The markets somewhat stabilised yesterday and gave everyone a little time to reflect on the past few sessions. Equities finally clawed back some losses, crypto pushed higher and FX consolidated.

So what did Thursday bring? Well crypto continues to hang tough despite an early sell-off in BTC down to $11,390 before recovering to $11,650 to start the US day. ETH followed a similar path dropping to $223.50 before recovering to $227.

As you will soon read, crypto was not the focus so remained fairly quiet apart from another failed attempt above $12,000 for BTC. However, by the end of the day, we would be back to $11,900.

Moving swiftly onto other markets and I’m not even sure where to begin. So let’s talk about NZD. The RBNZ had their rate announcement early in the Asian day and shocked the market with a 50bp rate cut.

NZDUSD immediately drops from 0.6540 down to a low of 0.6378. In the accompanying statement they wouldn’t rule out further cuts, so a very dovish stance. As is often the case when NZD has a quick move, AUD will also (and vice versa), dropping from 0.6780 to 0.6678.

But this was the tip of the iceberg. Long story short, DJ futures quietly crept higher to around +100, looked like we would see a continuation of yesterday’s pullback in equities. Wrong. Prior to the open futures slip to -250 and after the open it would be one-way traffic as the DJ slipped to a low of -598 points.

XAU screamed higher from $1480 to $1510. USDJPY backed off to 105.50 and EURUSD rose to 1.1240. Bonds yields collapsed with the US 10y yield down to 1.63% at one point. Complete carnage yet again.

However, in a remarkable turnaround and without a clear catalyst, the DJ rallies all the way back to flat on the day and both the S&P and Nasdaq would register minimal gains. EURUSD trades back to 1.1200 and USDJPY squeezes to 106.25.

XAU gives back some gains but remains around $1500. Confused yet? Yes? Join the club. A rollercoaster of a day that has the market questioning how much lower bond yields can go and exactly what is President Trump’s end-game plan? I guess only he knows, but for now the volatility looks set to continue.

Today’s chart is a daily XAU chart stretching back to 2012-2013. The yellow metal has had quite the rise with bond yields slipping so much over the past two months. In early June, we were still at $1280 and today hit $1510.

We broke resistance from a May 2013 high at $1488 and that really opens up the topside towards $1600 and beyond. While of course nothing is guaranteed, the market will still very much be in the mode of buying dips, especially back to that old resistance level at $1488.

It would appear that only a dramatic reversal of bond yields will thwart Gold’s efforts to make further gains.



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