Gold and Aussie rally on US dollar weakness, Sterling is just ridiculous

February 17, 2014

So bad news really IS good news again it seems as the severe weather disruptions that the US has been having are giving traders an excuse to ignore what has become a quite weak run of data in the US. So it was on Friday night with US industrial production undershooting expectations of a 0.3% gain with a 0.3% fall. Weather? Maybe. Weak nonetheless.

Traders don’t care though and weren’t bothered by the the weak data, they just continued to buy and the S&P, after collapsing a week or so again, is now back within striking distance of the all-time high, which is truly remarkable. So at the close of the week the Dow rose another 126 points or 0.79%, the Nasdaq was only up a smidge, rising 0.08%, while the S&P 500 gained another 9 points to 1,839 for another 0.5% gain.

It is really amazing price action when you think about it – worryingly so.

Anyway across the pond in Europe, stocks were higher after the French and German GDPs beat expectations, rising 0.3% and 0.4% respectively. That is still absolutely terrible growth and Europe is still mired in or near recession with massive unemployment. But, the fact they weren’t as bad than expected means they were good. So continental bourses ripped higher with the Dax up 0.68%, CAC up 0.63%, while in Spain the IBEX 35 rose 0.34%. In Italy, the new government got a big vote of confidence with the FTSE MIB up 1.62%. In the UK, the FTSE eked up just 0.07%.

Locally, the March SPI 200 contracts of the ASX rose 44 points to 5351 bid – right back at the high of December.

On global FX markets, the US dollar lost further ground with USDJPY closing the weak under 102 at 101.77, the Pound’s rise continues unabated and it closed the week at 1.6745, while the euro briefly traded above 1.37 but closed at 1.3691. The Aussie also was higher, closing the week at 0.9030.

The Aussie dollar fights back and it is usual that a weaker US dollar normally equals a stronger Aussie. So it has been over the past day even though the data Thursday on employment in Australia was appalling.

That is the way of markets.

A break of 0.9075/85 is needed to kick on.

Turning to commodity markets, Gold’s rally continued rising through the 200 day, moving average fairly easily up $18.60 on the day to $1318.30.

18 bucks in a day is a big move for gold given how big the ticks are and its now more than $30 above where I had placed my take profit/stop loss last week and $55 higher on the week. Also gold is trading above the 200 day moving average that I thought it might have a bit more hesitance at last Friday.

Gold is feeling overcooked on the 4 hour and daily charts but on the weeklies – well it looks like it is going higher still.

Nymex crude seems stuck around $100 while Dr Copper closed at $3.32 lb. Corn rose 1.08%, Wheat was 0.5% higher while Soybeans fell 0.5%.

It’s President’s Day in the US and Family Day in Canada, so two big markets are out.

Locally though, on the data front the Westpac Leading Index is out today along with New Motor Vehicle sales while the Japanese industrial production is the only other major data over the next 24 hours.

Have a great day and good hunting

Greg

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