28 July:Gold at all time highs. US$ downtrend picking up speed. Stocks are bid ahead of the FOMC & this week’s tech sector Q2 reports.

28 July:Gold at all time highs. US$ downtrend picking up speed. Stocks are bid ahead of the FOMC & this week’s tech sector Q2 reports.

While the US$ is lower again and the stock markets have squeezed higher, led by the Nasdaq, the big moves of the day have been seen in the precious metals, where Gold and Silver have both made strong gains. Gold has made a new all-time high on Monday, taking out the previous peak of US$1921, seen in 2011, as traders looked ahead towards the probability of a $1 trillion stimulus package to underpin the US economy, with the rising tensions between the US and China doing little to hurt the need for a safe-haven asset. Although the headlines were generally about Gold, the real move was in Silver, which gained by 8%, as opposed to Gold’s 2%, and seems to be heading rapidly to the $25.30 technical target, mentioned in the weekend video.

In the FX markets, the US$ accelerated its recent downtrend and fell to a 2 year low against the Euro due to the ever-growing concerns over the severity of coronavirus outbreak in the US, and also as trader look ahead to the FOMC meeting on Wednesday, when the Fed is expected to provide a very dovish outlook and to confirm its commitment to all-time low interest rates. The other currencies followed the lead of the Euro although to a lesser extent, but still appear to have further upside potential at the dollar’s expense.

The US stock indices all closed higher on Monday as traders added to risk positions ahead of Q2 earnings reports. The Nasdaq led the way in posting a 1.7% gain, outperforming the S&P and the Dow, as traders looked towards this week’s profit reports to come from Apple, Amazon, Facebook and Alphabet (Google), which have all performed well during the Covid crisis.

Oil put on about 0.9% as it continues its sideways range below $43pb.

In terms of the day’s data, the US durable goods orders rose 7.3% in Jun, above expectation of 6.5% mm, while the ex-transport orders were up by 3.3%, slightly below expectation of 3.5% mm.

From the EU, the German IFO business climate rose to 90.5 in July, up from 86.3, and above expectation of 89.3, the 3rd monthly rise in a row. The Current Situation index rose to 84.5, up from 81.3, missing expectation of 85.0, while the Expectations index rose to 97.0, up from 91.6, beating expectations of 93.4.

Looking ahead, Tuesday is going to be pretty thin on the ground. The NZ Total Jobs Filled figure for June is the only interest in Asia, which may give the kiwi a blip of interest, but that aside there is nothing at all on the calendar apart from the UK CBI Distributive Trade Survey – Realised (exp -26%), and the US Consumer Confidence, Case Shiller House Price Index (exp +4%), Richmond Fed Mfg Index and the API Weekly Crude Oil Stock Inventory.

The main corporate reports on Tuesday will come via Macdonald’s and Visa, with the heavy duty Nasdaq companies to report mostly on Wednesday/Thursday. It is going to be increasingly about politics in the US, with only 90+ days until the presidential election, and geopolitics, with US/China relations in the spotlight. Have a good day.

Economic data highlights will include:

Tue: NZ Total Jobs Filled, UK CBI Distributive Trade Survey – Realised, US Case Shiller House Price Index, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory,

Market moves, in brief:

FX: DXY 93.66 (-0.73%)

Bonds: US10Y; 0.618% (+4.58%), German 10Y; -0.490% (-10.11%), UK 10Y; 0.112% (-22.18%), Australian 10Y; +0.898% (+2.27%), NZ 10Y; 0.841% (+0.74 %), China 10Y; 2.892% (x+0.40%)

Stock Indices: DJI; +0.43%, S+P; +0.74%, NASDAQ; +1.67%, EUStoxx50; -0.24%, FTSE100; -0.31%, Shanghai Composite; +0.27%, ASX200SPI: +1.06%

Metals: Gold $1942 oz (+2.13%), Silver $24.60 oz (+8.03%), Copper $2.9105 lb (+0.62%), Iron Ore $107.40 per tonne (NYMEX) (-0.35%),

Oil: WTI $41.63 pb (+0.93%)

EURUSD: 1.1751
Res 1.1780 1.1805 1.1830
Sup 1.1725 1.1695 1.1665
USDJPY: 105.38
Res 105.60 105.85 106.10
Sup 105.10 104.85 104.60
GBPUSD: 1.2878
Res 1.2900 1.2925 1.2950
Sup 1.2845 1.2820 1.2795
USDCHF: 0.9201
Res 0.9230 0.9250 0.9275
Sup 0.9185 0.9165 0.9140
AUDUSD: 0.7145
Res 0.7155 0.7175 0.7195
Sup 0.7125 0.7105 0.7085
NZDUSD: 0.6684
Res 0.6690 0.6705 0.6720
Sup 0.6665 0.6650 0.6635
S&P.fs: 3234.18
Res 3285.00 3265.00 3245.00
Sup 3215.00 3195.00 3170.00
DJ30.fs: 26497.00
Res 26530.00 26600.00 26675.00
Sup 26440.00 26370.00 26290.00
SPI200.fs: 6035
Res 6050 6065 6080
Sup 6020 6005 5990
XAUUSD: 1941.34
Res 1950.00 1960.00 1970.00
Sup 1930.00 1920.00 1910.00
XAGUSD: 24.57
Res 24.60 24.75 24.90
Sup 24.35 24.20 24.05
WTI.fs: 41.63
Res 42.00 42.25 42.50
Sup 41.25 40.95 40.65

Trend Table

The US$ is lower once again, and the DXY charts hint that the fall is not done with yet. Now at 93.65, the US$ index looks to be headed towards 92.25 (14 May 2018 low) and possibly to 91.73 (76.4% of 102.98/88.25). Selling rallies (i.e. buying Euros on dips) seems to be the plan here because, as we said last week, without a sharp turnaround in the deteriorating pandemic data in the US, any economic recovery is going to be difficult, while the increasing tensions between the US/China are also adding to trader’s caution, which will not help the dollar in the longer term.

In line with the lower DXY, EurUsd has extended its rally to 1.1780, where it has now come up against the major descending trend resistance from the June 2008 peak in the Euro, at 1.6037. The current level will see decent selling interest and the hourly charts do point lower for the time being. However, the longer term momentum indicators point increasingly higher, and a break of the downtrend would then allow for a run towards 1.1815 (61.8% of 1.2550/1.0635) and to 1.1880 (100 MMA). On the downside, near term support will be seen at 1.1700 and at 1.1680 although there is now Fibo level ahead of 1.1540 (23.6% of 1.0765/1.1780). Buying dips remains the plan.

US$Jpy may be picking up speed to the downside as well after closing last week at a new 5 month low. Currently at 105.30 support (61.8% of 102.00/111.67), a move below 105.00 would target 104.50 and then 103.65 (76.4% Fibo target).

The Aud$ and the Nzd$, both remain firmly in their respective uptrend although the short term charts do look arather neutral, and a rangebound session may lie ahead (Aud; 0.7125/0.7175?/Nzd;0.6635/0.6700?). in the longer term, buying dips remains the theme.

As we said previously, the metals look as though they have room to run higher still, and although the short term momentum indicators are now overbought following yesterday’s sharp move, and look in need of some consolidation, I think Gold will see a run to $2000 oz, and with the weakness currently seen in the US$, this may occur sooner rather than later. Silver had an 8% rally and I am now looking for a move towards 25.10 (August 2013 high) and then to 26.10 (38.2% of 49.78/11.63)

Stocks are seeing the longer term charts turn neutral so I would not be getting to involved at this stage although if the major US$ trillion support package is announced, then stocks will most likely fly higher. The Nasdaq looks well undrerpinned heading into the Q2 tech rports due Wednesday/Thursday and should support the other indices.

1 HourOverbought – Turning Lower?Oversold – Turning higher?Overbought – Turning Lower?Turning Higher?Turning NeutralNeutral – Turning Lower?
4 HourUp – OverboughtDownUpOversold – Turning higher?Neutral – Turning Higher?Neutral – Turning Higher?
1 DayUpTurning LowerTurning Higher?DownNeutral – Turning Higher?Neutral – Turning Higher?
1 WeekTurning HigherNeutral – Turning Lower?Neutral – Turning Higher?Turning LowerUpTurning Higher
1 HourOversold – Turning higher?Turning Higher?Turning Higher?Overbought – Turning Lower?Bearish DivergenceNeutral – Turning Higher?
4 HourTurning LowerNeutralTurning NeutralUp – OverboughtUp – OverboughtTurning Neutral
1 DayDownTurning NeutralTurning NeutralUpUpTurning Neutral
1 WeekTurning LowerTurning HigherUpUpTurning HigherUp
1 HourTurning HigherTurning NeutralBearish DivergenceNeutral – Turning Higher?Bearish DivergenceTurning Neutral
4 HourTurning NeutralTurning NeutralTurning NeutralNeutral – Turning Lower?Turning HigherTurning Lower
1 DayTurning HigherTurning NeutralTurning NeutralTurning NeutralNeutral – Turning Higher?Neutral
1 WeekNeutral – Turning Higher?Neutral – Turning Higher?Turning LowerTurning Higher?Turning Lower?Turning Neutral

EurUsd – Monthly

UsdJpy – Monthly

Gold – Monthly

Silver – Monthly

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