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Risk appetite continues its recovery from Friday after inflation-indicative US PCE data came in lower than expected.

1. Friday’s risk rally sparked by the lower-than-expected US PCE Price Index data (the Fed’s preferred inflation metric) seems to have continued over the weekend, with most major stock indices trading higher since this week’s open in Tokyo. The Nikkei 225, the HSI, and the Nasdaq 100 are all up by about 1% so far today. Markets are expecting that the next Fed rate cut will not happen before March 2025.
2. Cocoa futures reached a new all-time high price just below $13,000 per ton last week, although the last couple of days have seen a minor bearish retracement from the high. Cocoa has seen a very strong increase in value (approximately a 40% gain) over the past few weeks, and the market will remember the spectacular rally in Cocoa in 2023 which saw the price of the superfood triple within only 4 or 5 months. Trend traders will be interested in being long of Cocoa futures. Unfortunately for retail traders, the smallest Cocoa future available has a position size of $100,000 but there is a Cocoa exchange-traded commodity (ETC) ticker COCO available on the London Stock Exchange which is very affordable. The “ETC aims to replicate the Bloomberg Cocoa Sub Total Return Index (BCOMCCTR) by tracking the Bloomberg Cocoa Sub Excess Return Index.”
3. In the Forex market, since today’s Tokyo open, the Canadian Dollar has been the biggest gainer and the Swiss Franc the biggest loser. The EUR/USD currency pair remains in a valid long-term bearish trend after making a strong bearish move down after the Fed meeting to trade not far from the multi-year low above $1.0300.
4. There will be a release of Canadian GDP data today, which is expected to show a month-on-month increase of 0.2%.
5. As it is a Monday and just 2 days before the Christmas holiday, markets may be relatively quiet today.

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