Financial Markets Digest – Gold's revival

It was an intriguing start to the financial markets for St Patrick's Day, coming as we were in the aftermath of the latest deliberations from the Federal Reserve and its downgrade of how many interest rate hikes are likely to be delivered this year. The announcement that this was to be cut from four down to two undermined the Dollar, and arguably this was the main highlight. The problem, which was always the problem with the existing way of flagging interest rate moves, is that everyone heads for the exit at the same time. The chief victims on the currency crosses were Dollar/Yen heading lower towards 2016 support just under 111, and Euro/Dollar where the greenback lost towards the $1.13 level. Perhaps even worse is the way that all the work put in by ECB President Mario Draghi last week in delivering his bazooka of stimulus has already been thrown out the window in terms of the weaker currency aspect.

From a charting perspective Euro/Dollar looks as though it could stretch as high as $1.15 at the top of a rising October price channel, especially while the initial resistance of March at $1.1218 remains in place as new support on an end of day close basis.

For Dollar/Yen below recent 114 resistance and especially below yesterday's 112.80 breakdown level, the risk is to sub 110 and even 105.

For the commodities the big news was Gold's revival – helped along by the dovish new stance of the Fed. This lifted the metal to $1,270.94 at best, with the technicals backed in a bullish way for $1,300 plus while the 20 day moving average at $1,243 is held.

As far as the indices were concerned we saw the FTSE 100 spike through 6,200 relatively easily early on Thursday's session, but then fade below the round number and what was a July resistance line as the weakening Dollar underlined that risk appetite was falling. Indeed, with today's failure to hold 6,200 we were looking at the sixth occasion in the recent past that this market has failed to follow through on breaking the mid 2015 downtrend.

The situation for the Dax was if anything even more pronounced in the sense that we were treated to an early clearance of the 10,000 level, but this faded and the German index sank to a day low of 9,753 before a mild rebound took place.

For the U.S. Markets it was all about the recent dance for the S&P and Dow around their 200 day moving averages at 2,018, and 17,138 respectively. The message from a technical perspective is that at least while above these two levels one would regard the post February recovery for both these markets to be very much intact. For the FTSE 100 the equivalent stop loss level for the bulls should be regarded as an uptrend line from last month which runs with the 20 day moving average at 6,087. - See more at: http://www.tiptv.co.uk/latest-finance-highlight/financial-markets-digest-golds-revival/#sthash.I0E4UbBT.dpuf