Good morning and welcome to episode 42 of ‘Talking Bull’.
In this video/podcast we cover the main headlines and what to expect from the day ahead. We take a technical look at key markets that are likely to be impacted by today’s events. Also, we participate in a ‘Gun to the head’ challenge where each of us calls a live trade. These will expire at 9pm tonight and we will keep track of the progress over time.
We hope you enjoy it!
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Ian made 1.39R on USDCHF to continue his impressive winning streak having made gains in 8 out of his last 9 predictions. Joe made 0.4R on FTSE while Steve was stopped on EURSEK.
We have included an illustration based on a £1000 account. This will follow the combined return of our morning trades by risking 1% of the trading capital per trade. The 1% risk is a variable monetary amount and will rise and fall based on the success of the calls.
We are currently up 40.43% collectively since we began recording Talking Bull on the 30th October 2019.
Reports that the US would drop labelling China as a currency manipulator further supported risk appetite as trade optimism continued.
The Chinese yuan continued to make headway ahead of the New York open with fresh 5-month highs against the dollar which helped underpin global risk appetite as markets focussed on US-China trade developments. According to sources, the latest US currency report is set to be released prior to the phase-one trade deal between the US and China. Sources also indicated that China would no longer be cited as a currency manipulator in the latest US Treasury report. Confirmation that the tag would be removed triggered a further boost to risk appetite.
There were also reports that China would increase purchases of US manufacturing goods under the phase-one deal with total purchases of $200bn. Asian equities hit record highs before a correction and USD/JPY pushed to fresh 7-month highs.
The dollar overall was held in tight ranges as potential defensive demand also faded with a move into alternative assets
Sterling was undermined by a weaker than expected GDP release and dismal industrial production data with GBP/USD dipping below 1.3000.
Industrial production was notably weak for November with a 1.2% decline to give an annual contraction of 1.6%. Manufacturing output declined 2.0% over the year and was a significant drag on the overall GDP data. Construction output was above consensus forecasts and there was a sharp narrowing of the monthly trade deficit to £5.3bn from £10.9bn the previous month with distortions from gold trade. The GDP data reinforced speculation over a Bank of England rate cut with futures markets pricing in a 50% chance of a cut at the January meeting with a cut fully priced in by September.
Gold drifted to the $1,550 per ounce area with silver testing support below $18.00. Trade optimism continued to sap support on Tuesday with gold trading at 10-day lows.
Data – Day ahead
1.30pm – US CPI inflation (December): YoY CPI expected to fall from 2.3% to 2.1%. Core reading expected to fall from 2.3% to 2.2%. Markets to watch: USD crosses
Gun to head trade ideas – Results so far
Gun to head trade ideas – Today
Have a great week everyone.