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  • General Statistics

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      10/06/21 10:53

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    Joined 25/01/22 07:45
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    • GOLD, XAU/USD, FOMC, TREASURY AUCTION, YIELDS, TECHNICAL OUTLOOK – TALKING POINTS Gold prices gain overnight on haven flows as Wall Street volatility persists Strong 2-year Treasury auction helped push yields lower, 5-year auction eyed XAU/USD establishes support at former area of major resistance as prices rise Gold prices held firm overnight despite a US Dollar that was charged on safe-haven flows amid a volatile New York trading session. US stocks managed to close in the green after a late-day rally, marking an impressive intraday turnaround. The broad risk aversion and volatility was the likely driver for bullion prices. A healthy amount of buying in the Treasury market also helped gold by pushing yields lower across the short-end of the curve, while longer-dated yields trimmed losses as stocks rebounded. Bullion is sensitive to Treasury yields, as the metal is a non-interest-bearing asset. Treasury rates have risen sharply since early December, boosted by increasingly hawkish Federal Reserve rate hike bets. However, those rate hike bets may have become too aggressive. An overnight auction of $54 billion in 2-year Treasury notes was met with strong demand on Monday in the United States. The auction saw the highest demand seen since early 2020. That suggests the hawkish bets calling for nearly four Fed rate hikes in 2022 may be overdone. This is a good sign for gold as higher demand for bonds raises the price. Bond yields fall when prices rise. Bullion traders have a busy week ahead, with the Federal Reserve’s policy decision set to cross the wires on Wednesday. Federal Reserve Chair Jerome Powell may push back on some of the aggressive market pricing on rates during the post-FOMC press conference. Markets are currently pricing in nearly 100 basis points of hiking, which is likely more than the Fed is comfortable with currently despite the recent hawkish shift among even more dovish board members. Later this week, the Fed’s preferred inflation metric, the personal consumption expenditures price index (PCE), is slated to drop. Analysts expect a reading of 4.8% year-on-year in the core segment of the price index for December. That would represent a small increase from November. It would also be prudent to keep an eye on the 5-year note Treasury auction tonight to help gauge overall bond demand. Another strong auction could help drive down rates on the shorter end of the curve. That would likely bode well for gold prices. GOLD TECHNICAL FORECAST Gold prices rose from a newly establish level of support, which served as resistance numerous times going back to July 2021. The next target for bulls is likely the November high at 1877.15. The RSI oscillator is in neutral territory, while MACD strengthens. Prices may require a bit more consolidation before the next big push higher. Alternatively, a move lower would aim for a quick show of support from the former resistance level. GOLD DAILY CHART Chart created with TradingView   Written by Thomas Westwater, Analyst for DailyFX.com. 25th Jan 2022.
    • EURO, US DOLLAR, EUR/USD, FED, INFLATION, RATES, STOCKS – TALKING POINTS: Euro impressively resilient as the US Dollar rises against commodity FX Latest USD gains may reflect risk aversion more so than Fed anticipation Steadying risk appetite after FOMC meeting may drive down EUR/USD Grappling with a rapid pickup in inflation and speculating on the likely response to it by global central banks have defined the dominant narrative for financial markets since at least mid-2021. That’s when the Federal Reserve began to signal that the time had come to begin scaling back Covid-triggered stimulus. The start of 2022 brought a key turning point. The Fed’s hawkish rhetoric began to truly sink in for investors as it threatened to start ‘quantitative tightening’ – reducing the balance sheet to boost long-term interest rates – alongside interest rate hikes this year. Markets got the message: inflation expectations cooled while nominal interest rates pushed higher, implying confidence in the Fed’s conviction. That pulled real interest rates sharply higher. The benchmark 10-year TIPS rate is on pace to finish January with the biggest monthly rise in over two years. Rising inflation-adjusted returns on relatively safer assets have encouraged a rebalancing of portfolios. Ultra-low rates had pushed investors to riskier bets in search of returns. Now in reverse, the same dynamic has pulled down stocks, a bellwether asset class for market-wide risk appetite. Chart created with TradingView One might have expected that the US Dollar would be a star performer against such a backdrop, benefitting from yield support courtesy of the hawkish Fed. The currency is up on the month against an average of its major counterparts, but only modestly. In a telling breakdown, the Euro has managed impressive resilience while the New Zealand Dollar has suffered outsized losses. This appears to reflect a larger theme: since the start of the year, the Greenback’s rise against ‘pro-risk’ currencies has been more than double the gains versus ‘anti-risk’ alternatives. Put another way, USD has scored outsized gains against currencies sensitive to the global business cycle and market sentiment (AUD, NZD, CAD). Defensively-minded currencies (EUR, CHF, JPY) have held up markedly better, though the shift in Fed views has allowed the Greenback a modest overall advance. This is despite the former group looking set to match the four interest rate hikes now expected of the Fed in 2022. Meanwhile, the latter set is seen sustaining negative-interest-rate policies at least until next year. This preference for relative ‘safety’ over returns underscores the markets’ risk-off disposition. Chart created with TradingView With that in mind, this week’s much-anticipated monetary policy announcement from the Fed’s rate-setting FOMC committee may bring a somewhat novel response from the markets. Policymakers are firmly expected to hold firm this time ahead of a well-telegraphed hike in March. Meanwhile, a repeat of Fed officials’ already combative language from the recent weeks in the policy statement and Chair Powell’s press conference seems unlikely to move expectations much further. That might offer a brief bit of relief for markets, if only in that the risk of surprise escalation will have been neutralized. Interestingly, this might weigh on EUR/USD. If the Euro is indeed being held up by anti-risk flows, support may be undermined if risk appetite steadies after the Fed has said its piece. That would perhaps allow the Greenback’s advantage against the single currency on the relative yield front to shine anew.   EUR/USD TECHNICAL ANALYSIS Euro chart positioning is little-changed from last week’s setup. Prices are idling between resistance in a congestion area capped at 1.1378 and a rising trend line guiding the shallow rebound from last week’s lows. A daily close below this barrier would speak to downtrend resumption, exposing support below the 1.12 figure. Alternatively, reclaiming a foothold above 1.1378 may set the stage for another run at resistance clustered around the 1.15 mark. Making the case for upside follow-through probably demands still-greater conviction however, calling for a return north of 1.17. EUR/USD chart created with TradingView EURO TRADING RESOURCES Just getting started in the markets? See our free trading guides What is your trading personality? Take our quiz to find out Join a free webinar and have your trading questions answered   Written by Ilya Spivak, Head Strategist, APAC at DailyFX.com. 25th Jan 2022.
    • Hi @ecou Natural gas prices retreated sharply on Wednesday as U.S. traders positioned themselves ahead of Thursday’s eagerly awaited inventories report. The current street consensus is predicting a 173 Bcf (billion cubic feet) draw from U.S. stockpiles, as cold weather batters the Midwest and the Northeastern sections of the United States. Wednesday’s decline saw natural gas futures close below the key 200-day moving average, potentially hinting at more pain for LNG (liquid natural gas) in the days ahead. However, price was able to hold above the key psychological $4.00 level, which could act as near-term support and fend off any potential drops. Despite the cooldown of natural gas prices throughout the second half of 2021, energy prices remain top of mind for politicians in Washington. In a press conference on Wednesday, President Joe Biden reaffirmed his commitment to getting more oil supply to the market. This comes as WTI and Brent crude continue to power higher above $85/bbl. Despite a relatively mild winter, risks remain for LNG. Bouts of colder weather and a relatively tight supply could exacerbate any price increases over the coming weeks. Global LNG prices also face significant pressure from the ongoing situation in Eastern Europe. The Nord Stream 2 Pipeline continues to be the center of attention, with many Western nations hinting at blocking completion of the project should Vladimir Putin elect to invade Ukraine. NATURAL GAS FUTURES DAILY CHART Chart created with TradingView European natural gas prices retreated Wednesday as well, as rumors spread that supply from China could saturate the markets in the near-term. European LNG futures fell by as much as 8.6% as Sinopec is rumored to be willing to sell numerous cargoes of LNG. Fresh supply for Europe could help alleviate growing price pressures across the continent, as prices more than tripled for some consumers in 2021. Overall sentiment in the space remains weak, with geopolitical tensions and the prospects of increased global supply weighing on price.   Jan 20, 2022 |  Brendan Fagan, Intern  |   DailyFX
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