Gold and commodities prices are rising to record highs followed by the Australian and New Zealand dollars
A surge in commodities led by copper, gold, silver and oil lifted the Aussie, Kiwi and Canadian Dollar to multi-week highs. The Dollar Index (USD/DXY) finished a touch lower in fairly quiet trading. Strong Japanese Household spending and better than forecast inflation data saw a mild Yen rally.
Stocks and treasuries were little-changed.
Outlook: Ho, ho, ho. Commodities stole the show and had a very merry Christmas. Copper prices traded to fresh yearly highs and retraced its dramatic fall from 2011 to 2014. Gold and Silver prices rallied to monthly highs. Brent Crude Oil jumped 2.56% on news that a large portion of Libya’s supply has been disrupted by a pipeline explosion.
Trading View: Trading was fairly subdued yesterday with most of Australasia and Europe on holiday yesterday.
A few things to note:
The surge in commodities saw mild gains in the Aussie, Kiwi and Canadian Dollar. Trading remained subdued to a general lack of liquidity. However, this could have implications for further upside chances ahead.
A lift in Japanese household spending and inflation clearly signals a Japanese recovery. BOJ governor Kuroda reiterated his continuing monetary stimulus approach in a speech following the data. The Dollar-Yen ended mildly lower at 113.18 (113.30 Friday).
There were no major US data releases over the break. However, tonight sees the important Conference Board’s Consumer Confidence report. Consumer spending accounts for the majority of the overall economic activity in the U.S.
AUD/USD – Metals matter to the Australian Dollar and the recent surge provides a sold backdrop. The divergence in policies between the Fed and RBA has seen a widening of interest rate differentials which has weighed on the Aussie. However, we’ve seen a solid base develop around 0.75 cents. At the same time, metals led by Copper started to rally. Watch Copper prices in 2018, as they will impact the Aussie.
In subdued trading, the Aussie rallied to 0.77296, highs not seen since early November.
AUD/USD closed right here and a break of the immediate resistance at 0.7730 could see it up to 0.7750 and then 0.7770. Immediate support lies at 0.7715 and 0.7700.
Today trading should remain subdued, with liquidity still thin. Likely range 0.7710-0.7740. Prefer to buy dips to 0.7680.
USD/JPY – slipped after the solid economic data report to 113.12 in quiet trading. Haruhiko Kuroda maintained the BOJ’s monetary stimulus approach and this limited USD/JPY downside. The Dollar closed at 113.18. Overnight high was 113.356, which is today’s immediate resistance. Further resistance can be found at 113.50. Immediate support lies at 113.10 and then 112.80. Likely range today 112.85-113.35. Look to sell rallies.
EUR/USD – drifted higher in the slow trade to close at 1.1865 (1.1859 Friday). A computer glitch on Christmas day saw a flash crash in the Euro of almost 3% before it quickly corrected. Markets shrugged off the Spanish election results. EUR/USD has immediate resistance at 1.1880 (overnight high of 1.18787). Further resistance lies at 1.1900. Immediate support can be found at 1.1850 and then 1.1830. Likely range 1.1840-1.1880. Prefer to sell rallies.
GBP/USD – closed little-changed at 1.3375 (1.3365 Friday). No news is good news for the Pound which had a rest from Brexit. GBP/USD has immediate resistance at 1.3390/1.3400, followed by 1.3420. Immediate support lies at 1.3350/60 and then 1.3320. Likely range today 1.3350-1.3390. Prefer to sell rallies.
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