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Market Talk – November 20th, 2015

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Asian equity markets closed a rather dull week in the positive but off their highs and with lots of dealer talk of possible PBOC easing action over the weekend. Traders are always looking for the next trade, so if it makes sense (or even if it does not) traders will jump on the bandwagon. As Asia closed the rumours were that the Chinese Central Bank were planning on easing monetary policy over the weekend and so further support the USD strength and Chinese investment overseas. Never let the truth get in the way of a good story and so currencies were the main benefactor today. The DXY performed well today as the Euro, GBP and DKK were all sold losing almost 1% each. Consequently, US Stocks closed positive but way off of their days highs.

Given the continued USD strength US stock market maintained their momentum with solid gains seen across all indices. Having heard from numerous FED and ECB members this week the plan is set for a US hike followed closely by further ECB QE/easing. It would be very easy just to play this game early by shorting the EURO or (as is known these days) playing the EURO as a carry trade. The logic makes sense but as always it is all about timing.

The talk is now about a Monday meeting at the Fed.