XAU/USD – Gold Moves Higher Ahead of CPI

Gold prices have moved higher to start the week. In Monday’s North American trade, the spot price for an ounce of gold is $1324.83, up 0.63% on the day. It’s a quiet start to the week, with only one event. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. The last time the federal government posted a surplus was in September.

 

Gold lost ground last week, as the US dollar received a boost from a tumultuous week on global stock markets. Is the correction over? It’s too early too tell, since much of the sell-off is related to investor concerns over possible interest rate hikes by major central banks. The Bank of England has said it could accelerate its pace of hikes, and the Federal Reserve could follow suit if inflation moves higher. Gold prices are closely linked to interest rate moves, and a change in the Fed’s projection of interest rate moves could have a sharp effect on gold. Currently, the Fed is projecting three rate hikes this year, but if inflation moves higher and the robust US economy continues its current expansion, the Fed may opt for four or even five rate hikes, and this would push gold to lower levels.

It’s a quiet start to the week in the US, and the US dollar has been generally subdued. That will likely change on Wednesday, with the release of inflation and retail sales reports. The markets will be glued to the inflation indicators, as last week’s stock market slide was triggered by concern that higher inflation would lead to additional rate hikes from the Federal Reserve and other central banks. If inflation numbers are higher than expected, we could see some volatility in gold prices and further sell-offs in the stock markets.

 

XAU/USD Fundamentals

Monday (February 12)

  • 14:00 US Federal Budget Balance. Estimate 50.2B

*All release times are GMT

*Key events are in bold

 

XAU/USD for Monday, February 12, 2018

XAU/USD February 12 at 12:20 EST

Open: 1314.73 High: 1326.24 Low: 1314.08 Close: 1324.83

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1260 1285 1307 1337 1375 1416
  • XAU/USD posted gains in the Asian session but gave up most of these gains in European trade. The pair has posted gains in North American trade
  • 1307 is providing support
  • 1337 is the next resistance line
  • Current range: 1307 to 1337

Further levels in both directions:

  • Below: 1307, 1285 and 1260
  • Above: 1337, 1375, 1416 and 1433

OANDA’s Open Positions Ratio

In the Monday session, XAU/USD ratio is showing short positions with a majority (54%). This is indicative of trader bias towards XAU/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

GBP/USD – Pound Ticks Lower, Investors Eye British CPI

The British pound has posted small losses in the Monday session. In North American trade, GBP/USD is trading at 1.3809, down 0.14% on the day. On the release front, there are no British data releases on the schedule. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. The last time the federal government posted a surplus was in September. On Tuesday, the UK releases a host of inflation indicators, led by CPI.

It was the Bank of England’s turn to be in the spotlight on Thursday. The BoE made no changes to interest rates or quantitative easing, and both moves were unanimous (9-0). There was some surprise however, at the hawkish tone of policymakers, who said that interest rates could rise “earlier” and by a “somewhat greater extent” than they predicted at their previous meeting in November. Bottom line? We could see an interest rate in the first half of 2018, with analysts circling May as the most likely date. At the same time, the effect that Brexit is having on the economy is difficult to predict, and if the economic conditions worsen, the BoE could delay a rate hike. The hawkish message from the BoE pushed the British pound above the 1.40 level, but the upward swing didn’t last, as the pound had to settle for small gains on Thursday.

It’s a quiet start to the week in the US, and the US dollar has been generally subdued. That will likely change on Wednesday, with the release of inflation and retail sales reports. The markets will be glued to the inflation indicators, as last week’s stock market slide was triggered by concern that higher inflation would lead to additional rate hikes from the Federal Reserve and other central banks. If inflation numbers are higher than expected, we could see some volatility from the US dollar as well as the stock markets.

GBP/USD Fundamentals

Monday (February 12)

  • 4:50 MPC Member Gertjan Vlieghe Speaks
  • 11:30 MPC Member McCafferty Speaks
  • 14:00 US Federal Budget Balance. Estimate 50.2B

Tuesday (February 13)

  • 4:30 British CPI. Estimate 2.9%

*All release times are GMT

*Key events are in bold

 

GBP/USD for Monday, February 12, 2018

GBP/USD February 12 at 11:30 EDT

Open: 1.3828 High: 1.3876 Low: 1.3796 Close: 1.3809

 

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3613 1.3744 1.3809 1.3901 1.4010 1.4128

GBP/USD posted gains in the Asian session but gave these up in European trade. The pair is steady in North American trade

  • 1.3809 was tested earlier in support and is under strong pressure. It could break in the North American session
  • 1.3901 has some breathing room in resistance following losses by GBP/USD on Friday

Current range: 1.3809 to 1.3901

Further levels in both directions:

  • Below: 1.3809, 1.3744, 1.3613
  • Above: 1.3901, 1.4010, 1.4128 and 1.4271

OANDA’s Open Positions Ratio

In the Monday session, GBP/USD ratio is showing short positions with a majority (56%). This is indicative of trader bias towards GBP/USD continuing to lose ground.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

USD/CAD – Canadian Dollar Unchanged as Investors Search for Cues

The Canadian dollar has ticked higher in the Friday session. Currently, the pair is trading at 1.2609, up 0.05% on the day. On the release front, the focus is on Canadian employment indicators, with the release of Employment Change and the unemployment rate. Traders should be prepared for some movement from the Canadian dollar in the North American session.

This week’s market selloff has boosted the US dollar, at the expense of the Canadian dollar and most other major currencies. The Canadian dollar has dropped 1.4% this week, and is down 2.5% in February, erasing the gains we saw in January. Interestingly, the catalyst for the current turbulence has been solid economic data in the US, namely, improved payrolls and wage growth reports. This has raised concerns of inflation, which could lead to a quicker pace of rate hikes from the Federal Reserve. This sentiment has sent the bond markets higher, while weighing on global stock markets.

After some spectacular readings, Canada’s economy is expected to show more modest job creation in January, with an estimate of 10.3 thousand. The unemployment rate is forecast to edge up from 5.7% to 5.8%. If these predictions are within expectations, the Canadian dollar could gain some ground on Friday, and end a tough week on a positive note.

USD/CAD Fundamentals

Monday (February 12)

  • 14:00 US Federal Budget Balance. Estimate 50.2B

*All release times are GMT

*Key events are in bold

 

USD/CAD for Monday, February 12, 2018

USD/CAD, February 2 at 8:10 EDT

Open: 1.2603 High: 1.2616 Low: 1.2585 Close: 1.2607

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2190 1.2351 1.2494 1.2630 1.2757 1.2855

USD/CAD has showed little movement in the Asian and European sessions

  • 1.2494 is providing support
  • 1.2630 is a weak resistance line
  • Current range: 1.2494 to 1.2630

Further levels in both directions:

  • Below: 1.2494, 1.2351, 1.2190 and 1.2060
  • Above: 1.2630, 1.2757 and 1.2855

OANDA’s Open Positions Ratio

USD/CAD ratio is unchanged in the Monday session. Currently, long positions have a majority (51%), indicative of a lack of trader bias towards as to what direction USD/CAD takes next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

EUR/USD – Euro Quiet at Start of Week

The euro has posted small gains in the Monday session. Currently, the pair is trading at 1.2266, up 0.12% on the day. It’s a light economic calendar to start the week, with only one release on the schedule. The US federal budget is expected to rebound and show a large surplus of $50.2 billion. This would mark the first surplus since September. There are no major indicators until Wednesday, when Germany releases Preliminary GDP and Final CPI, and the eurozone releases Flash GDP.

A rebound in the global economy has been a boon for eurozone exports, and this has boosted the bloc’s manufacturing sector. This was underscored by strong manufacturing reports out of France and Italy in December, which were released on Friday. Industrial production in both countries improved compared to November, beating the estimates. The Italian reading of 1.6% marked the strongest gain since August 2016. We’ll get a look at Eurozone Industrial Production on Wednesday. The November reading surged to 1.0%, marking a 3-month high. However, the markets are expecting a small gain of 0.1% in December.

German President Angela Merkel has reached an agreement with the socialist SDP to form a new government, but the price was steep, as the SDP extracted major concessions from Merkel, notably control of the powerful finance ministry. This will likely mark a shift in Germany’s eurozone policy, which had been marked by a conservative stance under former finance minister Wolfgang Schaeuble. The weaker members of the eurozone, such as Greece, will likely find a more sympathetic ear for financial help from the SDP than they did from Schauble. Many conservatives fear that the Olaf Scholz, who is expected to become finance minster, will not be as fiscally responsible as Schaeuble. On the weekend Scholz said that Germany should not dictate economic policies to other eurozone members. The coalition agreement still requires the consent of a majority of the 464,000 members of the SDP, and if the deal is rejected, Germany will likely be headed to new elections.

FX and Equities Brace for a Bumpy Week

 

EUR/USD Fundamentals

Monday (February 12)

  • 14:00 US Federal Budget Balance. Estimate 50.2B

*All release times are GMT

*Key events are in bold

 

EUR/USD for Monday,  February 12, 2018

EUR/USD for February 12 at 6:30 EDT

Open: 1.2252 High: 1.2298 Low: 1.2242 Close: 1.2266

 

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.1961 1.2092 1.2200 1.2286 1.2357 1.2481

EUR/USD edged higher in the Asian session. The pair has reversed directions in European trade and is moving downards

  • 1.2200 has switched to a support role after losses by EUR/USD on Tuesday
  • 1.2286 is the next resistance line

Further levels in both directions:

  • Below: 1.2200, 1.2092 and 1.1961
  • Above: 1.2286, 1.2357, 1.2481 and 1.2569
  • Current range: 1.2200 to 1.2286

OANDA’s Open Positions Ratio

EUR/USD ratio has shown strong movement towards long positions. Currently, short positions have a majority (57%), indicative of EUR/USD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.