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Dell announced their earnings after the close and beat on the top and bottom lines:

• EPS $1.89 versus $1.71 expected
• Revenues $25.03 billion versus $24.14 billion expected

Dell shares closed at $110.74 and are trading higher by $7.10 or 6.41% at $117.85.

This article was written by Greg Michalowski at www.forexlive.com.

The closing changes look small but it was certainly a lively day in North American equity markets. It looked bleak in the pre-market yesterday after Nvidia earnings but the market later shook it off and opened slightly higher. That was followed by some strong buying that ultimately flopped as heavy afternoon sellers hit and ultimately left the Nasdaq slightly lower.

Closing changes:

• S&P 500 flat
• Nasdaq Comp -0.2%
• Russelll 2000 +0.7%
• DJIA +0.6%
• Toronto TSX Comp +0.5%

This article was written by Adam Button at www.forexlive.com.

Goldman Sachs highlights a dramatic shift in market sentiment towards USD shorts as positioning adjusts ahead of anticipated Fed rate cuts. Despite tactical shifts, structural flows and high attractiveness of US assets may limit the USD’s decline.

Key Points:

1. Positioning Shift: Significant USD shorts have emerged, reflecting a market sentiment leaning towards USD weakness. This shift follows a move lower in the USD driven by the unwinding of long positions.

2. Historical Context: Historically, USD shorts often increase before the start of a cutting cycle. Despite this, Goldman Sachs sees parallels to the market’s reaction to dovish Fed communications from December 2023.

3. Structural Flows: While tactical positioning has changed quickly, structural flows may take longer to adjust. The attractiveness of US assets and uncertainty surrounding the upcoming US election could dampen substantial USD declines.

4. Election Impact: The approach of the US election could further slow portfolio adjustments and impact USD movements, maintaining some support for the currency despite current short positioning.

Conclusion:

Goldman Sachs notes a significant increase in USD shorts, reflecting market expectations for weaker USD as the Fed potentially cuts rates. However, structural factors and the US election could temper the extent of the USD’s decline.

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This article was written by Adam Button at www.forexlive.com.

Bitcoin has followed the broad market lower today as the early positive momentum in the risk trade comes unwound. Shares of Nvidia are down more than 6% following earnings.

Last week, it looked like bitcoin was ready to recoup the July-August decline but this week has seen steady selling. Today there was a strong rebound that nearly erased the Wednesday decline at one point, it it’s all come undone in the past two hours.

For now, there are still a series of higher lows from the August bottom but that would be invalidated by a fall below $57,000.

For the broader market, crypto has been a good leading indicator of sentiment and the latest round of weakness doesn’t bode well. On top of that, September is by far the worst month for stocks in the US over the past 20 years.

This article was written by Adam Button at www.forexlive.com.

Shares of Nvidia are dragging down the broader indexes as they fall 5.4% to the lowest in regular trading. NVDA is down $6.65 to $118.95 as the market (and the options market) continues to digest yesterday’s earnings report.

A host of analysts have boosted price targets since the release but the market hasn’t cooperated. There was some brief buying rigth at the market open but the trend has been lower since and accelerated in the past 30 minutes on a break below $120.

The post-market low yesterday was $115.01.

The drop in Nvidia shares coincides with a decline in the broader market after some strong buys earlier. The S&P 500 is now up 17 poitns to 5609 after rising as high as 5646 early in the US afternoon.

The FX market has largely ignored these latest moves.

This article was written by Adam Button at www.forexlive.com.

Shares of Best Buy are having their best day since 2020 after reporting strong earnings. The company raised its fiscal-year guidance and now expects to see full-year adjusted earnings per share in the range of
$6.10 to $6.35, up from a prior range of $5.75 to $6.20.

It wasn’t all good news for the economy though as the company lowered the top end of its guidance ranges for both full-year revenue and comparable sales. Comp sales declined 2.3% in the quarter with weakness in appliances, home theater and gaming, partly offset by computing and tablets.

Here are some notable comments on the consumer from the conference call:

• Best Buy CEO notes consumer environment remains “unpredictable and uneven”
• Company sees “resilient consumer so far” but expects potential “unsettled” behavior heading into holiday season
• Consumers remain “deal focused” and attracted to “predictable sales moments”
• Many product categories like appliances and TVs “continued to be very promotional”
• Best Buy observes consumers willing to spend on high-priced items when needed or for compelling new technology
• Company doesn’t see signals of major changes in customer behavior that would make them “increasingly cautious”
• Macro factors like inflation, spending on experiences vs. goods, and stagnant housing market continue to pressure consumer electronics industry
• Some early signs of easing inflation pressures, though housing remains a concern
• Spending on experiences has remained “relatively sticky” but showing some early signs of pulling back

This article was written by Adam Button at www.forexlive.com.

SocGen highlights that the unwinding of CAD shorts is still in progress, noting that substantial CAD short positions accumulated earlier this year have begun to reverse, impacting USD/CAD.

Key Points:

1. Unwinding of Yen Shorts: The recent focus has been on the unwind of large yen short positions, which have normalized since early August. This shift has been significant but is no longer the primary FX positioning story.

2. Current Focus on CAD: The largest remaining FX position is the short against CAD, accumulated between March and July. Recent movements indicate a reversal of these positions, pushing USD/CAD down from 1.40 to below 1.35.

3. Ongoing CAD Short Covering: Given the scale of the remaining CAD short positions, SocGen believes that the covering process is still underway and has further to go, suggesting continued pressure on USD/CAD.

Conclusion:

The significant CAD short positions from earlier this year are still being unwound, and SocGen expects CAD short covering to continue, which could keep USD/CAD under pressure in the near term.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

This article was written by Adam Button at www.forexlive.com.

There has been a nice turnaround on the intraday gold chart. It fell about $15 follow a round of USD buying on good GDP data but has since recouped all of that and more.

Bids emerged just before $2500 and it’s now in-line for a record close. The intraday record of $2531 is also within striking distance.

Fitch today affirmed the USA’s credit rating at AA+ but also highlighted a deficit that’s on track to hit 124% of GDP. They forecast a deficit of 8.1% of GDP in 2024 followed by 7.7% in 2025 and 2026. Those are eye-watering numbers that highlight downside risks to both the US dollar and to growth. It’s clearly unsustainable even in a period of 3% GDP growth.

Earlier this week I made: The very simple case for buying gold but would warn that September seasonals for gold are poor.

This article was written by Adam Button at www.forexlive.com.

This is the final episode of a trio of auctions this week. The two-year sale stopped through strongly while there was a small tail for the 5s.

• Prior was 4.162%
• Bid to cover 2.50 vs 2.64 prior

This is a 0.9 bps tail but so far the market is taking it largely in stride.

This article was written by Adam Button at www.forexlive.com.

It’s not AAA anymore but that’s a win.

This article was written by Adam Button at www.forexlive.com.

The US dollar jumped on stronger GDP and solid initial jobless claims but it’s slowly giving back those gains as equities strengthen. The S&P 500 is near a session high and up 0.9% while the Nasdaq is up 1.3%.

USD/JPY was the biggest mover on the economic data, rising a full cent but it’s since trimmed that to 38 pips.

The drop in the dollar has coincided with improving risk sentiment.

Looking to the top of the hour, the US is sell $49 billion in seven-year notes. Seven-year supply has been
generally well-received this year with five auctions stopping through, and two
tailing – although one of those tails was by just 0.3 bp

This article was written by Adam Button at www.forexlive.com.

Closing changes on the day:

• Stoxx 600 +0.75%
• German DAX +0.6%
• Francis CAC +0.8%
• UK’s FTSE 100 +0.5%
• Spain’s IBEX +0.25%
• Italy’s FTSE MIB +0.8%

That is an impressive turnaround for the DAX.

This article was written by Adam Button at www.forexlive.com.