Market Wrap – Euro hits new high

The euro moved to its highest trading level since June during the US session as the market continued to digest the soft ISM print and inflation expectations from the New York Fed.

As the risk-on mood reverberates around broader financial market the US dollar is selling off against most major currencies and equity markets are considerably higher.

Tesla is posting intraday gains of above 7 percent, while the other technology giants such as Apple and Google are also gaining by around 3 percent.

Cryptos are also getting in on the act with Bitcoin above $17,300. The crypto market is following tech stocks higher as the likes of the Nasdaq and S&P500 surge.

One of the most interesting stories of the day is gold. The yellow metal continues to flirt with a huge technical breakout on the charts close to the $1,875 level.

Most of the major central banks have been in heavy accumulation mode and it was only a matter of time before the price of gold really started to catch up.

Much of the gains during the US session are built on optimism that the fact the US CPI release on Friday is going to show a considerable drop in inflation.

Breaking down the Fed expectations numbers release earlier today it showed that One-year ahead inflation expectations 5.0% vs 5.2% in Nov and Three-year inflation steady are at 3%.

Additionally Five-year inflation expectations 2.4% vs 2.3% prior and Expected household income rise 4.6%, which is a record. The Expected household spending rise 5.9% vs 6.9% prior.

The income number will give the Fed a pause, but overall this is good for the peak inflation narrative and Fed credibility on inflation and a reason why risk-on traders are in vogue today.