Jump to content

USD up, gold price down as central bankers say more rate rises to come

Recommended Posts

After three days of central bank speeches at the ECB forum in Sintra, the market agrees that rates have not yet peaked, and cuts won't come for some time.

 Jeremy Naylor | Analyst, London | Publication date: Thursday 29 June 2023 

IGTV’s Jeremy Naylor looks across some of the commentary from Powell, Lagarde and Bailey. This has driven the US dollar to a two-week high and sent the price of gold down.

(Video Transcript)

ECB Forum

After three days of speeches and commentary from the Portuguese Resort in Sintra for the European Central Bank (ECB) Forum, one big theme has emerged, and that is we should expect more interest rate rises to come across the board.

Let's take a look at some of the commentary that we've seen for Jerome Powell: policy hasn't been restrictive enough for long enough.

Meanwhile, the European Central Bank Chief Christine Lagarde said it's not seeing enough tangible evidence of the fact that underlying inflation, particularly domestic prices are stabilising and moving down, and Andrew Bailey was somewhat more cautious. The Bank of England (BoE) governor said the bank would do what is necessary, but it remained to be seen if market bets would prove correct. He said they've got a number of further increases priced in for us, but he said my response would be to that. Well, let's wait and see.

One thing that the Fed, Bank of England and the European Central Bank agree is that recession is not on the cards.

FX markets

Let's take a look at what's been happening on the foreign exchange markets as a result of all this. It's broadly been positive over the last three or four days for the dollar basket. And you can see on this chart here with just about the hundred period moving average, that blue line there at 10275.

And this means that we've got money coming out of other currencies and you can see this EUR/USD trade, secondhand row of losses at the moment for the euro/dollar down at 10896. It hasn't broken like we've seen the dollar against sterling.

Yesterday's big losses broke us down below this line of price support at 12679, and we're picking up on that negative trade today down at 12631. So if you're short on this, the stop goes above that prior line of support, now resistance. So your stop would be at around about the 127 level with a, you'd have taken this down further if you think that it's not just the Bank of England, but it's the Fed also raising interest rates.

But the one runaway trade has been this Japanese yen. It's a weakening yen story right across the board. There's still no evidence that the Bank of Japan (BoJ) is going to be raising interest rates anytime soon. So, with the Fed still moving up in terms of restrictive monetary policy, you've got money coming out of the yen, the dollar now trading there again at levels not seen since the 10th of November, 2022, 14462.

It's just a question of what the Bank of Japan is going to do, and the authorities are going to try and stem some of this weakness in the Japanese yen.


So the other trade out of all this is what's going on with the price of gold, as we see money going into the dollar, dollar price, commodities suffering as a result. And we've got a print now down here below that prior line of support at 1910, which you've been watching on the Early Morning Call. And my next price target is now down here at 1870 to the red line, which is a 200 period moving average at 1858. And that's the next sort of area of support to watch out for for the price of gold.

And if you're short on this, your stock goes above the 1950 level with a view to taking that further on down.

So, gold suffering at the hands of the stronger dollar.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 26/09/23 08:23
  • Posts

    • Reading through this, I think this collabo is gonna increase users trust and confidence in trading on the platform knowing that their assets has another layer of security
    • After rallying on Monday, the Nikkei 225 led the Asian session lower overnight, reversing hopes that losses for Japan had been halted. Rising yields across the globe have driven losses in stocks, though US stocks struggled into positive territory at the close yesterday as some of the selling pressure of the past week eased. However, the theme of higher yields is likely to continue to keep pressuring stocks, resulting in more losses in what is often a difficult period of the year for equities anyway. US lawmakers continue efforts to try and find a short-term funding solution that will avoid a government shutdown. Futures point to a weaker open for Europe and the US, with little heavyweight macro data to detract from the focus on higher yields.   
    • EURUSD Elliott Wave Analysis Trading Lounge Day  Chart, 26 September 23 Euro/U.S.Dollar(EURUSD) Day Chart EURUSD Elliott Wave Technical Analysis Function:  Counter Trend Mode: impulsive   Structure: black wave 3 of A Position: Wave A Direction Next Higher Degrees: 4 of A Details: blue  wave 2 of black wave 3  looking completed at 1.07367,now blue wave 3 of black wave 3 in play . Wave Cancel invalid level: 1.07367 The EUR/USD Elliott Wave Analysis on 26 September 23, is conducted on the daily chart of the Euro/U.S. Dollar (EUR/USD) currency pair. The analysis utilizes Elliott Wave theory to provide insights into potential market trends and movements.   The Function identified in this analysis is "Counter Trend," indicating a focus on identifying and interpreting market movements that go against the prevailing trend. In this context, "counter trend" implies that the analysis is geared toward potential reversals or corrections within the market.   The Mode is described as "impulsive," which suggests an anticipation of strong and directional price movement. In this case, the focus is on an impulsive wave sequence within the market, implying the potential for substantial price shifts.   The Market Structure is outlined as "black wave 3 of A." This specifies that the analysis is centered on the development of the third wave within the broader wave structure, emphasizing its significance in the Elliott Wave sequence.   The Position denotes that the analysis is concentrated on "Wave A," suggesting that the entire Wave A structure is of interest in the analysis.   The Direction Next Higher Degrees highlights "4 of A," indicating that the analysis is attentive to the development of the fourth sub-wave within Wave A and its potential impact on the market.   In the Details section, it is mentioned that "blue wave 2" of "black wave 3" is considered completed at the level of 1.07367. The market is now in the phase of "blue wave 3 of black wave 3." The "Wave Cancel invalid level" is specified as 1.07367, serving as a reference point for traders.   In summary, the EUR/USD Elliott Wave Analysis on 26 September 23, suggests that the market is currently in a counter-trend phase with an impulsive movement in progress. The focus is on the development of "blue wave 3 of black wave 3" within the larger Wave A structure. Traders are advised to monitor this sub-wave for potential trading opportunities, while the specified invalid level provides a reference for managing risk within their trading strategies.   Technical Analyst : Malik Awais  
  • Create New...