Open Demo Account


Summary:

  • Gold moving towards lower bound of 1306-1366 range
  • Price could be set for 4th consecutive daily decline
  • Rise in US yields boosting USD and weighing on Gold

The Gold market has experienced pretty large moves in the last couple of days with 2 large declines coming after the market reversed from near the top of its recent range. Gold has been unusually quiet so far this year with the market remaining in a fairly narrow $60 range from 1306-1366. This range has actually tightened further in the past few weeks with 1322 providing support and 1355 resistance. 

link do file download link

 Gold has been in a narrow range of late from 1322-1355 and the market is now probing the lower bound of this range. This is within a bigger range from 1306-1366. Source: xStation

The declines of more than $20 combined in the last two sessions has come about largely due to a resurgence in the buck, with the USDIDX rising close to the 91 handle and within striking distance of its highest level of the year. The rise in the US dollar is clearly having a negative impact on the price of Gold, and these markets can be linked together by looking at the TNOTE – the 10-year US government bond which is widely seen as a proxy for interest rates. 

The theory is that a higher US interest rate is positive for the USD and therefore negative for Gold The TNOTE – which is inversely correlated to rates IE lower TNOTE = higher rates – has continued to fall lower over the past week with the yield close to 3% – its highest level in 4 years. 

If we take the US election in 2016 as a starting point we can see that both the TNOTE and Gold experienced a sharp decline on Trump’s victory (after the initial shock wore-off) before recovering throughout the first half of last year. However, around September time when the Fed announced the start of their balance sheet reduction a large divergence began. 

link do file download link

 The TNOTE and Gold have shown a large divergence in the past 6 months but the former may be starting to pull the latter down lower. Source: xStation

This shouldn’t be too surprising as a substantial part of the Fed’s balance sheet was TNOTEs and therefore if they reduce these holdings then the respective price will fall from less demand. However, the size of the disconnect does appear to be large and traders may look for some convergence going forward.    

 


Summary:

  • Major currencies trade flat except for the NZ dollar which continues trading on the back foot
  • European stocks mixed while the SP500 futures are set to open broadly higher
  • Bonds muted while the US 10Y yield keeps flirting with 3%

Major currencies are trading on the sideways except the NZ dollar keeping its overnight loss, it’s down 0.4% at the time of writing. The shared currency has retraced some of its earlier losses and come back above a 1.22 handle despite a miss in the German IFO reading. On the other side, the Swedish krona is trying to get back some ground being 0.2% against the greenback in anticipation of the Riksbank meeting later this week (Thursday). Let us point that the SEK has been battered of late, and as a result the EURSEK has struck its highest point since December 2009. Since then, some have begun talking that FX traders have gone too far downplaying the likelihood for higher rates (we still perceive any rallies as a selling opportunity, and this may be especially true when the euro has lost some of its appeal on the back of a revival seen in the US dollar (possibly a short-lived one though). Looking beyond the G10 space let’s take a glimpse at the Turkish lira being traded 0.5% higher as investors impatiently await the tomorrow’s CBT decision (there is guesswork the bank could lift rates in a bid to shore up the currency and thereby ease inflationary pressures). The decision will be announced at the midday on Wednesday.

Getting back to the Asian session it’s worth mentioning Australian inflation which turned out quite dormant in the first quarter. Do notice that core inflation, the RBA focuses on, is just under or at the lower bound of the target (it depends on which indicator we watch) suggesting there is still a lot to do in order to get inflation persistently anchored within the goal.

This week has been supportive of riskier assets as of yet, and after encouraging developments from North Korea Chinese equities were boosted by fresh hopes that the PBoC will be willing to cut the reserve requirement ration even further despite a slash delivered last week. Bear in mind that these moves are aimed at helping the smallest firms which could struggle with tighter financial conditions being implemented by the authorities in order to cut back on inflated debt in some parts of the economy. It looks like European investors needed some time to digest mentioned upbeat stories as after the cautious opening they decided to switch on a risk-on mode. A while after the midday European stock markets keep trading close to their earlier levels. Meanwhile, the SP500 futures are pointing to a green beginning (+0.6%) following upbeat earnings from Coca-Cola, United Technologies, Biogen or Caterpillar we’ve been offered thus far in pre-market trading.

Bond traders have not had too much to digest so far, the US 10Y yield keeps moving a shy of 3%, the German 10Y bund is trading at 0.63% (little changed on the day) whereas the UK 10Y yield is losing 1bps and it’s trading at 1.53%. While everybody is talking about higher yields across the pond being a major driver for the stronger greenback, it looks that looking at hedge-adjusted yields may add up even more. From this standpoint it turns out that the US 10Y yield has not become more attractive for Japanese investors compared to the same yield in Germany over the recent days, the spread has even widened.

The biggest cryptocurrencies in terms of market capitalization have experienced a significant jump in price throughout the last 24 hours. Bitcoin moved above the $9250 mark while Ethereum is eyeing the $700 handle. An improved outlook on the digital currencies may result from the research conducted by one of the major information firms showing an increased interest in this kind of assets.

As NY traders are slowly coming online it’s worth taking a look into the macroeconomic calendar.


Summary:

  • According to Thomson Reuters about 20 percent of the financial institutions are considering launching cryptocurrency trading operations

  • Goldman Sachs may be actually setting up a cryptocurrency trading desk

  • Indian crypto-enthusiasts take country’s central bank to court over the recent crackdown

The biggest cryptocurrencies in terms of market capitalization have experienced a significant jump in price throughout the last 24 hours. Bitcoin moved above the $9250 mark while Ethereum is eyeing the $700 handle. An improved outlook on the digital currencies may result from the research conducted by one of the major information firms showing an increased interest in this kind of assets. Apart from that, financial news website Tearshear reported that one of the world’s biggest investments banks may have not been telling us the truth about its intentions connected to the crypto sphere. On top of that we will say a word about a situation in India where crypto-enthusiast took country’s central bank to court over allegedly unconstitutional crackdown.

Thomson Reuters has conducted study among some of its clients (about 400 financial institutions) on the possibility of launching cryptocurrency trading operations this year. According to Sam Chadwick, company’s director of new content initiatives, around 20 percent of surveyed entities were “really interested” in this matter. The study shows that 70 percent of these firms are considering setting up cryptocurrency trading operations division with three to six months while about 22 percent is looking into the period of six to twelve months. Apart from that, majority of institutional investors is only interested in trading coins with the biggest market capitalization while some are exploring the perks of trading ICO tokens. A small group of respondents expressed interest in crypto investments only via ETFs.

link do file download link

BITCOIN has broken above the recent short term consolidation range in a firmly manner overnight to trade way above the $9000 handle on Tuesday. A test of the resistance level at $9300 may be on cards. In case a sharper pullback occurs investors should watch 33-period moving average on the H4 interval as it proved to be a decent technical support level in the past. Source: xStation5

This shift in the financial institutions’ attitude towards cryptocurrency trading seems to be confirmed by the latest actions of some notable banks. A few days ago we have wrote about Barclays exploring clients’ interest in the cryptocurrencies. Yesterday Tearsheet reported about an interesting development within Goldman Sachs. As the Bank officials denied several times that they are looking into setting up a cryptocurrency desk some may find it interesting that the company actually hired Justin Schmidt, a former cryptocurrency trader. Mr. Schmidt is said to lead Goldman’s digital asset division. Having that in mind it looks like Bloomberg’s late-2017 report saying that the Bank is looking forward to launch cryptocurrency trading desk by the end of June 2018 may not be just a rumour.

link do file download link

ETHEREUM continues to climb higher amid improved sentiment towards cryptocurrencies as a whole in the recent days. The coin may be eyeing a $700 handle for the first time since early-March. Source: xStation5

A tough stance of Indian authorities on the cryptocurrencies has outraged the representatives of the industry. Crypto-enthusiasts claim that the recent crackdown on the cryptocurrencies was unconstitutional. They reason their claims by saying that the central bank failed to provide community with any reason that would justify why cryptocurrency business must be restricted. As the charges of failing to comply with the constitution are serious the case will be resolved by the Indian High Court. The next hearing in this case is to be held on May 24th.

 


Summary:

  • April German IFO will be presented in a new form for the first time
  • US housing market may steer moods around the greenback
  • API is going to reveal its calculations on a weekly oil stocks change

Tuesday does not look impressively in terms of macroeconomic releases and therefore one may suspect that price movements begun yesterday have a chance to continue. Before noon there will be the IFO reading while the US housing market data should draw attention thereafter.

9:00 am BST – German IFO: Although this is a kind of data which rarely tends to exert increased pressure on the shared currency, this time it seems to be especially of note though. It’s the first time the index will be released in a new form (weights changed since the last print in order to better reflect rising importance of services in the German economy) so do expect a massive downward revision (ca. 10 points) to the print for March. Either way, the index should paint a similar picture what PMIs have showed of late. The consensus stands at 102.8.

3:00 pm BST – US housing data: The US dollar got a boost at the end of last week and it continued this performance on Monday. Yesterday we were offered an existing home sales release showing slightly better than expected numbers. Today it’s new home sales’ turn being forecast to come in at 630k, a rise from 618k in February.

9:40 pm BST – Oil inventories by API: Expectations suggest that oil stocks have shrank 2.6 million barrels during the past week against a 1 million barrels decrease reported in the prior week. As everybody well knows it’s an omen before the governmental data released a day later and for that reason investors watch for this reading so eagerly.

Central bank speakers for today:

8:00 am BST – BoE’s Woods

9:20 am BST – BoE’s Hauser

10:30 am BST – ECB’s Villeroy

link do file download linkAfter breaking a long-term bullish trend line bears could be eager to test a crucial zone placed nearby 1.2150. Price behaviour around this level could set moods for upcoming days or even weeks. Source: xStation5


Summary:

  • Chinese stocks rally as the PBoC could further cut RRR in order to ease monetary conditions
  • Australian inflation little changed in the first quarter suggesting no pressure to adjust policy for the time being
  • US dollar keeps its last gains, NZ dollar feels the pain the most

Admittedly, US stocks ended the first trading day flat Asian investors shared more optimism which resulted in decent gains. Improved moods came in spite of the fact that the US 10Y yield keeps hovering just shy of 3% reviving some concerns that a breakout of this level could lead to a broader sell-off. Chinese indices stood out the most rallying on hopes that the PBoC could further ease monetary conditions by cutting the reserve requirement ratio (RRR). Let us remind the bank did so last week in order to free up some lending for small firms but shying away from broad-based easing as the authorities pursue to rein in a credit binge in some parts of the economy. As a result, both Shanghai Composite and Hang Seng (CHNComp on xStation5) have gained almost 2% each so far. It’s worth noticing that the index bounced back from a key technical level, but it quickly ran into an obstacle from an upper bound of a broader triangle pattern.

link do file download linkThe CHNComp faced some hurdles after recovering from a pivotal technical level. A breakout of this resistance seems to be necessary in order to allow bulls to climb higher. Source: xStation5

In terms of macroeconomic releases it’s worth mentioning Australian inflation which turned out to quite dormant in the first quarter. Headline missed expectations coming in at 0.4% qoq and 1.9% yoy while economists surveyed by Bloomberg had forecast 0.5% and 2% respectively. When it comes to the core gauges there were a notch better, and in a quarterly basis both trimmed mean and weighted average met forecasts showing 0.5% each. In turn, annual price growth brought somewhat higher than anticipated values – 1.9% and 2% for trimmed mean and weighted average. All of that means that the RBA does not need to even think about monetary tightening for the time being at least. Do notice that core inflation, the RBA focuses on, is just under or at the lower bound of the target (it depends on which indicator we watch) suggesting there is still a lot to do in order to get inflation persistently anchored within the goal. In response to the report rate hike odds till December moved down from 38% to just 33% highlighting market participants assign the low likelihood for any moves this year.

link do file download linkTechnically the AUDUSD broke its important trend line suggesting bears could have already taken control. Any tries of a recovery could be halted in the vicinity of 0.7630 so be cautious trading the Aussie. Source: xStation5

Finally, let’s add that the greenback managed to preserve its last gains it made yesterday. Looking around the G10 space one may notice that the NZ dollar has been afflicted the most thus far being almost 0.4% down against its US counterpart. There was little fresh news from New Zealand except a speech from PM Jacinda Ardern who is “really positive” about prospects of the FTA with the EU.


US dollar is finally looking like could shake off its weakness. US Dollar Index is at the highest level in nearly 2 months as rising oil prices push up interest rate expectations. But could it finally make a run?

Most of the major coins managed to post gains over the weekend with Bitcoin climbing to the $9000 handle on Saturday. A Central Bank of Iran dealt a blow to the domestic cryptocurrency market by banning banks from crypto dealings. Moreover, one of the new Fed officials expressed his disbelief in digital currencies.

It’s not the first and not the last time Donald Trump is trying a “market intervention” via Twitter but this time it affects the market that seems to be at the crossroads. A possible flare up in oil price is not only crucial for oil investors but may have broad based effects on the global economy and the markets.

Everybody who counted on a green opening following the North Korean announcement was disappointed, and even better than forecast PMIs coming from France and Germany failed to bring a long-awaited relief. As a result, the German DE30 is breaking down its critical short-term support line drawn nearby 12535 points.

The news coming from North Korea stole the show over the weekend as the country’s leader Kim Jong Un declared that he would suspend nuclear and missile testsimmediately as well as shut down a nuclear test site which served to conducting the previous six nuclear tests.

The first part of April was completely dominated by politics. It may very well stay this way this week as sanctions and Trade Wars remain unfinished stories. However, we also have important central bank meetings and GDP reports that will fight for attention.

 


Summary:

  • European investors launch new week in mixed moods

  • Bitcoin eyes repeated test of $9000 handle

  • Nickel continues to erase its recent gains

Despite crucial developments in the North Korean theme over the weekend European investors remain in the mixed moods at the beginning of the week as major stock benchmarks from the Old Continent hover around the Friday’s closing price. US dollar is the top gaining currency from the G10 basket while Norwegian krone and Japanese yen underperform against all of its major peers. Nickel continues to decline erasing almost all of its gains made during latest superb rally.

Most of the major coins managed to post gains over the weekend with Bitcoin climbing to the $9000 handle on Saturday. A Central Bank of Iran dealt a blow to the domestic cryptocurrency market by banning banks from crypto dealings. Moreover, one of the new Fed officials expressed his disbelief in digital currencies.

It’s not the first and not the last time Donald Trump is trying a “market intervention” via Twitter but this time it affects the market that seems to be at the crossroads. A possible flare up in oil price is not only crucial for oil investors but may have broad based effects on the global economy and the markets.

Everybody who counted on a green opening following the North Korean announcement was disappointed, and even better than forecast PMIs coming from France and Germany failed to bring a long-awaited relief. As a result, the German DE30 is breaking down its critical short-term support line drawn nearby 12535 points.

The news coming from North Korea stole the show over the weekend as the country’s leader Kim Jong Un declared that he would suspend nuclear and missile tests immediately as well as shut down a nuclear test site which served to conducting the previous six nuclear tests.

The first part of April was completely dominated by politics. It may very well stay this way this week as sanctions and Trade Wars remain unfinished stories. However, we also have important central bank meetings and GDP reports that will fight for attention.

 


Summary:

  • Central Bank of Iran bans domestic banks from conducting crypto operations

  • United Arab Emirates’ biggest bank implements blockchain technology

  • New San Francisco Fed President criticizes digital currencies

Most of the major coins managed to post gains over the weekend with Bitcoin climbing to the $9000 handle on Saturday. A Central Bank of Iran dealt a blow to the domestic cryptocurrency market by banning banks from crypto dealings. Moreover, one of the new Fed officials expressed his disbelief in digital currencies while in the UEA one of the major banks decided to introduce Blockchain technology to its systems.

Central Bank of Iran decided to ban domestic banks from operating on the cryptocurrency market. In a statement CBI justified that “cryptocurrencies have the option to be used for money laundering, supporting terrorism and exchange of sums between wrongdoers”. Therefore from now on country’s financial institutions are forbidden to trade coins on their own account, provide services related to cryptocurrencies as well as advertising them in any way. It is worth to mention that this might come as a blow for Iranian citizens as after fears over renewing US financial sanctions a shift from Iranian rial to various cryptos was observed.

link do file download link

Despite breaking above the resistance level at $151.50 LITECOIN bulls failed to maintain gains causing the price to fall back below this barrier. Two repeated tests proved to be not enough to overcome this level once again therefore one may assume that buyers are running out of steam. Investors should watch 33-period moving average as price seems to respect this level. Source: xStation5

One of Middle East’s biggest banks, National Bank of Dubai, recently became the first lender in the region to introduce Blockchain technology to its systems. The UEA’s biggest bank implemented the “Cheque Chain” technology that prints a unique QR code on each transaction check and later on it puts the recorded checks on the Blockchain what is said to give the Bank a better supervision over transactions and improve the fraud prevention. After a month of pilot programme the Bank announced that tests were successful and it is implementing this feature for the clients in the whole country. Let us recall that in the previous week country’s authorities launched the “UAE Blockchain Strategy 2021” that aims to make Emirates the global leader in usage of Blockchain technology.link do file download link

After breaking out of the downward channel BITCOIN price continues to rise. However, a long upper wicks suggest that the bears may be lurking around $9000 handle. Source: xStation5

While in some countries we can see a clearly positive shift in government’s attitude towards cryptocurrencies and technologies associated with them the central bankers remain reluctant to give coins the credit. John Williams, the head of San Francisco Fed, is the most recent figure to criticize digital currencies and express his distrust of cryptocurrencies becoming the official means of payment. Williams said that the coins fail to pass the basic test for the currency which is being the storer of value. Apart from that, central banker said that the currency supply should be regulated by governments and central banks yet he added that his view is “very biased” by his central banking experience.

 


Summary:

  • Monday is going to bring preliminary PMIs coming from European economies
  • ECB and CBT decisions in the spotlight this week, the latter could draw even more attention
  • Pound failed to gain last week, it will be offered the first GDP reading for Q1 on Friday

The first part of April was completely dominated by politics. It may very well stay this way this week as sanctions and Trade Wars remain unfinished stories. However, we also have important central bank meetings and GDP reports that will fight for attention. The Monday’s timetable looks as follows:

European PMIs – France/Germany/EMU (8:00/8:30/9:00 pm BST): The European economy had a really successful last quarter of 2017, but since then a lot has changed. We were already offered a few somewhat disappointing PMIs since the beginning of the year, and it’s possible that this trend will be continued. On the other hand expectations are much more muted this time round as each index is forecast to decline in April compare to its value from the prior month.

US data – PMI/existing home sales (2:45/3:00 pm BST): The US dollar managed to gain traction last week, and it was enough to spur some market analysts to start deliberating whether it was a short-lived pullback or a longer comeback. The first day this week is bringing some economic data which could help dispel those concerns. PMI for manufacturing is expected to come in at 55.2 while for services at 54.1. On top of that, existing home sales should show 5.55 million, a tiny increase from 5.54 million in February.

What to watch for a remainder of the week?

ECB meeting: decision (Wednesday, 12:45pm GMT) post-meeting conference (1:30pm)

It’s not going to be an easy conference for the ECB president Mario Draghi. The euro held nicely over the past few weeks as some board members aired outlook for a definite end of QE this December and deposit rate hike as a next step next year. However, on the macro front there are few reasons that could justify the bullishness. The PMI indicators continued to slide (albeit from a high levels) while inflation disappointed (again) in March. Are the euro bulls set for a disappointment? Affected markets: EURUSD, DE30.

CBT meeting (Wednesday, 12:00pm GMT)

There’s no other currency being under a spotlight similar to the Turkish lira this week. Just days ago Turkey seemed to be on the verge of currency crisis as investors fled on economic overheating concerns. This bloodshed has been stopped by a bold move from president Erdogan to call snap elections but the real test for the currency comes this week. Markets are convinced that the CBT must raise rates and not just by mere 25-50 bps. Actually, a hike of 75-100 bps is expected. If the CBT shies away from the move the consequences for the lira could be dire. Affected markets: USDTRY, EURTRY.

GDP reports in UK (Friday, 9:30am GMT) and US (Friday, 1:30pm GMT)

We pointed out last week that the bar was hanging high for the pound ahead of some key monthly releases and indeed the GBP bulls were disappointed by weaker wage and inflation reading. The bar ahead of the GDP report is set at a lower level as even the Bank of England admitted that Q1 could have been affected by weather. In the US, the Q1 has been traditionally weak and retail sales data suggests that this time it might be no different. Affected markets: GBPUSD, US500.

link do file download linkThe GBP suffered last week partly on the back of dovish Carney. Having said that, it looks well positioned to bounce back as it’s already reached a strong support in form of a trend line. Source: xStation5


Summary:

  • North Korean leader declared over the weekend his country will suspend nuclear and missile tests immediately
  • US is unlikely to make any substantial concessions in the aftermath
  • Japanese yen trades slightly lower along with Asian stock markets

The news coming from North Korea stole the show over the weekend as the country’s leader Kim Jong Un declared that he would suspend nuclear and missile tests immediately (starting Saturday) as well as shut down a nuclear test site which served to conducting the previous six nuclear tests. The state news agency KCNA added “to guarantee suspension of nuclear tests in a transparent manner, the republic’s northern nuclear test site will be abolished”. This announcement came in less than a week before scheduled meeting between South and North Korea leaders. The meeting is seen as a precursor to a historic summit between Kim Jong Un and Donald Trump set to begin at the end of May or early June.

US President Trump tweeted after a while when the announcement came up and wrote “this is very good news for North Korea and the World – big progress! Look forward to our Summit”. Even as it could look like tensions and frictions between the two countries might ease off in the nearest time do notice that Kim did not declare his country is going to give up the program altogether. He was also quoted by the state KCNA news agency as saying “we no longer need any nuclear test or test launches of intermediate and intercontinental range ballistic missiles, and because of this the northern nuclear test site has finished its mission”. Although Trump hailed the step taken by North Korea he seems to be a long way off from any substantial concessions for the time being at least, according to unnamed senior Trump administration official who spoke on condition of anonymity. He also suggested that lifting sanctions looks unlikely until North Korea has substantially dismantled its nuclear programs.

link do file download linkThe Japanese yen trades subtly lower in the morning still eyeing a resistance at 108. Source: xStation5

Despite a promising stance presented by North Korea investors did not rush to buy riskier assets, and as a result the Japanese current did not lose too much. Looking at the chart above one may notice the pair keeps trading below its crucial supply zone placed slightly above 108, and it looks that it’s underpinned by an upper boundary of an upward channel. Asian stock markets have also barely responded to positive developments on the Korean Peninsula as most of them are set to close lower excepts the Australian stock market which managed to add 0.35%. Meanwhile, the SP500 futures (US500 on xStation5) are trading 0.3% higher pointing to a green opening when US traders come online. Notice that Monday’s session could be outstandingly important for bulls given the Friday’s decline which dragged US indices back to their pivotal technical support.

link do file download linkAfter drawing a bearish engulfing the NASDAQ (US100) got back to its relevant support being localized nearby 6640 points. Today’s session could be conclusive where it may go from here. Source: xStation5