This is not a correlated market. The dollar is Down- and Crude is Up+ which is normal and the 30 year Bond is trading Lower. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa. The S&P is Higher and Crude is trading Higher which is not correlated. Gold is trading Lower which is not correlated with the US dollar trading Lower. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open. Asia is trading mainly Higher with the exception of the Singapore and Nikkei exchange. Currently Europe is trading Higher with the exception of the Milan exchange which is down fractionally.

Possible challenges to traders today

Import Prices are out at 8:30 AM EST. This is Major.
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
Fed Chair Powell Speaks at 12 noon EST. This is Major.
Beige Book is out at 2 PM EST. This is Major.
FOMC Member Williams Speaks at 2:30 PM EST. This is Major.
FOMC Member Clarida Speaks at 3:45 PM EST. This is Major.
FOMC Member Bostic Speaks at 4 PM EST. No effect.

Bias

Yesterday we gave the markets an Upside bias as the USD, Bonds and Gold were all trading Lower yesterday morning and under ordinary circumstances would have been an Upside day. The S&P and Nasdaq did trade Higher however the Dow dropped 68 points. Today we aren't dealing with a correlated market and our bias is to the Upside.

Could this change? Of Course. Remember anything can happen in a volatile market.

Commentary

Yesterday we gave the markets an Upside bias as just about all the instruments we use for Market Correlation purposes indicated an Upside day. Then a funny thing happened around 7 AM EST. It was announced that the JNJ vaccine that only requires one dose was put on hold as some people developed blood clots in their brain allegedly due to this vaccine. However it should be understand that about 7 million JNJ vaccines were administered and out of those only six (6) persons were affected this way. That is minuscule and those persons were women ages 18-48. No women outside of that age range have been affected. This drove the Dow lower and as such the Dow was the only index to lose ground yesterday. Both the S&P and Nasdaq gained ground. Today we have a bit more economic news so we shall see if this changes market direction today.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.