Wall Street, Dow Jones, OPEP22 Nov 2016

Wall Street, Dow Jones, OPEP22 Nov 2016


Thanksgiving approaching meaning that volatility will remain low. U.S equity market continues to move higher despite high expectations for an upcoming tighter monetary policy, however the rising bond yields will be a drag for equity market. Markets have changed rapidly since Trump was elected. One of the most major bullish trend (US Treasury Notes that exist the last decades have shown strong signs of exhaustion and possible reversal). Moreover the difference between the German and U.S. 10 Year bond yields which hit a new multi decade high, shows significant expectations for the future change on US monetary policy.

British pound has been stabilized while USD has rallied more than 6% against Yen and Euro since D Trump was elected.

If we consider that market expectations for a Fed hike next month are close to 100% probability, then it is obvious that the next big trading opportunity is not existing at the moment in this low volatile thanksgiving week but can occur if some unexpected breaking news create doubts about fed’s ability to hike next month . If these eventualities are displayed on your computer screen then is the time to sell USD and buy US Treasury Notes and gold.

We continue to see high probabilities for some bearish reaction at EUR/JPY. Crude oil touching the highest level since last October. We recommend some cautious for crude oil as expectations seems to stand very high for an OPEC deal.

Key points:
• ECB’s Visco: Inflation doesn’t show any signs of increase
• Draghi says recovery proceeding at moderate pace
• Fed’s Fischer: Fiscal policies could relieve the Fed of being the only game in town
• Germany’s Schaeuble says he would prefer to start ending unusually expensive QE as soon as possible
• Donald Trump plans to withdraw the U.S. from the Trans-Pacific Partnership

Daily Economic calendar:
Country Event Importance Previous Expectations Follow Times
EUR Consumer Sentiment Medium -8 -7.8 EURO 18:00
USD Existing home sales Medium 5.47 5.43 USD 18:00

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