Gold up, GBP down and the RBA will decide the Aussie's fate at 11.30 today | Vantage FX

Gold up, GBP down and the RBA will decide the Aussie’s fate at 11.30 today

February 18, 2014

No US markets but there was still plenty of action over the past 24 hours it was simply centred in the other two large global financial hubs of Tokyo and London.

Yesterday the Nikkei was under pressure from the the big miss on Japanese GDP which printed 0.3% qoq versus 0.7% which saw the annualised rate drop from 2.8% to just 1%. But it recovered to finish up about 0.5%.

In London it was the soothing words the of BoE Governor Mark Carney who noted that he wanted to give “comfort” that rates aren’t going to rise until the economy gets back on a sustainable footing including employment increases and spending. The FTSE rallied 1.09% on the back  of these comments.

On the Continent however the DAX fell 0.06%, the CAC lost 0.12% while the IBEX 35 in Madrid lost 14%. In Italy the bond rally continued and the FTSEMIB rose 0.12% after the Mayor of Florence Matteo Renzi was asked to form a Government by the Italian President. Interestingly in Germany the Bundesbank warned on German housing saying that prices could be as much as 25% overvalued but then added things were all good – so it’s ok, move along, nothing to see here.

A really interesting thing that I noted overnight was that regulatory fillings last week have revealed that the newly crowned king of the hedge Fund world (or perhaps recrowned) George Soros has doubled down (actually almost tripled down) on his bearish bet on the S&P 500 to a position of $1.3 billion short.

Locally the SPI 200 March contract on the ASX Futures overnight continued to rally, up 28 points to 5371 bid.

On global FX markets Sterling came under pressure from the Carney comments, nose bleed levels technically and some concern about tonight’s inflation data which is widely expected to show another print below 2%. At 1.6705 GBP is only down 0.23% on the day but it is almost 120 points of the 1.6822 high.

I sold some GBP yesterday, too early and it rallied against me on the run above 1.68 but I am short still as I had the channel in the chart below as a back stop stop loss.

1.6689 is key short term support but if that gives way 1.6600/15 is the target.

Elsewhere Euro is up a little at 1.3705, as is USDJPY which rose 0.13% to 101.93 but well off the low of 101.37 after the Japanese GDP data yesterday.

The Aussie dollar is also lower sitting at 0.9030 down 0.24%. It’s a big day for the Aussie today with the release of the minutes at 11.30 this morning. As Annette Beacher from TD Securities noted in my other piece this morning it is unlikely the Aussie will do nothing over the next 24 hours.

On commodity markets Gold rocketed another $10 an ounce in the past 24 hours and sits at $1339.66 this morning at a fairly important technical juncture.

Gold is breaking out of a HUGE level

Sometimes the hardest thing to do is hang onto a long, or a short, that is deeply in the money.

It is a prospect I have faced over the past week as gold has roared higher and broken a number of technical levels.

This is potentially a break of the entire downtrend – a weekly close is required to get me really excited but as I noted on my BTFD show yesterday and as Citibank suggested this morning a price target of $1433 seems reasonable in time.

Nymex Crude is up 0.62% to $100.92 Bbl and Copper is up another 2 cents at $3.34 while corns rally continued gaining another 1.08%, wheat rose 0.5% while soybeans dropped 0.5%.

Bitcoins, or should we say Mt Gox, troubles continued in the past 24 hours with prices on the Japanese exchange tanking to $220 at one point. Mt Gox is in decline and prices on other exchanges are above $600.

On the data front RBA minutes is the key data release domestically. In Japan the BoJ has a policy meeting and then tonight the UK CPI and PPI together with retail prices is huge for the FTSE and the Pound.

In Europe the ZEW surveys for Germany and the EU will be released while in the US we get New York Empire manufacturing, TIC flows and the NAHB housing market index.

Have a great day and good hunting.





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