Fibogroup Market Analysis 2017

[fibogroup.com]

The gold price has racked up its 4th straight day of gains in early European trading today after Yesterday’s speech by Fed president Janet Yellen.

In an about turn from previous speeches, Yellen noted that future rate rises are not a done deal and very data dependant, especially on the question of inflation.

It seems that the trigger for any future rate increases from the Fed is inflation hitting 2 percent which the Fed president acknowledged had not happened yet.

“It’s premature to reach the judgment that we’re not on the path to 2 percent inflation over the next couple of years,” she said. “We’re watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot will be persistent.”

This may be just the news that gold needed as we can see on the chart. The precious metal is now making a run for the $1,223 level which it hit five days ago but then faced stiff resistance.

This time Yellens speech may be enough to push gold higher as the market had been expecting more rate cuts and a much more bullish tone but it seems that is a distant memory.

It could head up to the next critical level which is $1,240 which may become the next support level for gold to go even higher.

 

[fibogroup.com]

The Australian dollar has racked up its 6th straight day of gains today taking it to the highest level this year and some predict it may be headed for US$80c in the nearest future.

At 9.33am (GMT) the Aussie dollar was trading at US$73.59c up from US$73.32 in yesterday’s close.

Riding high on the back of US dollar weakness and a dovish speech by US Federal Reserve president Janet Yellen yesterday who noted that further rate rises in the US are not guaranteed which caught the market off guard and left investors exiting the US dollar.

Some now predict that the Australian dollar looks set to continue its uptrend,

“There could be no stopping it this side of US80c in coming weeks amid ingrained US dollar bearishness,” said Ray Attrill, head of currency strategy at National Australia Bank.

Commodity prices such as Iron ore, which has recovered substantially in the past few months, have also helped the Aussie dollar in its recent bull run.

Some however are not so confident that the rally can last and warn that a serious reversal of trend may be in the making

Blackwell Global

 

[fibogroup.com]

The Australian dollar is taking a breather in today’s trading after rising tremendously last week and some say that there may be more gains ahead this week.

The local currency is now above US78c, sitting at a 2 year high against its US counterpart and some predict that there may be some further gains in the weeks ahead.

The reason for last week’s gains was a dovish speech by US Federal Reserve bank president Janet Yellen that left the market predicting that no more rate rises in the US would occur this year.

Also helping the Aussie dollar is expectations that the RBA will have to raise interest rates in the nearest future to keep in line with other countries such as Canada, which lifted interest rates last week.

Interest rates are a very sensitive subject for the RBA and is a double-edged sword.

If they lift rates they are in danger of derailing the fragile recovery happening at the moment in the Australian economy and if they leave rates unchanged or reduce them the property market will continue overheating which will end up a disaster for the economy.

"The RBA is likely to be quite annoyed at the rebound in the Australian dollar, which it would continue to regard as unhelpful for our economic transition," noted BetaShares Capital chief economist David Bassanese

"It seems the market at this stage simply does not believe the RBA will remain neutral, with tightening expectations over the coming year continuing to build,” he added.

The driver of the Australian dollar this week will be the release of the minutes meeting from the RBA where investors will be looking for clues on the direction of interest rates as well as Thursday’s unemployment rate and job participation figures.

 

[fibogroup.com]

The gold price is trading higher for a 3rd straight day in today’s trading session and has clearly broken through what was formerly a strong resistance level as we can see by the lower line. The momentum is now with the precious metal, as many now believe that further rate hikes from the US Federal Reserve are on hold for the rest of the year. The next resistance point we believe will be the 2nd trend line which is around $1242 and may be a good place to take a profit. After some resistance, the gold price should break through this 2nd trend line and continue its climb higher

 

[fibogroup.com]

The gold price is under pressure today as the market awaits the latest interest rate decision from the European central bank followed by a monetary press conference.

Although no changes are expected, al ears will be on the following statement from ECB president Mario Draghi for clues of the central bank’s future movements.

No changes in rates are expected but the market is expecting a bullish tone from the Draghi and many believe he will set the stage for an interest rate hike in the nearest future which would be negative for gold as it is not an interest baring investment,


“We expect the ECB to be very subtle in their approach and the main agenda for them would be to reinforce their forward guidance. What we do want to hear from the ECB is that the policy members have discussed the topic of tapering,” said Naeem Aslam, chief market analyst at ThinkMarkets.

Another reason that gold has been under pressure over the last few trading sessions is the rebound in the US dollar which also caused a selloff in the precious metal.

There is a round of solid economic data due out of the US later today and this may help to determine gold’s direction as we head into the weekend,

“Although the ECB event is an important factor today, we do think the main denominator which matters the most is the dollar here,” said Aslam. “The weakness in the unemployment claims and Philly Fed manufacturing index could resume the selloff in the dollar and that would push the yellow metal higher.” Mr Aslam added.

 

[fibogroup.com]

The Australian dollar continues to push towards the US80c mark in today’s trading session, brushing off remarks by the Reserve Bank of Australia in order to try and talk the currency down.

At 10.36am (GMT) the Aussie dollar was trading at US79.57c up from US79.11c at close of trading on Friday.

In a speech on Friday, deputy RBA governor Guy Debelle noted that now was not the time to raise interest rates in Australia which immedieately caused a selloff in the Aussie dollar as most had predicted a rate hike in the foreseeable future

"Debelle burst the Aussie dollar bulls' balloon, leaning heavy against the markets inference of the neutral nominal rate comment in an attempt to jawbone the currency lower," OANDA trader Stephen Innes said.

With the Australian dollar now sitting at a 2 year high against its US counterpart, many believe that the chances of a rate hike this year have disappeared and the earliest time to expect one is in the second half of next year but is not guaranteed.

"Our view on monetary policy remains unchanged and we don't yet see a case for rate rises sooner than late 2018," noted Commonwealth Bank's economic research team

"To bring rate rises on the table sooner than that we would need to see labour market slack eroded further, in the form of declining unemployment and underemployment rates, and wages growth lift." they added.

It seems for the moment the Australian dollar has reached a top around US80c and the chances of a pullback seem to outweigh the possibility of the currency travelling much higher.

 

[fibogroup.com]

The gold price is taking a breather today after 6 straight days of gains but some think the break is only temporary and further gains are coming in the days ahead.

US president Donald Trump’s effort to push through new healthcare measures as well as an array of other policies is having a devastating effect on the US dollar at the moment and pushing investors towards gold.

And with the healthcare bill set fall short of the number of votes needed to pass, gold looks set to benefit further.

"We remain cautiously constructive on gold as we see no end to dollar weakness for the moment given the ongoing political dramas in Washington and the approaching deadline to extend the debt ceiling," said INTL FCStone analyst Edward Meir.

"There seems to be very little progress being made on a number of 'pro-growth' Trump initiatives, all being net bullish for gold," he added.

Tomorrows interest rate decision from the US Federal Reserve is also likely to create some movement in the gold price and although no changes in rates are expected, the following monetary statement will be closely monitored for signs of a potential rate hike later in the year.

Some believe the statement will be dovish in light of recent inflation figures out of the US which are still below the Feds target rate which should also help the gold price

"We may seem some consolidation here from the dollar but fundamentally our bearish view on it remains," UniCredit Global Head of FX Strategy Vasileios Gkionakis said.

"What the Fed says tomorrow is the million dollar question but the risk is that they sound a bit more cautious after the fourth consecutive downside surprise in inflation." he said

 

[fibogroup.com]

The gold price is facing headwinds for a third straight day today as investors await an interest rate decision from the US Federal Reserve followed by a monetary press conference.

Overall gold has made some solid gains over the past 2 weeks on the back of US dollar weakness and although the precious metal has been under pressure for the past few trading sessions, many expect the uptrend to continue.

No rate changes are expected from the Fed today so all eyes will be on the following statement, which many expect to be less than enthusiastic on the back of recently released inflation figures which currently sit below the Fed’s target rate.

This event may be the catalyst for gold continue its rise as it may signal the end of rate rises this year from the Fed.

Gold has faced stiff resistance at the $1,260 level as we can see on the chart and has found good support at $1,246 which is expected to hold until the speech from the Fed. If as predicted the announcement is dovish gold, should finally break the critical $1,260 level and push significantly higher with $1,260 becoming the new support level

 

[fibogroup.com]

The Australian dollar made a run for the US81c mark in today’s trading session following on from yesterday’s gains on the back of a dovish statement from the US Federal Reserve.

At 1.06pm (GMT) the Aussie dollar was trading at US80.15c after reaching a high of US80.69c earlier in the trading session.

The Australian dollar’s recent gains have been at the expense of US dollar weakness, which was exasperated yesterday when US Fed President Janet Yellen raised concerns over the health of the US economy and seemingly took an interest rate hike off the table for the foreseeable future.

This caused investors to dump the greenback but some believe it’s too early to call and the chance of further rate hikes by the Fed this year is a distinct possibility and should a strong round of data from the US hit the market within the next month the Fed’s outlook could change dramatically" noted Think Markets UK chief analyst Naeem Aslam

"However, this could change rapidly because all what it takes is just a couple of strong economic reading and these Fed fund rate will show a completely different percentage." he added.

With the Australian dollar above US80c, problems in the local economy are likely to develop such as the rising cost of exports, which will make Australian goods uncompetitive with their foreign rivals, which may cause the government to step in.

“The higher dollar also adds unavoidable costs to many businesses at a time when rising energy costs are cutting deeply into margins,” said Australian Industry Group chief Innes Willox.

“Governments need to redouble their efforts to agree on policies that will put downward pressure on energy costs that are eye-wateringly high to help mitigate to dollar cost impact.” He added.

 

[fibogroup.com]

As we wrote in our last report the gold price would benefit on the back of a dovish speech from the US Federal Reserve and has now broken through the critical resistance level of $1,260, hitting a 6 week high which as we predicted has now become the new support level over the last 2 trading sessions.

With the possibility that the Fed won’t deliver any more rate hikes this year, the precious metal looks set to benefit for the foreseeable future unless some super economic data from the US is released to the market which may put an interest rate hike back on the table.

Gold will probably test this support level over the next few trading sessions before continuing to climb towards the next resistance level of $1,265, which was formally a support level 2 months ago.