Deus Forex Machina

Gold surged on Friday night to $1396 oz.

Yesterday the Twitterverse was agog at the likelihood that after six down days in a row the Dow was likely to rally last night – and so it came to pass with US stocks up across the board even after the Nasdaq had to suspend trading after some glitches hit its network.

Rightyo so the Fed didn’t say anything contentious or unexpected and as David has written this morning in his piece on the Jedi Fed “When the Fed tapers now is really immaterial.

The news headlines are about the troubles in the emerging markets but its is really developed markets that are the focus of the big swings and the big capital allocations.

Over the past month there has been a strong divergence in economic release between the G10 (strong), the BRIC’s (weak) and emerging markets (weak but not as weak as the BRIC’s).

A couple of week’s back I asked if the Aussie dollar low was in and since then the Aussie has rallied pretty well even as I’ve been on the wrong side of it.

Last night’s price action in the US dollar and sell of in US stocks is dedicated to Frankie Valli.

Bonds rates around the world moved higher, sharply so, overnight on the back of the better than expected data in the US and in Europe.

Is it just me or was the price action in gold and the US dollar over the first day of the week and the data from Japan a little sign that maybe a safe haven trade might be gaining a bit of traction once again.