Gold Futures Close Modestly Higher As Dollar Retreats

Trading 25 sept 2020 Commentaire »

Gold futures rebounded from early weakness and two-month lows on Thursday and snapped a three-day losing streak, due largely to some bargain hunting and a slightly weaker dollar.

The dollar index advanced to 94.59 a little before noon, but dropped to 94.20 later in the session. It was last seen at 94.28, down more than 0.1% from previous close.

Continuous surge in coronavirus in several countries across Europe, and uncertainties surrounding the U.S. presidential elections and the U.S. stimulus package lifted the greenback in recent sessions.

Gold futures for December ended up $8.50 or about 0.5% at 1,876.90 an ounce

Silver futures for December edged up $0.091 or 0.4% to $23.196 an ounce, while Copper futures for December closed lower by $0.0250 or about 0.8% at $2.9680 per pound.

Data released by the Labor Department this morning showed an unexpected uptick in first-time claims for U.S. unemployment benefits in the week ended September 19th.

The data said initial jobless claims inched up to 870,000, an increase of 4,000 from the previous week's revised level of 866,000. Economists had expected jobless claims to drop to 843,000 from the 860,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average fell to 878,250, a decrease of 35,250 from the previous week's revised average of 913,500.

A report released by the Commerce Department showed new home sales jumped by 4.8% to an annual rate of 1.011 million in August after skyrocketing by 14.7% to an upwardly revised rate of 965,000 in July. Economists had expected new home sales to pull back by 1.2%.


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Seven-Year Note Auction Attracts Modestly Below Average Demand

Trading 25 sept 2020 Commentaire »

Finishing off this week's series of announcements of the results of its long-term securities auctions, the Treasury Department revealed Thursday that its sale of $50 billion worth of seven-year notes attracted modestly below average demand.

The seven-year note auction drew a high yield of 0.462 percent and a bid-to-cover ratio of 2.42.

Last month, the Treasury sold $47 billion worth of seven-year notes, drawing a high yield of 0.519 percent and a bid-to-cover ratio of 2.47.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous seven-year note auctions had an average bid-to-cover ratio of 2.51.

Earlier this week, the Treasury revealed its auction of $52 billion worth of two-year notes attracted below average demand, while its auction of $53 billion worth of five-year notes attracted average demand.


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*UK Chancellor Sunak Unveils 15% VAT Cut For Hospitality And Tourism Sectors

Trading 24 sept 2020 Commentaire »

UK Chancellor Sunak Unveils 15% VAT Cut For Hospitality And Tourism Sectors


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*UK Chancellor Sunak Announces New Job Support Scheme, Extends Self Employment Income Support

Trading 24 sept 2020 Commentaire »

UK Chancellor Sunak Announces New Job Support Scheme, Extends Self Employment Income Support


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Belgium Business Confidence Improves For Fifth Month

Trading 24 sept 2020 Commentaire »

Belgium's business confidence improved for a fifth straight month in September, underpinned by stronger morale in manufacturing and construction, survey data from the National Bank of Belgium showed on Thursday. The business confidence index rose to -10.8 from -12 in August. Confidence strengthened for a fourth month in a row in manufacturing. Companies continued to appraise their total order books more positively and demand forecasts were revised upwards.

The slight revival of confidence in the building industry was based almost entirely on greater use of equipment.

Sentiment eroded in the business services and the trade sectors.


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*ECB's Lane: Primary Concern Is Inflation Remaining Below Our Aim For Excessive Period

Trading 24 sept 2020 Commentaire »

ECB's Lane: Primary Concern Is Inflation Remaining Below Our Aim For Excessive Period


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*ECB's Lane: Sustained Surge In Covid-19 Cases Will Damage Consumer And Investor Confidence

Trading 24 sept 2020 Commentaire »

ECB's Lane: Sustained Surge In Covid-19 Cases Will Damage Consumer And Investor Confidence


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*BoE's Bailey: Right To Have Negative Rates In Toolbox

Trading 24 sept 2020 Commentaire »

BoE's Bailey: Right To Have Negative Rates In Toolbox


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U.S. New Home Sales Unexpectedly Jump To Nearly 14-Year High In August

Trading 24 sept 2020 Commentaire »

A report released by the Commerce Department on Thursday unexpectedly showed another significant increase in new home sales in the U.S. in the month of August.

The Commerce Department said new home sales jumped by 4.8 percent to an annual rate of 1.011 million in August after skyrocketing by 14.7 percent to an upwardly revised rate of 965,000 in July.

Economists had expected new home sales to pull back by 1.2 percent to a rate of 890,000 from the 901,000 originally reported for the previous month.

With the unexpected increase, new home sales surged up to their highest level since reaching 1.016 million in September of 2006.

New home sales in the South spiked by 13.4 percent to an annual rate of 636,000, while new home sales in the Northeast jumped by 5.0 percent to a rate of 42,000.

On the other hand, the report said new home sales in the Midwest plunged by 21.4 percent to a rate of 99,000. New home sales in the West also slid 1.7 percent to a rate of 234,000.

The Commerce Department said the median sales price of new houses sold in August was $312,800, down 4.6 percent from $327,800 in July and down 4.3 percent from $327,000 a year ago.

The estimate of new houses for sale at the end of August was 282,000, representing 3.3 months of supply at the current sales rate. The months of supply is down from 3.6 in July.

"Strong sales have depleted inventories of new homes for sale, which fell to their lowest level in nearly three years," said Nancy Vanden Houten, Lead U.S. Economist at Capital Economics.

She added, "That, along with strong homebuilder sentiment and lean inventories of existing homes, should support new home construction even if the pace of sales softens in the months ahead."

On Tuesday, the National Association of Realtors released a separate report showing existing home sales also climbed to their highest level in nearly fourteen years in August.

NAR said existing home sales jumped 2.4 percent to an annual rate of 6.000 million in August after skyrocketing by 24.7 percent to a rate of 5.860 million in July.

With the continued increase, which matched economist estimates, existing home sales reached their highest level since December of 2006.


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USD/CHF. Jordan’s threats, weakening franc and growth outlook

Trading 24 sept 2020 Commentaire »

The dollar/franc pair jumped to two-month highs today, heading towards the borders of the 93rd figure. The nearest resistance level is located at the upper border of the Kumo cloud on the D1 timeframe (0.9300) - and there is no doubt that buyers of the pair will test this target in the medium term. At least, the fundamental background contributes to this: the franc is depreciating against the background of dovish comments from the head of the Swiss central bank, the dollar then continues to rise in price throughout the market, reflecting increased demand. All this makes it possible for us to say that the franc will not only conquer the 93rd figure in the foreseeable future, but will also get close to the key resistance level 0.9405 (Kijun-sen line on the weekly chart). It is too early to talk about such price heights, since there are still certain prerequisites for a growth breakthrough. However, everything in order.

As a rule, meetings of the Swiss National Bank no longer cause strong volatility or any excitement in the market. With rare exceptions, the central bank only repeats what was mentioned earlier, practically without changing the wording. However, many anticipated this particular September meeting, as rumors about the dovish attitude of the SNB circulated on the market. And these rumors were largely justified: SNB Chairman Thomas Jordan criticized the overvalued, in his opinion, rate of the franc and announced the conduct of currency interventions.

The overvalued franc is a big problem for the SNB. This is not fresh news: since the EUR/CHF rate decoupled from the 1.2000 target (this level was previously maintained artificially), the SNB has been constantly trying to pull down the price of its currency. Many spheres of the country's economy suffer from the expensive franc - first of all, the export and tourism sector. This is especially important in the context of the coronavirus crisis, since the service sector is at the forefront of the attack. Therefore, the central bank is constantly expected to take retaliatory measures. The SNB is in no hurry to act, at least in the context of monetary easing. At the same time, the Swiss currency, as a rule, ignores many of (almost all) Jordan's verbal attitudes.

But today the franc still fell under Jordan's dovish rhetoric First of all, he emphasized that the franc is "highly overvalued". Second, he said that inflationary forecasts "faced unprecedented high uncertainty." Based on the first two points, he moved on to the third, according to which the central bank is ready to conduct foreign exchange interventions. Jordan also stated that the coronavirus crisis has an extremely negative impact on the country's economy, so the SNB will continue to adhere to an expansionary policy. And although key indicators are expected to increase in the third quarter (after a record collapse in the second quarter), by the end of the year, Switzerland's GDP should decline by more than five percent - this is the worst result in the last 50 years (such a decline was last observed in the mid-70s. -s). As a result, Jordan promised to use, if necessary, "all instruments of monetary policy", thereby increasing the pressure on the Swiss currency.

Let me remind you that the current rate on deposits in Switzerland is -0.75% per annum, and the list of so-called "privileged recipients" (i.e. the list of those exempted from negative rates) has been cut more than once. Traders fear that if the situation worsens, the SNB may conduct shock therapy - and here we are talking about a whole complex of mitigating measures. According to experts, the central bank can further reduce the rate (down to -1% or even -1.25%), as well as significantly revise the list of beneficiaries. Plus, there is a need to carry out a large-scale foreign exchange intervention. Such a scenario looks unlikely at the moment, but Jordan's dovish rhetoric reminded traders that the Swiss central bank has enough leverage in its arsenal.

Considering the SNB's position and the US dollar's growth, we can conclude that the priority is to buy USD/CHF. The first target for moving up is 0.9290 (upper border of the Kumo cloud on the daily chart. Key resistance level is much higher at 0.9405 (Kijun-sen line on the weekly chart).

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