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85% Win Rate On Gold
It's that time of the year where gold rallies over the holiday period, want the stats? Dive in.
Jordon Mellor & Jonathan Kibbler
December 13, 2024 • Estimated Reading Time: 6 minutes
Alright, listen up. We are on a mission to help traders understand what TRULY moves the markets. No, it’s not a trend line or a doji candle. The asset you trade everyday is something people use everyday, and it matters. You can get ahead of most traders by understanding your asset. Go forth, be brave and digest the information.
Macro Gossip
”It’s been a bit of a wild ride.”
‘It’s been a bit of a wild ride’ I think this is a statement we can all agree with considering the year 2024 has been.
But these were the words from the Reserve Bank of Australia governor Michele Bullock after holding interest rates at their last meeting of the year on Tuesday.
Markets had anticipated the RBA to hold interest rates at 4.35% for a ninth meeting in a row.The governor expressed that things could ‘move in either direction’.
The pace of growth this year was behind the RBA’s predictions coming in at 0.8% well below the targets of 1.5%.
So maybe the RBA could move rates in the new year!
Why it Matters:
Changes in central bank policy can impact markets. Here’s what to watch:
Interest rate changes will impact the way the currency will behave. The rule of thumb is a central bank cutting interest rates can lead to a negative currency.
Higher rates tend to slow economic growth by making borrowing more expensive, while lower rates stimulate growth.
Investors often use tools like the carry trade, borrowing in low-interest currencies to invest in higher-interest ones, further influencing exchange rates.
The Boss’s Take: “The AUD is under pressure from China weakness, this doesn’t look like it’s changing anytime soon.”
Quick & Dirty Trade
Has the EUR officially bottomed?
Got a minute? Perfect, here’s the view of EUR this week:
Pros: Technical price action is showing that sellers actually might be doing sell (Ask Jon to confirm). Bottoming out currently at 1.04, there is evident support, not strong, but still support.
Cons: “It’s in the bin”
Verdict? Swipe right if you’re into risk; swipe left if you don’t trust the EURO.
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Macro Insight, Micro Impact
98.6% Chance Of Fed Rate Cut On The 18th.
Plot Twist of the Week: This probably won’t come as a surprise, but the Fed are expected to cut 25 basis points on the 18th of December. But here is the twist, if the Fed does cut 25 basis points (0.25%), that will put it the rate right on price with the current US 2 Year Bond Yield. Which means the bond market is happy with pricing and not showing traders a potential future move…
Why This Matters:
Bond Markets Lead Sentiment = Bond markets can show traders and investors overall sentiment, if the bond market is proceeding the Fed, it will likely mean rates will remain the same and everyone will be waiting for bond to react.
Will the bond market move next week? Stay tuned.
Macro Hack of the Week: Have you heard of the BDI?
Put it this way, global trade is the lifeblood of any economy, and unusual patterns in shipping or trade can offer early warnings or opportunities for traders.
Retail traders can use publicly available shipping metrics and port activity data to anticipate currency and commodity movements.
You may ask, how on earth do I find that information? Well there is the BDI Index or Baltic Dry Index.
The BDI tracks the cost of shipping raw materials like coal, steel, and grains. A rising BDI suggests increased global trade and economic growth, which often leads to a bullish outlook for commodity-linked currencies like AUD, CAD, and NZD.
Here’s a chart of the BDI vs AUDUSD, you can see how the BDI moves first before the AUDUSD price.
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