Daily Fundamental ForexTime ( FXTM )
NZ economy lifts on data
The New Zealand dollar has managed to claw back some of it's earlier losses as the strong dollar starts to wane, and as economic data out of New Zealand continues to be a mixed back but mostly bullish. Two ANZ surveys released today showed the New Zealand economy picking up as commodity prices lifted to 3.2% (prev 2.0%). At the same time the ANZ truckometer was released which acts as a proxy for GDP readings and it was strongly up 6.7% m/m (prev -5.7%), which shows that expectations for GDP in the coming quarter are slightly weaker, but the following quarter is expected to see an overall lift in GDP for the economy. For many this will be a positive sign for the New Zealand economy, but for the Reserve Bank of New Zealand they will be looking to make sure that house prices are kept in check and that if the economy starts running red hot it may be time to tighten interest rates in order to keep inflation in check.
Technically the NZDUSD has been struggling lately as volatility continues to play havoc for traders trying to trade key levels. The main level being 0.73118, which so far has had a number of attempts to close above it on the daily chart, but all failing in the last fortnight. However, with pressure building it certainly could be a case of a breakout and the NZDUSD would likely run in such a scenario and looking for higher highs. In this case 0.7475 being the next level of resistance traders are likely to find, unless we see some sort of major economic data which boosts the NZ economy strongly.
Across the pacific ocean in the USA we have seen US data recently seem to lack any real power in the marketplace with non-farm payrolls being much weaker than anticipated at 151k (180k exp), this in turn lead to a spike in the unemployment rate to 4.9%. So far the USD has suffered slightly for this, but for the most part people still expect that not even a blip in non-farm payroll can prolong the odds of an interest rate rise in the USA. Expectations around this continue to build, and if we see any further movement in unemployment claims this may add weight to the theory that something may be stifling the labour market at present. For the S&P 500 this weakness followed by bets on a rate hike have stopped it in its tracks and it's currently ranging as a result.
Resistance at 2185 continues to stop any sort of momentum for the S&P 500 and I would be surprised if the recent push higher can gain any sort of traction to push through at this stage. As the S&P dips lower it's playing between two key support levels at 2168 and 2152, any drop to the 2152 support level is likely to find the 50 day moving average which has acted as dynamic support in the past. However, with the technical build up, it's still possible for the S&P 500 to fall further as the bets for rate hikes increase.
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Original Posted By fxtm.official►
Daily Fundamental ForexTime ( FXTM )
Stocks tumble after Powell’s warnings over US economic recovery
Fed chair Jerome Powell poured cold water over stock markets during his latest press conference on Wednesday, as he expressed doubts whether the US economic recovery can persist at the same pace without more fiscal stimulus.
Asian equities are in a sea of red, after US stock indices posted declines on Wednesday. The Dow Jones index was the sole exception, as it eked out a 0.13 percent advance, aided by the climbs in the industrials and financials segments. The US central bank left interest rates unchanged at the record low during their meeting this week, and suggested that rates could be kept near zero until the year 2023, or at least until the US can return to maximum employment and reach the average two percent inflation. Such an ultra-accommodative interest rate environment should keep global equities well bid over the coming years. In technical terms, the Dow may be able to call upon its 50-day moving (MA) average to guide the index higher eventually. However, at the time of writing, the FXTM trader's sentiment is short on the Wall Street 30 (Mini).
However, stocks bulls may not get the near-term boost that they desire, considering the stalemate in negotiations over the next round of US fiscal stimulus. Despite US President Donald Trump saying on Wednesday evening that he was more open to bridging the gap with Democrats, markets remain doubtful that the next support package can arrive before the elections on November 3. Global investors are also fearing a delayed outcome to the polls, with the political uncertainty further delaying the much-need financial support. Such a major event risk, if it happens, is then likely to trigger heightened volatility in global equities. At the time of writing, US stock futures are edging slightly lower.
The concerns over the delayed US fiscal stimulus are also set to colour the jobless claim data due out later Thursday, with both initial claims as well as continuing claims expected to show slight declines. Yet, with about 13 million Americans still having to rely on unemployment benefits along with the more than 800,000 still being added to that list per week, such figures only underscore the need for more financial support for the vulnerable segments of the US economy. Further signs that the recovery in the US jobs market is stalling, even as the world’s largest economy presses on with its reopening, could trigger more risk aversion which may push the Dollar index closer to its 50-day MA.
Quote:
Original Posted By fxtm.official►
Daily Fundamental ForexTime ( FXTM )
Stocks tumble after Powell’s warnings over US economic recovery
Fed chair Jerome Powell poured cold water over stock markets during his latest press conference on Wednesday, as he expressed doubts whether the US economic recovery can persist at the same pace without more fiscal stimulus.
Asian equities are in a sea of red, after US stock indices posted declines on Wednesday. The Dow Jones index was the sole exception, as it eked out a 0.13 percent advance, aided by the climbs in the industrials and financials segments. The US central bank left interest rates unchanged at the record low during their meeting this week, and suggested that rates could be kept near zero until the year 2023, or at least until the US can return to maximum employment and reach the average two percent inflation. Such an ultra-accommodative interest rate environment should keep global equities well bid over the coming years. In technical terms, the Dow may be able to call upon its 50-day moving (MA) average to guide the index higher eventually. However, at the time of writing, the FXTM trader's sentiment is short on the Wall Street 30 (Mini).
However, stocks bulls may not get the near-term boost that they desire, considering the stalemate in negotiations over the next round of US fiscal stimulus. Despite US President Donald Trump saying on Wednesday evening that he was more open to bridging the gap with Democrats, markets remain doubtful that the next support package can arrive before the elections on November 3. Global investors are also fearing a delayed outcome to the polls, with the political uncertainty further delaying the much-need financial support. Such a major event risk, if it happens, is then likely to trigger heightened volatility in global equities. At the time of writing, US stock futures are edging slightly lower.
The concerns over the delayed US fiscal stimulus are also set to colour the jobless claim data due out later Thursday, with both initial claims as well as continuing claims expected to show slight declines. Yet, with about 13 million Americans still having to rely on unemployment benefits along with the more than 800,000 still being added to that list per week, such figures only underscore the need for more financial support for the vulnerable segments of the US economy. Further signs that the recovery in the US jobs market is stalling, even as the world’s largest economy presses on with its reopening, could trigger more risk aversion which may push the Dollar index closer to its 50-day MA.
Quote:
Original Posted By fxtm.official►Daily Fundamental ForexTime ( FXTM )
6 reasons behind gold’s recent climb
Gold prices are holding relatively steady on Tuesday, holding on to most of its gains garnered over the past three days. Earlier today, it posted a 3-month high before paring gains.
From a technical perspective however, a near-term pullback may be healthy and necessary in order to clear the path for further gains. After all, its 14-day relative strength index has been flirting with the 70 mark, which typically denotes overbought conditions.
That isn’t to take anything away from spot gold’s start to the trading week – one that gold bulls will be savouring.
Bullion has punched decisively above its 200-day simple moving average, having built on a series of higher highs since forming a double bottom in March, even threatening to fall into a bear market (20% drop from its record high). It dipped below the $1680 line on a couple of occasions in March, only to go on and advance by more than 9% since.
Perhaps most importantly, gold prices this week have broken out of the downtrend it has adhered to since posting its record high back in August 2020.
'Markets Extra' Podcast: Can gold return to $2000?
Why are gold prices climbing?
1) Investors’ desire to hedge against inflation
The precious metal is traditionally seen as a way to preserve one’s wealth during times when the prices of goods and services climb higher, eroding consumers’ purchasing power along the way. With markets having grown more concerned about the prospects of faster US inflation, it has helped boost gold prices.
2) The weaker dollar
Gold tends to have an inverse relationship with the US dollar. In other words, as the buck goes up, gold goes down, and vice versa. With that in mind, the greenback has been declining for a third consecutive day, with the dollar index (DXY) falling by about one percent since last Thursday.
3) Stabilizing US Treasury yields
Recall throughout the first quarter, Treasury yields spiked higher which roiled various asset classes, including the zero-yielding yellow metal. However, of late, 10-year Treasury yields haven’t strayed too far away from the psychologically-important 1.60% line over the past month, while real rates on the same tenor are falling back deeper into negative territory. All that has created a more conducive environment for gold to explore more of its upside.
4) Volatility in cryptocurrencies
In recent months, markets had been questioning gold’s suitability as an inflation hedge, with some segments of the market apparently preferring alternative assets. However, given the volatility seen in the likes of Bitcoin of late, it appears that investors are flocking back towards an asset that has stood the test of time.
5) ETF inflows
The flow of funds in and out of gold ETFs have had a major say on spot prices. According to Bloomberg data, these bullion-backed ETFs have been adding on troy ounces of gold for a 7th straight day, which is the longest streak of additions since 6 January. Although on a year-to-date basis these ETFs have net sold about 6.63 million ounces of the precious metal, recent purchases suggest that investors are coming round after a tumultuous Q1.
6) A dovish Fed
Policymakers at the world’s most influential central bank, the Federal Reserve, have repeatedly assured markets that the inflation surges are likely to be temporary. Hence, the Fed is in no rush to pull back its support for the financial markets, nor bring forward any US interest rate hike. Although markets took some time to buy into that messaging, the repeated assurances by Fed officials have enabled gold prices to climb higher.
What else could move gold prices this week?
The minutes from the latest FOMC meeting, to be released on Wednesday, could offer more clues about the Fed’s inflation outlook. More signs that the Fed is willing to tolerate an inflation overshoot could spur on gold bulls.
Thursday’s weekly US jobless claims could be key as well. Another better-than-expected reading on the labour market could prompt investors to raise their expectations for faster US inflation, adding to gold’s gains in the process.
The rest of the week is also set to feature more speeches and appearances by Fed officials. Any hint about the Fed’s outlook on the US economy and consumer prices, and the eventual policy response by these central bankers, could also move gold prices and the dollar.
Could we see $2000 gold?
Markets are currently pricing in just an 8.4% chance that spot gold would breach the $2000 mark by the end of this quarter.
While there appears to be plenty of tailwinds in play at the moment, gold prices still have another 7% to make up for before reaching that psychologically-important mark.
Gold bulls would need a significant ramp up in any of the 6 reasons listed above in order to close that gap and achieve the $2000 handle once more.