AUD/USD plunged alongside Wall Street indices following the Fed’s last meeting of the year. And if Santa’s rally is to kick in at all this year, it could be to pick up some of the crumbs left during yesterday’s volatile selloff.
By :Matt Simpson, Market Analyst
The Fed delivered their widely expected 25bp cut and, in line with my own expectation, slowed their pace of easing to two cuts in 2025. Yet market reactions suggest this development was not priced in. Nasdaq futures suffered their worst day in five months while S&P 500 and Dow Jones had their worst in four. All closed just off their lows for the day with highly negative delta volumes (considerably more sellers than buyers) to show bearish initiation behind the move.
Click the website link below to get our Guide to central banks and interest rates in Q4 2024.
cityindex.com
See the expectations for the Fed, ECB, and BOJ...and more importantly, what could drive monetary policy in Q4 and beyond!
If Santa’s rally is to kick in at all this year, it could be to pick up some of the crumbs left during yesterday’s volatile selloff. As a reminder, we tend to see Wall Street indices rise into the year end, and other global indices follow. The chart below shows the rally tends to kick in around December 21st for the S&P 500, with a series of positive average returns and favourable win rate. But I am not convinced the general returns over this period can outweigh the recent losses sustained, so Santa’s rally may fizzle out to more of a mediocre sympathy bounce.
Powell said during his press conference that stronger economic growth and lower unemployment has driven the slower pace of easing, and further progress on inflation needs to be achieved to justify further cuts. But they can afford to be more cautious as they are very close to neutral. Perhaps wisely, he declined to comment on Trump’s policies.
The combination of a surging US dollar and fallout on Wall Street saw AUD/USD plunge to a 2-year low during its worst day since March 2023. The Aussie now trades just over 50-pips from its 2022 low, which is close enough to be rude not to at least tap it.
Still, the 2022 is a big level indeed. And one that could at least trigger a volatile shakeout, as bears are tempted to book profits. But to see such a bearish acceleration at cycle lows underscores the panic, and with the yuan weakening alongside China’s bond yields, this is not a bearish stampeded I intend to stand in front of. But AUD/USD traders need to monitor how China’s markets react to get a feel for just how low AUD/USD can go and if it can break or rebound from the 2022 low.
Click the website link below to get our exclusive Guide to AUD/USD trading in Q4 2024.
cityindex.com
If the RBA is able to stick to its plan and keep monetary policy unchanged, AUD/USD may stick to its bullish seasonal trend in Q4, though volatility could increase.
11:00 – NZ business confidence
11:30 – AU reserve assets
14:00 – BOJ interest rate decision (no change expected)
17:30 – BOJ press conference
23:00 – BOE interest rate decision (no change expected)
00:30 – US GDP (Q3)
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
cityindex.com
AUD/USD plunged alongside Wall Street indices following the Fed's last meeting of the year. And if Santa’s rally is to kick in at all this year, it could be to pick up some of the crumbs left during yesterday’s volatile selloff.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
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By :Matt Simpson, Market Analyst
The Fed delivered their widely expected 25bp cut and, in line with my own expectation, slowed their pace of easing to two cuts in 2025. Yet market reactions suggest this development was not priced in. Nasdaq futures suffered their worst day in five months while S&P 500 and Dow Jones had their worst in four. All closed just off their lows for the day with highly negative delta volumes (considerably more sellers than buyers) to show bearish initiation behind the move.
Click the website link below to get our Guide to central banks and interest rates in Q4 2024.
Central Banks Q4 2024 Market Outlook - City Index AU
See the expectations for the Fed, ECB, and BOJ...and more importantly, what could drive monetary policy in Q4 and beyond!
If Santa’s rally is to kick in at all this year, it could be to pick up some of the crumbs left during yesterday’s volatile selloff. As a reminder, we tend to see Wall Street indices rise into the year end, and other global indices follow. The chart below shows the rally tends to kick in around December 21st for the S&P 500, with a series of positive average returns and favourable win rate. But I am not convinced the general returns over this period can outweigh the recent losses sustained, so Santa’s rally may fizzle out to more of a mediocre sympathy bounce.
Powell said during his press conference that stronger economic growth and lower unemployment has driven the slower pace of easing, and further progress on inflation needs to be achieved to justify further cuts. But they can afford to be more cautious as they are very close to neutral. Perhaps wisely, he declined to comment on Trump’s policies.
AUD/USD technical analysis:
The combination of a surging US dollar and fallout on Wall Street saw AUD/USD plunge to a 2-year low during its worst day since March 2023. The Aussie now trades just over 50-pips from its 2022 low, which is close enough to be rude not to at least tap it.
Still, the 2022 is a big level indeed. And one that could at least trigger a volatile shakeout, as bears are tempted to book profits. But to see such a bearish acceleration at cycle lows underscores the panic, and with the yuan weakening alongside China’s bond yields, this is not a bearish stampeded I intend to stand in front of. But AUD/USD traders need to monitor how China’s markets react to get a feel for just how low AUD/USD can go and if it can break or rebound from the 2022 low.
Click the website link below to get our exclusive Guide to AUD/USD trading in Q4 2024.
AUD USD Q4 2024 Market Outlook - City Index AU
If the RBA is able to stick to its plan and keep monetary policy unchanged, AUD/USD may stick to its bullish seasonal trend in Q4, though volatility could increase.
Economic events in focus (AEDT)
11:00 – NZ business confidence
11:30 – AU reserve assets
14:00 – BOJ interest rate decision (no change expected)
17:30 – BOJ press conference
23:00 – BOE interest rate decision (no change expected)
00:30 – US GDP (Q3)
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
AUD/USD plunges to 2-year low, Santa’s rally faces cancellation
AUD/USD plunged alongside Wall Street indices following the Fed's last meeting of the year. And if Santa’s rally is to kick in at all this year, it could be to pick up some of the crumbs left during yesterday’s volatile selloff.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
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