Who Knew What And When

Who Knew What? And When?

Gold and Yen pairs have long been considered a flight to safety. When traders get nervous, they tend to sell risky assets and move their money into “safe havens”, such as Gold and Yen.

Given yesterday’s risk-on move in stocks, one may have considered that things to be great and that the economy is on the path of growth and continued support by the Fed. This can be seen in a 5-minute chart of yesterday’s price action in S&Ps.

Source: Tradingview, CME, City Index

That may still be the case, however Gold and Yen didn’t seem to believe the narrative. Take a look at the 5-minute chart of USD/JPY from yesterday. As S&Ps were making new highs into the close, USD/JPY could only retrace 50% of the day’s move.

Source: Tradingview, City Index

The same can be said for EUR/JPY. From high to low, the Yen pair was down over 200 pips, and could not even retrace to the 38.2% Fibonacci retracement level for the day!

Source: Tradingview, City Index

Below is a 5-minute chart of S&Ps overlaid on Gold. Gold and S&P’s typically have an inverse relationship, i.e. when stocks move higher, gold will usually move lower. Notice at the end of the day how the 2 assets were moving together.

Source: Tradingview, CME, City Index

Perhaps this just may have just been positioning on the first trading day of the new year. Markets will still be thin until many traders return from a long break on Monday. However, after seeing the price action of Yen pairs and Gold begs us to ask the question….Did someone know that the US attack, which killed Iran Gen. Qassem Soleimani, was imminent? This is something we will never know the answer to. Obviously, as we know now, after the attacks S&Ps dropped roughly 55 handles from high to low. Proper risk management would have stopped out anyone who had gotten long in S&Ps into the end of day yesterday. But when we see asset correlations break down, we need to ask ourselves why that is and take note of it. If one had questioned this yesterday, it may have resulted in hesitation to buy S&Ps into the end of the day and may have saved someone from a losing trade.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.