Market News

• Greene: continue to think we should proactively lean against the risk of second-round inflation effects
• The risk of second-round effects is greater than we previously thought
• Wage disinflation looks to have stalled at levels above those consistent with 2% inflation

Megan Greene is sticking to her guns and the message is only getting sharper. Her latest: wage disinflation has stalled at levels inconsistent with 2% inflation, the risk of second-round effects is greater than previously thought, and the BoE should continue to proactively lean against them.

That’s three for three on the hawkish checklist, and nothing we haven’t heard from her before — she’s was one of the three September dissenters voting for a hike to 4%, she warned last week…

There are some incremental positive developments on the road to peace in Ukraine.

Finland's President Stubb said this: On a substantive and technical level, we’ve made a lot of progress under the radar in the past week or so towards a peaceful solution to the war in Ukraine. Similarly (though less explicit) Norway's PM said that after meeting with Ukraine

On a more substantive note, ABC reports that the US is nearing a deal with Russia to free 'multiple' jailed Americans. There are also reports that US envoys Witkoff and Kushner will fly to Saint Petersburg tomorrow. On that note, Stubb said they found some elements of peace that will be taken to that meeting in Russia.

The US administration has been leaning on Zelenski in recent weeks in…

he USDCAD sellers have been steadily pushing the pair lower since last Wednesday, when the price stalled near the October 9 high. That failure to extend higher gave sellers their opening, and they have taken advantage.

The pair has now declined for four consecutive days. From Wednesday’s high at 1.42984 to today’s low at 1.4033, the price has fallen approximately 265 pips. That is a sizable move in a relatively short period, with a series of broken technical levels giving sellers more confidence along the way.

However, today’s test of the 100-day moving average has attracted some buying interest. The question now is whether buyers can turn that initial response into a larger corrective move.

Sellers have been clearing the downside hurdles

The…

The headline pendulum has swung back in the other direction.

A report now circulating suggests that talks between Iran and the US are continuing, but pushes back against the idea that a deal is close. That is a less encouraging message than the earlier headlines, and markets have given back some of the moves tied to hopes for a breakthrough.

The distinction matters. Continuing negotiations keep the door open to progress. However, talks alone do not establish that the two sides are close to an agreement. Traders who positioned for a more immediate easing of tensions are now reassessing those expectations.

Oil rebounds as yields move off their lows

Crude oil has moved back above $97 after reaching a low of $95.25. The rebound shows how…

As London/European traders head for the exits, the major European indices are closing mostly lower. Spain’s Ibex is the exception, while France’s CAC leads the declines.

The closing levels show:

• Germany’s DAX: down 13.02 points, or 0.05%, at 25,306.76.

• France’s CAC: down 29.56 points, or 0.38%, at 7,838.50.

• UK’s FTSE 100: down 31.71 points, or 0.29%, at 10,732.99.

• Spain’s Ibex: up 53.10 points, or 0.28%, at 19,092.39.

• Italy’s FTSE MIB: down 14.92 points, or 0.03%, at 49,071.36.

Middle East headlines keep traders on their toes

The bigger story has been the volatility surrounding the US–Iran negotiations.

Earlier optimism followed an Al Araby Al Jadeed report that Qatar and Pakistan had presented a compromise proposal involving confidential IAEA…

One of the most important lessons I learned early in my trading career was that price action needs to help confirm the fundamental story. A story can sound convincing. But for traders, the question is practical: Is the market moving in a way that supports it?

Treasury Secretary Scott Bessent said during an appearance on 2WAY TV that we are on the “other side of the energy shock.”

There may be an argument that the worst of the initial spike is behind us. But looking at crude oil prices and the technical levels, I am not ready to declare victory.

December crude oil futures reached $101.37 today. Although the price has since slipped below $100, it remains higher by about 0.78% as I speak. Before the war began on February 28, crude was trading…

GBPUSD breaks above its 100-day moving average as Iran headlines pressure the dollar

The GBPUSD is pushing to new highs for the day as reports of a potential compromise between the US and Iran send oil prices and US yields lower, while putting pressure on the dollar.

According to Al Araby Al Jadeed, Qatar and Pakistan have presented a proposal that includes a secret IAEA visit to Iranian nuclear sites and the release of $6 billion in interest on frozen Iranian funds. The proposal reportedly has US approval and some prior Iranian support, although differences remain and official confirmation is still needed.

The market is responding to the prospect of reduced tensions. December crude oil futures have fallen below $96 after trading above $101…

Al Araby Al Jadeed is reporting that Qatar and Pakistan have put a “compromise proposal” in front of Washington and Tehran that meets the demands of both sides. The key detail is that the plan, presented to Iranian officials today by Pakistan’s army chief, reportedly already has American sign-off and some prior Iranian approval.

The reported terms:

• Release of $6 billion in interest on Iranian funds frozen in Qatari banks
• A “partial response” to Iran’s demand for the return of frozen funds
• A secret IAEA visit to Iranian nuclear sites, meeting a US demand
• A framework to stop a return to escalation and restart negotiations

The same outlet cites a source saying a breakthrough to halt escalation between Washington and Tehran is expected to be…

Bitcoin buyers had their opportunity yesterday. More specifically, the price broke above its 100- and 200-hour moving averages (currently at $81,686 and $82,082 respectively) and extended to a high of $83,038. However, the momentum faded before reaching the next upside target at $84,178.

The price subsequently rotated lower, spent several hours trading between the two moving averages, and eventually broke below both. Over the last few hours, it has remained below those levels, tilting the short-term technical bias back to the downside.

The moving averages currently come in at:

• 100-hour moving average: $81,687

• 200-hour moving average: $82,082

Why do those levels matter? They provide a reference for control and risk. Yesterday’s break above gave…

What worries me about the economics of AI is that as models advance, there will be more and more tasks that can be completed by cheap, open source models. For instance, once AI can reliably complete the tax filings of 98% of people, then you won't need a frontier model to do it. That line of thinking is going to work through a whole series of workloads and Scotia has an interesting report today that's somewhat of a case study on a single healthcare company that's aggressively adopting AI.

The healthcare technology firm Scotion spoke to ($2 billion in revenue, 5,000 employees) is running a two-tier model strategy, and the bottom tier is growing fastest. Machine-driven workloads, now about 70% of token usage, are split 50/50 between closed…

• Prior was +0.3%
• Index vs 71.2 prior

For background. the US pending home sales report provides an early indication of demand in the existing housing market. Published monthly by the National Association of Realtors, it tracks signed contracts to purchase existing homes, rather than completed transactions.

That distinction is what gives the report its value. A home typically goes under contract one or two months before the sale closes, making pending sales a leading indicator for the existing home sales report. It offers a more timely view of how buyers are responding to mortgage rates, prices and available inventory.

The headline measure is the Pending Home Sales Index, with 100 representing the average level of contract activity in 2001. It…

In the morning video above, I take a look at the three major currency pairs—EURUSD, USDJPY and GBPUSD—from a technical perspective. For each pair, I outline the bias, the risk-defining levels and the targets that would give either the buyers or sellers more control. It is important to have a roadmap technically. I help provide your roadmap. 

The North American session gets underway with the dollar mixed but mostly lower, crude oil above $100, and US and European equities are under pressure. Treasury yields are split, with the 2-year yield edging higher while longer-term yields decline.

That combination deserves attention. Higher oil keeps the inflation discussion alive, but the decline in longer-term yields shows that the bond market is not…