London session
International Trading
THE TECHNIQUE OF GIVING A GOOD MASSAGE
14 years ago
Friday, September 24, 2010
, Posted by Usman Ali Minhas at 7:51 AM
After a quiet Asian session, markets in Europe have opened on a weaker note even though German economic data surprised to the upside. The IFO survey, which measures business confidence, jumped to its highest level in three years in September, and is close to the highs of the past decade. However, the expectations sub-index, which measures confidence 6 months into the future, deteriorated, falling from 105.2 in August to 103.9 in September.
The euro is trading on a stronger note, and is currently above the 1.34 mark. Although credit-default swaps tied to Irish debt retreated from the record high reached yesterday, they remain elevated at 471 basis points. The euro remains at risk from negative news-flow from the peripheral economies, but if all remains quiet then FX investors will concentrate on US economic data released later today and a raft of Fed speakers (see below).
The dollar is looking fairly bearish, the dollar index is still trading below its 50, 100 and 200-day simple moving averages. It has also given back gains against the yen after spiking to 85.40 during the Asia session. This was sparked by speculation that the Bank of Japan was intervening in the FX markets yet again. This was not confirmed by the BOJ, and the dollar has since drifted lower against the yen and is currently trading around the 84.50 mark.
While stocks have struggled, gold continues to post record highs in the wake of the Federal Reserve meeting on Tuesday. The Fed raised concerns about the outlook for inflation, although it stopped short of further expanding its balance sheet to stimulate the economy. Some market commentators are sceptical that the Fed will embark on more monetary stimulus, which has weighed on equities this week.
Gold is hovering just below the $1,298 mark. If it reaches $1,300 ¬ - and at this stage it doesn’t look like there is much getting in its way ¬ - there could be some selling interest. However, our core view is that any pullback in the gold price will precede a move higher for the yellow metal.
Silver also reached a 30-year high at the start of the London session, reaching $21.3575 per/oz and is currently outpacing gains in gold. This is a further indication that precious metals are gaining in popularity as Central Banks around the globe are happy to see their currencies depreciate, either through monetary policy action or active intervention to sell their currency like the BOJ.
Elsewhere, the Aussie dollar has started the London session on a good note, and is currently at 0.9550 - yesterday’s high. If it can pass through here, then we could see it move back toward the 0.96 mark. However, after rumours that the RBA’s tolerance for AUD/USD is at 0.96, it will take a big push from Aussie bulls to see it move above that level.
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