Recession It Is!

It’s often said that real and influential movements happen a day or two after the FOMC and rate decision. If that’s the case, then we definitely have a positive signal for stocks and a negative one for the US dollar. It also appears that this will be the sentiment for the next few weeks.

The rate decision in the US wasn’t the only important data this week. Yesterday for example, we found out that the US is in an official recession. The GDP came out to a negative -0.9% instead of the expected 0,4%. FED officials and US policymakers were clearly unhappy about that number and set out to do their best to change the definition of recession in order to make it magically disappear. Still, all the smoke and mirror tricks can’t hide the fact that two consecutive negative GDP prints means… a recession is here.

You’d imagine this news being negative for stocks. But no. The stock market is happy because it means a slowdown in rate rises and maybe another stimulus on the horizon. Yay!

One of the biggest stars over the past two days has been the Japanese yen. Overnight we had a package of data from Japan including their retail sales, industrial production or unemployment rate. The data came in mixed and I don’t think it had a real impact on what’s happening with the yen right now. Friday will most probably bring us some kind of a correction, because the movement was strong and taking profits has been looking very tempting. Also, I don’t think traders would be keen to stay with a short position on USDJPY over the weekend, or in general, for too long.

The earning season continues. Today we’ll get earnings from Exxon Mobil, Procter&Gamble, and Chevron. Big players of course, but not big enough to shake the whole market. The macro calendar is rather empty today with the most meaningful data from the US PCE Price Index, normally not Tier-1 data.

Worth mentioning is it’s the third (so far) consecutive bullish day on gold. After the bounce off the 1680 USD/oz, buyers are coming in hot. The first target is really close and will most probably touch 1780 USD/oz very soon.