200-day SMA. WTI crude (SpotCrude) rebounded to $72.22, ending a six-week losing streak. Bitcoin was trading around $50,000.

💲 The US dollar index (USDX) dropped to 95.93 last week despite the Treasury yields moving higher. Safe-haven currencies JPY and CHF underperformed against the greenback.

🇪🇺 EUR continued the recovery to 1.1316. GBP ended the week higher at 1.3271 after reaching its one-year low. The ECB and BoE are scheduled to release rate decisions this week, together with FED and SNB.

👍 Commodity currencies were the biggest winners last week, with NOK leading the gains. AUD added 2.46% on the week to 0.7171 and NZD +0.76% to 0.6797. USDCAD closed lower at 1.2724, the first weekly loss since mid-October.

Five things traders need to know today

📉 US stocks retreated Monday on worries of Omicron variant impact, with the energy sector leading the moves and stay-at-home stocks outperforming. European indices were in red while Asian benchmarks closed mixed.

🛢️ WTI crude (SpopCrude) ended lower at $71.37 amid the risk-off sentiment, with China reporting its first Omicron case. Gold edged higher to $1,786.55. Bitcoin extended the decline to $46,883.50 near the 200-day SMA.

🤑 The US dollar index (USDX) climbed to 96.29, while the yield on 10-year Treasury fell toward 1.40% (-4.57%). US November PPI data is scheduled for release today. USDJPY was up to 113.57.

↕️ EUR dipped to 1.1285, struggling with the 20-day SMA. GBP continued the downward trend to 1.3211 after the UK confirmed the first Omicron death. UK’s employment data is on radar today.

🌏 AUD gave up Friday’s gains and closed lower at 0.7133. NZD ended the day at a one-week low of 0.6755. USDCAD jumped above 1.2800 after a four-day winning streak.

Three themes on the radar:

1) Wall Street retreats
2) Inflation red hot
3) Fed on watch

https://www.ausbiz.com.au/media/three-themes-for-the-open-wall-street-retreats-inflation-hot-fed-on-watch?videoId=18071

Five things traders need to know today

😔 Nasdaq tumbled 2.47% Thursday on fear of the earlier and more aggressive rate hikes in 2022. Dow and S&P 500 also closed in red. While jobless claims and Markit manufacturing PMI missed estimates, housing starts remained strong. Major European and Asian indices trended higher.

🌟 Gold rose to a two-week high of $1,799.12. Palladium (XPDUSD) +8.24%. WTI crude (SpotCrude) edged higher to $72.13 as the US oil stockpile decreased sharply by 4.58 million barrels last week. Bitcoin traded near $48,000.

💲 The US dollar index (USDX) dropped below 96 on mixed economic data, trading lower against all major currencies despite FED’s hawkish stance. UST yields were lower across the curve. USDJPY was down to 113.70.

🇬🇧 GBP extended the recovery to 1.3322 (+0.49%) after the BoE unexpectedly raised its rate by 15bp to 0.25% in response to UK’s fastest inflation growth in a decade. EUR jumped to 1.1330 as the ECB is set to reduce the pandemic bond purchase under PEPP in Q1.

🆙 AUD ended higher at 0.7183 on strong employment data in November. NZD was up to 0.6799 as NZ economy contracted by less than expected in Q3. USDCAD pulled back to 1.2774.

Five things traders need to know today

🙃 US stocks indexes ended the week lower on fear of FED’s aggressive rate hike expectation, with Nasdaq 100 (-3.03%) leading the decline. Biden’s $1.75tn ‘Build Back Better’ bill was almost dead without the support from Democrat senator Joe Manchin. Major European and Asian indices also closed in red. Hang Seng index suffered a 3.35% weekly loss, down 15% YTD.

↕️ Gold posted the first weekly gain in five weeks, closing at $1,797.96 above the 200-day SMA. WTI crude (SpotCrude) dropped to $70.43 as the fast-spreading Omicron is expected to impact fuel demands. Bitcoin struggling around $47,000.

🤑 The US dollar index (USDX) jumped to 96.60 as the FED projected three rate hikes in 2022 and earlier ending of the QE program, while the yield on 10-year Treasury fell toward 1.40%. USDJPY trended higher at 113.70.

🇪🇺 EUR finished the week lower by 0.70% at 1.1237. Policy divergence and growing Covid threat continued to weigh on the single currency. GBP dipped to 1.3236 amid the USD strength despite BOE’s unexpected rate hike last week.

🌐 AUD and NZD remained under pressure amid the risk-off mood, closing at 0.7126 and 0.6735 respectively. USDCAD was up to 1.2837, the highest close price in one year, making CAD the worst-performing G10 currency last week. USDTRY hit a fresh high of 17.05.

Five things traders need to know today

😟 US stocks edged lower Monday on worries of surging Omicron cases and Democratic Senator Joe Manchin’ rejection of Biden’s $1.75 trillion spending program. Goldman cut the US GDP forecast for 2022. Major European and Asian indices closed in red.

🔻 Gold dropped below the 200-day SMA to $1,790.81. WTI crude (SpotCrude) closed lower at $69.49, hitting as low as $64.46 in the session on fears over Covid wave and renewed travel restrictions. Bitcoin consolidated around $47,000.

💵 The US dollar index (USDX) ended slightly lower at 96.48, while Treasury yields increased across the curve. USDJPY was little changed at 113.62.

💵 EUR rebounded to 1.1276 despite some EU nations re-imposing lockdowns and restrictions. GBP continued the losses to 1.3208, near the yearly low, with the UK government saying it could tighten restriction before Christmas.

🌎 AUD ended lower at 0.7109 amid the risk-off mood. NZD wad down to 0.6713, the lowest close price since November 2020. USDCAD jumped to one-year high of 1.2940. USDTRY plunged nearly 20% overnight.

What is SANTA CLAUS RALLY? 🎄🎅🤔

A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January.

According to the 2019 Stock Trader's Almanac, the stock market has 💹 risen 1.3% on average during the 7 trading days in question since both 1950 and 1969. Over the 7 trading days in question, stock prices have historically risen 76% of the time, which is far more than the average performance over a 7-day period.

However, in the weeks prior to Christmas, stock prices have not gone up more than at other times of the year.

The Santa Claus rally was first recorded by Yale Hirsch in his Stock Trader's Almanac in 1972.

The Dow Jones Industrial Average (DJIA) has performed better in years following holiday seasons in which the Santa Claus rally does not materialize.

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Five things traders need to know today

📈 US stocks continued the rebound on Wednesday helped by big techs and Tesla (+7.49%). S&P 500 +1.02% with all eleven sub-sectors closing in green. The emergency authorization on Pfizer’s treatment pill also lifted market sentiment. Major European and Asian indices edged higher.

🌟 Gold surged above $1,800 and Palladium (XPDUSD) +5.1% to $1,876.98. WTI crude (SpotCrude) extended the recovery to $73.31, with US inventories falling by 4.7 million barrels last week. Bitcoin regained $49,000.

💵 The US dollar index (USDX) dropped for a third consecutive session to 96.05, while the yield on 10-year Treasury was down to 1.46%. A slew of US economic data including PCE and Durable goods order is scheduled for release today.

🔺 EUR ended higher at 1.1326. More EU nations re-imposed restrictions ahead of the holiday season. GBP climbed to 1.3350, the highest close price in one month, despite the UK recording 100,000 daily Covid cases for the first time.

😀 Commodity currencies outperformed overnight amid a risk-on mood. AUD was up to 0.7212 and NZD 0.6810. CAD strengthened to 1.2893 per dollar. NOK led the G10 gains on the higher oil prices.

Five things traders need to know today

📈 US stocks continued the rebound on Wednesday helped by big techs and Tesla (+7.49%). S&P 500 +1.02% with all eleven sub-sectors closing in green. The emergency authorization on Pfizer’s treatment pill also lifted market sentiment. Major European and Asian indices edged higher.

🌟 Gold surged above $1,800 and Palladium (XPDUSD) +5.1% to $1,876.98. WTI crude (SpotCrude) extended the recovery to $73.31, with US inventories falling by 4.7 million barrels last week. Bitcoin regained $49,000.

💵 The US dollar index (USDX) dropped for a third consecutive session to 96.05, while the yield on 10-year Treasury was down to 1.46%. A slew of US economic data including PCE and Durable goods order is scheduled for release today.

🔺 EUR ended higher at 1.1326. More EU nations re-imposed restrictions ahead of the holiday season. GBP climbed to 1.3350, the highest close price in one month, despite the UK recording 100,000 daily Covid cases for the first time.

😀 Commodity currencies outperformed overnight amid a risk-on mood. AUD was up to 0.7212 and NZD 0.6810. CAD strengthened to 1.2893 per dollar. NOK led the G10 gains on the higher oil prices.