Gold approaching resistance, GBP and Aussie lower with stocks

February 24, 2014

The S&P has once again got the wobbles up near the recent high with another pretty ugly candlestick to follow up on Wednesday’s reversal.

The catalyst was the more weak US economic data on Friday hit stocks with existing home sales printing a fall of 5.1% in January over Decembers number. Given the 60-90 day lag on this data, due to this data being “sale close” based, its unlikely the weather was a big impact on this releases which seemed to weigh heavily on traders.

So in the end the Dow, Nasdaq and S&P 500 all finished in the red although not really by much. At the close the Dow lost 0.19% to 16,103, the Nasdaq fell 0.11% and the S&P 500 drop 4 points or 0.21% to 1,836. Of note is that US markets had been in the black early and closed on, or near, the lows of the day

Stocks across the pond in Europe however saw markets mostly higher after early losses as the US was in the black when they closed. The FTSE was 0.37% higher, the DAX rose 0.40% while the CAC was 0.59% higher. In Madrid stocks eked out a 0.09% gain while in Milan stocks fell 0.29%.

Locally the ASX March SPI 200 futures fell 1 point to 5413 bid.

China’s Finance Minister might have surprised a few over the weekend when he said that the Fed’s Taper is good for China. But his context was dead right insofar as he said that it meant the US economy was recovering. But in a pointed message to his G20 colleagues Lou Jiwei said that “growth rates like those in 209 and 2010, when China contributed 50% of world growth, that is not sustainable”

Turning to global FX markets it is worth noting that so far the Euro has ignored the weak EU data and threat of deflation and or ECB reaction but Mario Draghi hinted in Sydney over the weekend that something is coming down the pipe noting that MArch is the likely date for a decision, “By then we’ll have the full set of information needed for us to decide whether to act or not”. Of course he said or not, so it’s not a done deal but with Euro near the top of the recent range the risk is of some pullback over the next week or so.

Anyway this morning in Asia Euro sits at 1.3730, USDJPY is at 102.47 and GBP remains under pressure at 1.6625 with a little lift from Mark Carney’s comments about the UK economy over the weekend. The Aussie sits at 0.8970 down a little with upside momentum fading once again.

The Aussie is just in a diagonal box at the moment but it is perilously close to a break lower.  Now of course that could simply be my short Aussie position speaking but I don’t think so.

The level to watch is 0.8930/40.

On commodity markets gold rose close to $7 to $1325 up 0.52%.

Gold is back above $1320 and closing in on resistance which comes in about $9 or $10 higher.

I bailed on my long last week after the dual test and rejection of the resistance and for the moment I am staying flat but retain a bullish bias on Gold once either a strong break ensues or we see a retracement back under $1300.

Copper rose 1 cent to $3.34 while crude slipped 0.52% to $102.30. The Ags were mixed with corn down 0.60%, wheat fell 1.05% while soybeans rose 0.92%.

On the data front today it is quiet in Australia but the German IFO index will be watched closely tonight as will EU CPI and the US Chicago Fed Activity index and Dallas Fed Manufacturing business index.

Have a great day and good hunting.

Greg

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