Marshall Gittler
Trading Analysis
Silver
The dollar traded virtually unchanged against most of the other G10 currencies during the morning in Europe. In the absence of any material events to drive the forex markets, the greenback was higher only against SEK and AUD, while it was slightly lower against CAD.
The Aussie gave back some of its overnight gains after China’s Q3 GDP slowed by less than anticipated. Although the less-than-expected slowdown in China’s growth was taken as positive by the market, it was the slowest expansion rate since 2009. I still believe that the slowing Chinese economy will eventually weigh on the Australian currency. Tomorrow, Asian time, we get Australia’s CPI for Q3 and the forecast is for the inflation rate to decline on a yoy basis, which could also prove AUD-negative.
The big test for the greenback comes tomorrow, when we get the US CPI data for September. Last week, both retail sales and PPI disappointed, increasing the chances that the CPI rate would come in below forecasts too. The USD strength depressing import prices and the steep fall of energy prices over the recent months also supports this view. As a result, a below-estimate CPI figure could signal that the USD correction is not over yet.
Combining these two points, and taking into account that AUD/USD has been trading in a sideways path for the last month, I would wait for a break below the low of the 3rd of October at 0.8640 to corroborate the view of a weaker Aussie against a stronger dollar.
Both gold and silver rose during the European morning ahead of the Hindu festival of Diwali on Wednesday, but although the yellow metal has been in a rising mode since the 6th of October (when it found support within the floor zone of 1180/85), silver has remained stuck within a range.
Silver seems to be trading within a sideways path between the support line of 17.05 (S1) and the resistance of 17.80 (R1), which coincides with the 23.6% retracement level of the 10th of July – 6th of October decline. If the longs of the white metal are willing to follow those of gold, they will have to overcome the 17.80 (R1) resistance hurdle. Such a move could target the 38.2% retracement level of the 10th of July – 6th of October down leg, near 18.50 (R2). On the downside, a decisive dip below the 16.65 (S2) would confirm a forthcoming lower low on the daily chart and could signal the reinforcement of the prior downtrend. Our near-term momentum studies support the flat picture of silver, as they both lie near their equilibrium lines.
Support: 17.05 (S1), 16.65 (S2), 16.00 (S3) .
Resistance: 17.80 (R1), 18.50 (R2), 19.10 (R3) .
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.