Last weeks trading showed increased volatility in all markets from small and large cap stocks to currencies across the board. The US Dollar showed it’s strength again despite a small retracement, mostly against the Yen and British Pound as the Euro just kept it’s same weak downward spiral with no assistance coming from the ECB meeting and words from Draghi. Major scares of the Ebola virus in the States, Hong Kong protest reminding us of Tiananmen Square and an upswing of actions against ISIS in Syria kept all Markets jittery and mixed. Gold and Silver continued to build a more solid base as investors are now digesting all of Friday’s news events including the strong US Non Farms Payroll which helped the USD recover any previous losses from Thursday’s action.
Monday was a National holiday in Australia, but that didn’t stop some currency surprises entering the markets. What a difference a day makes which shows again that volatility can turn a market around at a seconds notice. The mighty US Dollar had it’s biggest crash in over a year stopping a 12 week rally and stocks have retraced most of their yearly gains. This USD weakness sparked a commodity surge in Gold and Silver where last week’s base of support remained firm. Silver rose 3 % and gold had a 3 month high (gain of 20 dollars) as the commodity Bulls finally gave a sigh of relief. Many analysts are saying this is a normal and needed correction and with a light US news data week and continued weak Euro results, Dollar bulls will not be influenced at all and no doubt yesterday showed some profit taking from the big boys. Will the Dollar continue to lose some value this week? only time and price action will tell.
Stocks around the Globe were generally muted yesterday, no significant gains anywhere… A prominent Canadian analyst is saying that US Stocks are showing signs of SEVERE weakness and a sharp correction is coming as fewer stocks are now above the all telling 50 and 200 moving day averages. He states small caps are the thing to keep your eye on, like the Russell 2000, as it is making new lows. Also noteworthy is that many large European Companies have been getting their money out of the Euro zone and it is looking like a Global Money Tsunami! The last quarter alone 87 Billion Euro have left their shores mostly going to the States. It’s all about risk, as Euro manufacturing plunges and consumer confidence has fallen, so business is reacting.
On the data front today we have the Bank of Japan, and the Reserve Bank of Australia coming out with interest rate decisions and later on some news from Great Britain on Manufacturing Production.
The mighty US Dollar took a breather on Tuesday’s trading losing ground against most of its major counterparts. Some large institutions took profit and are now considering what to do. The recent Dollar rally has slowed somewhat and these losses are interpreted as a corrective pull-back.
Gold had four hours of very positive trading jumping up 35 Dollars, high of 1235.35 but was met with a brick wall and quickly retreated to end the US session around the 1222 area. Upon the Asian session open, gold has further weakened to 1220 but has regained a couple of dollars and sits at 1222 where price movement has now slowed. Oil has reacted to increased action in the Middle East and edged higher about a dollar and is sitting at 91.67 upon the close of the day.
Yesterday’s Chinese Manufacturing Purchases results pleasantly surprised many. The Aussie and Kiwi initially reacted stronger but their past week’s downward momentum took over and they both had a free fall in quick fashion. The Australian Dollar has lost 4.6% against the US Dollar this month alone. Many investors betting on this weakness to continue.
The US and Allies increased air strikes in the Middle East and are to blame for the toll in stock prices. Wall Street was lower across the Indexes, the DOW down 0.68%, S&P 500 down for the third day in a row.
AT Partnerships Update
The news calendar is fairly light today. The Eurozone does have an important release of “German IFO Business Climate” which is a survey of over 7,000 businesses about current business conditions. This release is highly respected and can have a mighty impact on currency prices. During the US session, New Home Sales is coming out and an indicator of economic he…..
European data shows the single currency economy has now ground to a halt. Yesterday in France, Mario Draghi said that the ECB will do everything in its power to stimulate growth by using some unconventional banking tools to spur some inflation into the economy. While interest rates will remain low, the question is what will the Euro do? It did not respond well to Draghi’s comments at all and continued its struggle against most combatants especially the US Dollar. Weakness is expected to remain in the struggling Euro. Yesterday’s German PMI data was not encouraging. Sanctions against Russia have really hurt the GDP of Germany, the engine that drives the whole European economy. Bank lending to private euro zone businesses needs to grow, as it has fallen 1.6% so far this year only because demand is not there. The reason for no demand is because business is running scared, wary of deflation, the killer for a growth environment . This will only leave the Central Bank one option and that is to buy sovereign bonds just as the Bank of England and the US Fed are shutting off their money printing presses. The Euro has weakened further upon the Asian open now at 1.2775; a fresh 14 month new low . A large option from one of the major players in New York sitting at 1.2800 was busted yesterday further adding to the Euro demise .
The currencies that were on a positive direction yesterday were the New Zealand Dollar the Australian Dollar, as both reversed their negative trends based on some solid trade balance data along with domestic fundamental positve news. The US Dollar Index also advanced on good “New Home Sales” that rose an astonishing 18% obliterating the expected 4.4%. Many analysts are now believing the “US Dollar Index” is on the verge of a major correction. For those technical traders out there, these analysts are basing their beliefs on technical charts that shows “negative RSI divergence” a lower high seen on this indicator, as the Index price on the chart has a higher high at the same point. Divergences can be very powerful but can take some time to play out.
Gold and Silver had some up and down movement but have finished the trading day at about the same point of where it started so no major commitments by any of the Big Boys either way.
Major Stock Markets, the DOW, S&P 500, FTSE, and DAX all had minor gains as Geopolitical events in the Middle East ramped up even higher.
The only major news announcements today are coming out of the US with very important Durable Goods numbers and Unemployment Claims. Currencies this week have really reacted quickly to news data being released and this shoud be no exception. Also around this time of 8:30 EST, Bank of England Mark Carney will be speaking, and this is always an interesting show as every word is scrutinized for a hint at any changing of
To summarize last week’s currency price action comes down to a familiar, repeat performance of the US Dollar, as it just keeps marching on, steam rolling all opposition before it. The dollar rose to fresh 6 year highs against the yen on Friday and hit 14 month peaks against the Euro after data showed the US economy grew at its fastest pace in two and a half years. The US Dollar Index, which tracks the performance of the greenback versus a basket of six other currencies, ended Friday’s session up 0.51% to a 4 year high, capping its eleventh consecutive weekly gain. Quite remarkable price action!
A good example of US Dollar strength is that the Pound Sterling rose against the Euro close to two year highs but got clobbered during the London session by the Dollar. Other currencies to feel the impact are the commodity based countries, as the Aussie, New Zealand the Canadian (CAD) all felt the wrath of fury from the American Buck.
Oil prices have dropped also, affecting the Russian rouble as they are a huge export of Crude Oil so their currency dropped to fresh record lows against the greenback. The cost of OIL has costs Russia millions of needed cash. Yesterday, Russia has had a stroke of luck with a massive OIL discovery found in the Arctic Ocean said to have the potential of hundreds of billions of dollars. Putin must suddenly have a wry smile on his face today!
Silver is at its lowest level in 4 years breaking major support at 18.20 and with the next level at 17.50. Trade volumes are still surprisingly low. Gold, on a weekly chart has hit a triple bottom going back to June 2013. Can this bottom at 1180 area be broken this week? There is a direct relationship between the US Dollar and Gold, usually one goes up and the other goes down…
Its all about risk and one wonders if risk has been distorted by Central Banks printing money to pay off debt and affecting the true value of supply and demand. World debt is not slowing down so developed economies must draw upon underfunded pensions, and taking money out of honest people’s bank accounts to keep the nightmare alive. This won’t and can’t go on forever and simply, all this debt simply won’t be paid. There are knowns and unknowns making it difficult for investors to mitigate risk. There are certainly a lot of challenges ahead, but then again, there will be many opportunities for the savvy…
There will be plenty of action this week coming from news announcements but the ultimate is Friday’s Non Farm Payrolls, Trade Balance and Unemployment Rate (US session), all released in the same minute usually sending the market into a wave of up and down undulation until a direction is finally settle upon. For the Euro-zone, what will Draghi say or implement to help stimulate the impotent Euro in the face of the continuing realization that policies to stimulate growth have done nothing but continue to fail. www.atpartenerships.com.au
It is amazing sometimes how a fundamental news report can affect so many areas of Investment Markets. Yesterday’s Stock Markets around the world had an awful time with the DOW, S&P 500 , NASDAQ , DAX, FTSE , EURO STOXX 500, all losing 1-2 % for the day. Why? Yes there are terror concerns and interest rate hike worries, but the major catalyst was news from Russia that the government is studying a proposal to seize foreign assets reported by “The Moscow Times.” Gemany’s DAX had an immediate free-fall and is now in the red for 2014. Russia is responding to the Western sanctions over the Ukraine crisis and also last Wednesday Italy’s TAX department seized 30 million Euro in assets from a prominent Russian businessman who is a great friend and ally to Putin. Retribution perhaps? Interesting times ahead as the heat turns up between Putin and the West.
To an investor, it’s all about Risk. The Euro did weaken during most of the sessions but Asia open has it firming up a bit although it is flirting with 22 month lows with the US Dollar. Carney of the Bank of England has little affect on the Pound after his testimony and the currency is holding steady, but again it was the US Dollar that firmed against most major currencies with solid Jobless Claims supporting the move.
Gold and Silver reacted only slightly to the Russian news and Gold shorts will still sell the yellow metal after Gold jumped 11-12 dollars mid US session. It is sitting on 1221 at the moment. On a 4 hour chart there is a nice double bottom now formed that day traders need to keep an eye out for, as many do not like to hold their positions over the weekend, making Friday always a tough day to trade as profits are usually taken.
Friday’s news calendar shows only one major event, a GDP (Gross Domestic Product) US announcement with a slight increase expected. Of course Geopolitical occurrences will dictate again all investment decisions as the chess pieces are all set up for major moves with tensions in Ukraine, Russia, and the Middle East at an all time high.
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