Alpari UK
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US Opening Call from Alpari UK on 16 April 2013
Gold finds some stability while markets respond to poor European data
Today’s US opening call provides an update on:
* Gold begins to stabilise off the back of the worst sell-off in over three decades;
* UK CPI remains at 2.8%, as markets contemplate the potential for further easing;
* Both German and eurozone ZEW economic sentiment disappoint;
* US looks forward to key housing and inflation data;
* European stocks continue to fall, yet US stocks expected to lead higher;
The headlines have been dominated by the downfall of gold since the loss of the crucial 1530 level on Friday. The cause of this highly significant loss have been attributed to a number of factors and conspiracy theories. Regardless of the initial catalyst, once this key support level broke, the precious metal has been in freefall, bringing about the most significant fall in price in over three decades. This morning we have seen the price of gold retrace somewhat and the markets are following closely to understand where this is merely a period of consolidation or a move to pull back to the levels of old. The inability of the typical safe-haven investment to retain value is a sure-fire boost to the equity markets as investors seek to find returns in a world of low bond yields and strong equity returns.
UK CPI came out as expected earlier, maintaining the 2.8% level for the second consecutive month. The CPI has a key role to play in the decision-making of the MPC with regards to further quantitative given the current inflation targeting imposed by the government and followed by the BoE. Subsequently, we are looking to see a reduction in this level to free up some room to manoeuvre on monetary loosening.
The German and Eurozone ZEW economic sentiment index figures were released earlier, with both plummeting below expectations. The German figure fell from 48.5 to 36.3, despite forecasters expecting a more moderate drop to 41.5. Similarly, the Eurozone figure fell from 33.4 to 24.9 despite expectations of a number closer to 31.5.
The US has a number of key releases today, with key inflation and housing data due out early into the US session. The building permits and housing starts are both due out simultaneously, with both expected to portray a similar picture of stability in the sector. Building permits are expected to remain at 0.94 million, while the housing starts are forecast to marginally increase from 0.92 million to 0.93 million. Meanwhile, the Core CPI rate is expected to remain at 0.2% in the other notable release of the day.
The European markets have continued to tumble for the third consecutive day off the back of alltime highs in almost all the major indices. However, this negativity has failed to spread across to the US markets, with the DJIA expected to open 44 points higher and the S&P500 up around 5 points.
AUDCHF consolidates, yet further losses may be imminent
The Australian dollar has seen some significant losses over the past days off the back of the disappointing Chinese data early on Monday. Taking a look at the Australian dollar against the Swiss franc, we can see today’s appreciation may simply be a retracement in a bearish market and the break below key moving averages may serve to provide resistance to any move higher.
The recent fall in the pair saw a bounce off the 61.8 Fibonacci retracement level, pushing back above the key support and resistance level around 0.963, only to be rejected around the 50.0 retracement at 0.966. Most crucially, the 100 and 200 day moving averages provide key levels of resistance should we see further upside in the coming days.
The stochastic and CCI indicators are both currently in oversold territory and are likely to turn to the upside over the next two days, indicating a potential pullback towards the region of the 50.0 Fibonacci level and 100 day simple moving average.
I see it likely that we could see more upside momentum as a form of consolidation, however there is a clear downturn in sentiment against the Australian dollar as a result of China’s poor performance. Subsequently it is likely that this currency pair could fall lower towards the previous point of support around 0.945. That being said, the primary target would be the Fibonacci extension at 0.955.
Gold finds some stability while markets respond to poor European data
Today’s US opening call provides an update on:
* Gold begins to stabilise off the back of the worst sell-off in over three decades;
* UK CPI remains at 2.8%, as markets contemplate the potential for further easing;
* Both German and eurozone ZEW economic sentiment disappoint;
* US looks forward to key housing and inflation data;
* European stocks continue to fall, yet US stocks expected to lead higher;
The headlines have been dominated by the downfall of gold since the loss of the crucial 1530 level on Friday. The cause of this highly significant loss have been attributed to a number of factors and conspiracy theories. Regardless of the initial catalyst, once this key support level broke, the precious metal has been in freefall, bringing about the most significant fall in price in over three decades. This morning we have seen the price of gold retrace somewhat and the markets are following closely to understand where this is merely a period of consolidation or a move to pull back to the levels of old. The inability of the typical safe-haven investment to retain value is a sure-fire boost to the equity markets as investors seek to find returns in a world of low bond yields and strong equity returns.
UK CPI came out as expected earlier, maintaining the 2.8% level for the second consecutive month. The CPI has a key role to play in the decision-making of the MPC with regards to further quantitative given the current inflation targeting imposed by the government and followed by the BoE. Subsequently, we are looking to see a reduction in this level to free up some room to manoeuvre on monetary loosening.
The German and Eurozone ZEW economic sentiment index figures were released earlier, with both plummeting below expectations. The German figure fell from 48.5 to 36.3, despite forecasters expecting a more moderate drop to 41.5. Similarly, the Eurozone figure fell from 33.4 to 24.9 despite expectations of a number closer to 31.5.
The US has a number of key releases today, with key inflation and housing data due out early into the US session. The building permits and housing starts are both due out simultaneously, with both expected to portray a similar picture of stability in the sector. Building permits are expected to remain at 0.94 million, while the housing starts are forecast to marginally increase from 0.92 million to 0.93 million. Meanwhile, the Core CPI rate is expected to remain at 0.2% in the other notable release of the day.
The European markets have continued to tumble for the third consecutive day off the back of alltime highs in almost all the major indices. However, this negativity has failed to spread across to the US markets, with the DJIA expected to open 44 points higher and the S&P500 up around 5 points.
AUDCHF consolidates, yet further losses may be imminent
The Australian dollar has seen some significant losses over the past days off the back of the disappointing Chinese data early on Monday. Taking a look at the Australian dollar against the Swiss franc, we can see today’s appreciation may simply be a retracement in a bearish market and the break below key moving averages may serve to provide resistance to any move higher.
The recent fall in the pair saw a bounce off the 61.8 Fibonacci retracement level, pushing back above the key support and resistance level around 0.963, only to be rejected around the 50.0 retracement at 0.966. Most crucially, the 100 and 200 day moving averages provide key levels of resistance should we see further upside in the coming days.
The stochastic and CCI indicators are both currently in oversold territory and are likely to turn to the upside over the next two days, indicating a potential pullback towards the region of the 50.0 Fibonacci level and 100 day simple moving average.
I see it likely that we could see more upside momentum as a form of consolidation, however there is a clear downturn in sentiment against the Australian dollar as a result of China’s poor performance. Subsequently it is likely that this currency pair could fall lower towards the previous point of support around 0.945. That being said, the primary target would be the Fibonacci extension at 0.955.
Read the full report at Alpari News Room