GM Lark Traders! This is Lark Digest, the trading newsletter that delivers hot off-the-press news faster than XAUUSD tanks after an NFP shocker.

We’re here to give you the complete breakdown.

Mr.Lark

On today’s menu:

• Why XAUUSD Just Crashed 📉

📉 Why XAUUSD Just Crashed

On Fridays, we like to keep the vibes high, but clearly, XAUUSD didn’t get the memo.

As of writing this, gold looks sadder than a trader that just blew their $100K challenge.

So, as always, we’re here to explain why the yellow metal is feeling depressed.

1/ THE US IS RESILIENT 🇺🇸 

This morning, we had the Non-Farm Payrolls release and it came in hotter than a summer day in Death Valley.

The market was expecting a modest 185,000 new jobs, but instead, we got a whopping 272,000! Talk about overachieving, right?

But before you start popping the champagne, there’s a twist.

The unemployment rate ticked up from 3.9% to 4.0%. It’s like finding out your favourite stock surged, but they’re also filing for bankruptcy—mixed feelings all around.

But surprisingly, the market only cares about the NFP print…

2/ A CHANGE IN EXPECTATIONS 🙃

This print has shot up the DXY (U.S Dollar Index) like it just got a double shot of espresso.

But gold is crashing faster than my New Year’s resolutions.

So, what’s going on here?

Earlier this week, the Bank of Canada and the European Central Bank cut interest rates.

By them starting off the party, many thought the US wouldn’t be far behind.

But for them to cut rates and have your mortgage payment drop, there needs to be weakness in the economy.

And your cousin finally getting that job isn’t the weakness they need to see.

So, what does all of that mean? Why is XAUUSD crashing?

Because the market is adjusting their expectations for when the Fed will cut rates.

And as Mr. Lark always says, when the Fed changes its mind more often than a teenager picking an outfit, you better stay on your toes.

3/ HOW I’M TRADING THIS 🤑

Here’s the golden rule of trading:

The market is always forward-looking. It doesn’t care what’s happening today; it cares about what will happen in the future.

Today’s data suggests we’ll see fewer rate cuts, and it won’t be for a while.

And that means our bias is:

• Long USD 📈 

• Short XAUUSD 📉 

• Stocks? 😕

We need to see how the market digests this to create a bias on stocks.

A stronger job market is generally good news, but higher interest rates can be a buzzkill for growth stocks 📉 

Stay safe out there, Larkers and happy Friday!
Mr.Lark

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☕️ Pre-Market Fuel

1. Will Roaring Kitty become a billionaire today? If GameStop hits $69/share by today, he will be.

2. Warren Buffett has been buying up an insane amount of Treasury bills. It suggests that he thinks interest rate cuts are on the way.

3. Look at all of these countries that have cut rates so far this year. After today, it’s questionable whether the US will be added to that list.

🍪 Digestible Memes

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