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 Lower and Crude is trading Higher which is correlated. Gold is trading Lower which is not correlated with the US dollar trading Down. 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. All of Asia is trading Higher. Currently all of Europe is trading Higher as well with the exception of the German Dax which is fractionally Lower at this time.

Possible challenges to traders today

Prelim GDP is out at 8:30 AM EST. This is Major.
Core Durable Goods Orders is out at 8:30 AM EST. This is Major.
Durable Goods is out at 8:30 AM EST. This is Major.
FOMC Member Bostic Speaks at 8:30 AM EST. This is Major.
Prelim GDP Price Index is out at 8:30 AM EST. Major.
Unemployment Claims is out at 8:30 AM EST. Major.
Pending Home Sales is out at 10 AM EST. This is Major.
Natural Gas Storage is out at 10:30 AM EST. This is Major.
FOMC Member Quarles Speaks at 11:10 AM EST. Major.
FOMC Member Bostic Speaks at 12 Noon EST. This is Major.

Bias

Yesterday we gave the markets an Upside and finally the markets cooperated. The Dow closed Higher by 425 points, The S&P gained 44 and the Nasdaq gained 133. Today we aren't dealing with a correlated market and our bias is Neutral.

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

Commentary

Yesterday was Day Two of Fed Chairman Powell's testimony to a Congressional Committee and in it he basically stated his continued cooperation for a sustained period of easing for interest rates which is a key driver for Consumer Spending in the United States. Consumer Spending represents about 70% of GDP in the US economy and the Chairman and his members seemed intent on keeping it low for an extended period of time. The markets took this as positive news and exploded to the Upside. Today we have about 10 economic news reports, all of which are major; so we will see if this upward momentum can continue.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD softens to near 1.3600 as BoE hints further rate cuts

The GBP/USD pair loses ground to near 1.3610 during the early Asian session on Monday. The Pound Sterling softens against the Greenback amid growing expectations of the Bank of England’s interest-rate cut. Traders will take more cues from the Fedspeak later on Monday.

Gold eyes acceptance above $5,000, kicking off a big week

Gold is consolidating the latest uptick at around the $5,000 mark, with buyers gathering pace for a sustained uptrend as a critical week kicks off. All eyes remain on the delayed Nonfarm Payrolls and Consumer Price Index data from the United States due on Wednesday and Friday, respectively.

Top Crypto Gainers: Aster, Decred, and Kaspa rise as selling pressure wanes

Altcoins such as Aster, Decred, and Kaspa are leading the broader cryptocurrency market recovery over the last 24 hours, as Bitcoin holds above $70,000 on Monday, up from the $60,000 dip on Thursday.

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.