Gold is the story of the day dropping $40 or more than 3% to below $1200 and ounce for the first time since the end of June this year.
A break below this level opens the way into the $900 region.
Looking elsewhere the focus shifted a little with European stocks playing catch-up to the big US rally the day before while the Euro continues to be pressured but the Aussie might be finding some support down here.
Before we get into other markets it is worth noting some interesting economic developments overnight with the at in the US falling heavily on the weak side. Jobless claims were up another 10,000 from last week’s aberrant print (at least that’s what the market thought) with 379,000 new claims filed last week. Existing home sales also printed weaker, down 4.2% in November against the 1.5% fall that the market had expected and weaker than last months’s fall of 3.2%. The Philly Fed survey was also weaker at 7 which is below the 10 that was expected. Westpac wrote yesterday that they thought the Fed had erred by tapering before the US economy had found its escape velocity – time will tell.
At the close the Dow is up 0.07% at 16.179, the Nasdaq is down 0.30% and the S&P 500 is off just 1 point to 1810.
In Europe however it was “catch up day” with the FTSE up 1.43% after its boring performance the day before while the DAX, CAC, FTSE MIB and IBEX all building strongly on their more than 1% gains the previous day rising 1.68%, 1.64%, 1.78% and 2.33% respectively.
Of course it was an interesting day in Asia yesterday with the USDJPY pushing above 104 and this Yen weakness dragged the Nikkei up 1.74%. The excitement was lost on many other Asian markets but our own ASX was up more than 2% on the back of both US stocks and the tumbling Aussie dollar. Overnight on the ASX Futures the SPI 200 has fallen 5 points for the Dec contract to 5233 bid but March is up 13 points to 5196 bid.
If the SPI 200 can get through the slow moving average at 5266 it can roar higher but this level will be solid initially.
Turning to FX markets the Aussie has held in okay off the low yesterday straight after the Taper announcement of 0.8818. It sits at 0.8855 this morning.
0.8740/60 is the bottom of the big downtrend channel and should provide solid support as it nears that level. Worth noting is the NAB and others are once again down grading their forecasts for the Aussie in 2014.
Elsewhere USDJPY is sat 104.16, the Euro is on its way back down at 1.3656 and even Sterling couldn’t rally overnight falling back to a still elevated 1.6370. Aussie NZD has finally bounced and sits at 1.0821 while Euro/Aussie looks like it might have topped too and sits at 1.5413 off the move than 1.55 high yesterday.
106 then 110 eventual look likely for the USDJY even if it is slightly overdone at the moment.
On commodity markets of course gold was the primary focus but Nymex crude is up 0.99% to $98.63 while copper is off a few cents at $3.34 lb. The Ags were mixed with corn up 1.29%, wheat fell 0.33% and soybeans rose 0.23%.
On the data front no one really cares. The taper is done, Christmas is next week so for many traders this is it for the year. But before they head off we have a few little gems to get through in the next 24 hours. The BoJ is out today with a monetary policy decision and press conference, German Gfk consumer confidence is out along with UK GDP as is the third read of US GDP and personal consumption data. So we might get a bit of thin trading position squaring both today/tonight and into year end a large number of traders and investors will be absent for the next two weeks.