December 3, 2022

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Risk off tilt to start the week

2 min read

COVID-19 case rise in Asia give risk off bias

Other markets

  • FTSE -0.99%
  • Dax -0.26%
  • CAC -0.35%
  • Gold +0.23%
COVID-19 case rise in Asia give risk off bias

The TAIEX (Taiwan’s stock index) was sharply lower on the Asian session handover and that was down to regional COVID-19 breakouts and containment measures. The Hang Seng and Shanghai Composite were both higher after the PBoC injected funds through a 100bln CNY MLF operation. However, gains were limited by the mixed Chinese activity data.

The mixed risk tone started the session and gold kept pushing higher even as Bitcoin drifted lower post Elon Musk’s latest twitter session. However, that trend was reversed as Elon Musk tweeted early in the session that ‘Tesla has not sold any Bitcoin’. This sent Bitcoin higher. Make sure you get Elon Musk’s Tweets if you are on Twitter. Here is how to do it. 

Gold continued its move higher as real yields fall., but slight souring in the risk tone kept the USD enough bid to keep gold’s rise capped under key resistance at $1860. However, as long as inflation expectations are there, and the Fed are not moving towards tapering, this should send gold higher through the only trend line that matters right now. Any news of Fed bond tapering and the outlook changes. Remember, in the last taper tantrum of 2013 gold lost around 20% of its value as the Fed tapered its bond purchases.

US 10 year yields stayed around the key 1.60% level for the session. The dollar index traded mostly sideways under key resistance and the VIX wavered in the 20-21 region. It is a market awaiting a fresh catalyst in a sleepy start to the week.

Finally I include my latest interview I had on CNBC Arabia prior’s to last week’s CPI data. It is in Arabic, so only one for our Arabic speaking readers. See here. I like the host’s smile when I explain the EURUSD is inversely correlated to the DXY at 5:17. See here for the whole interview. Justin will be back in the saddle tomorrow!

Take care everyone!




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