Gold rises as a safe haven and touches the $ 1226 level and base currencies are rising due to a weak dollar
The European equities are following their pummeled Asian counterparts lower, with the Stoxx 600 at its lowest levels since January 2017. All European stock sectors slumped, with weakness in commodities and metals weighing on oil and basic-resource names. The FTSE MIB is set to enter the bear-market territory, as local banks pare initial strength to trade lower by 0.7%.
The USD is down 0.3%, while the SEK outperformed in Group-of-10 Forex after inflation data exceeded market consensus.
Yield curves have a flattening bias and the market continued to punish Italian bondholders. The Italian short end has risen by approximately 20bp since the market open. U.S. yields are broadly steady ahead of CPI data.
Reassurances from the Lower House Budget Committee Head did little to inspire participants in this morning’s Italian debt offering with auction bonds languishing around session lows.
Disastrous conditions continue to weigh down the European stock market after the Asian and American counterparts took their share of the beating and passed it around. The European market continued to experience the downward movement as the Italian crisis took a back seat to the current issue.
Over in the U.S., the market remains in turmoil as the U.S. President criticized the Federal Reserve calling the “loco” due to their tightening monetary policy which is against. The U.S. is yet again selling bonds this time focusing on the ultra-long terms of 30-year bonds.
Euro-area bonds rallied after stocks slumped around the world, but there was little sign of panic in the currency market, with haven assets failing to get any meaningful bid; the krona led gains among its Group-of-10 peers on speculation Sweden’s swifter-than-forecast inflation will spur the Riksbank to raise rates as soon as December.
Gold prices advanced on safe-haven demand following a shake in the global markets, with a weaker dollar seen as supportive. The commodity is now down more than 13% from its April peak as the dollar recovered on concerns over trade disputes between the US and China and the run-up to a Fed rate hike in September, with the precious metal having retreated 1.4% for the week, which represents its sharpest one-day loss in two weeks when the bond market was closed for the Columbus Day holiday.
The U.S. Federal Reserve raised rates three times this year and traders widely expect it to raise it once more by the end of 2018. On Wednesday, U.S. President Donald Trump continued his attacks on the central and blamed the central bank’s policy decision for Wednesday’s sharp market decline.
Gold prices traded higher regaining the psychologically important 1200 level as a rout in global stock markets spurred by fear over increasing bond yields, slowing global growth and trade tensions bolstered safe-haven demand.
Gold prices advanced to daily highs and were trading at 1226$ as a high for yesterday following September’s inflation data, which was released short of expectations. The U.S. Consumer Price Index rose 0.1% in September after advancing 0.2% in August, the U.S. Labor Department said on Thursday. Consensus forecasts were calling for a rise of 0.2%.
The inflation rate has been a concern for market participants, with Federal Reserve officials as well politicians these past few month, with the U.S. President Donald Trump once again criticizing the Federal Reserve during a media scrum on Tuesday, saying that central bank officials can afford to hold off on raising interest rates as there are no signs of inflation.
Gold is seen trading strongly during the New York trading session, with a stronger tone as result of the Wednesday’s sell-off in global equities, while initial weekly US jobless claims increased by 7000 to a seasonally adjusted 214 K in the week to Saturday. Consensus expectations compiled by various news organizations had called for initial claims to be around 205 K to 207 K. The government left the week’s tally unrevised at the previously reported 207 K.
EUR/USD – Long-legged doji, indicative of mean reversal, plays out; overall picture remains bearish as long as short-term DMAs hold. Immediate support at 1.1490 followed by 1.1420. Looking forward to trading in a possible range today from 1.1580-1.1640
GBP/USD – Bloomberg Trender Indicator turns bullish as cable closes above 1.3171; first stop on the upside at 1.3298. The immediate resistance for today still at 1.3275 followed by 1.3315. Immediate support can be found at 1.3130 followed by 1.3090. Look for a possible trading range today from 1.3200-1.3275.
USD/JPY – Healthy correction of the rally since March unfolds, with 55-DMA now in focus. The immediate resistance is still at 113.55 followed by 114.06. Immediate support still at 111.85 followed by 111.20.
AUD/USD – Studies suggesting a relief rebound meet bearish price action. Immediate support still at 0.7025 with next support at 0.6980. The immediate resistance still at 0.7140 followed by 0.7280. Expected range today from 0.7100-0.7160.
USD/ZAR – The rand strengthened almost 1.5% against the dollar in early trade on Friday as the US currency continued its slide on poor inflation data.
The rand was trading 1.1% firmer at R14.47/$ by 09:49 on Friday after hitting an intraday high of R14.44 against the greenback. The unit was also one of the best performing emerging market currencies in the previous session on the back of dollar weakness and lower US bond yields.
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