Gold Heads for the Best Week Since 2011 as `Fear Is in Control'

Good morning,

- USDJPY: Bearish on a break to 111.50.SSI: 2.79 short positions for every long (bearish bias).

- The Euro-Zone’s 4Q Gross Domestic Product (GDP) report may produce headwinds for the Euro.

-Top/worst performers in majors vs USD yesterday: CAD 0.2%, AUD 0.0%, GBP -0.1%., NZD -0.6%, JPY -0.3%, CHF -0.3%.

- Gold’s explosive start to 2016 has lifted prices to the highest level in a year as investors flee a bear market in global stocks, a weakening dollar and the fallout from the spread of negative interest rates. “It’s Friday and fear is in control of markets,” Australia & New Zealand Banking Group Ltd. said in a note to clients. Bullion is benefiting from “rising safe-haven buying, making it the best performing commodity in 2016.” Shares in producers including Newcrest Mining Ltd. and Zijin Mining Group Co. rallied after bullion surged on Thursday to $1,263.48 an ounce, the highest since February 2015, according to Bloomberg

-Top/worst performers in Indices today: NAS100 0.4%, SPX500 0.4%. HKG33 -0.8%, AUS200 -0.4%.

- BoJ Kuroda: Will closely watch market moves including FX, Negative rate will help consumption and investment.

-$JPY, $NZD, and $AUD are expected to be the most active majors vs $USD with 1W implied volatility at 22.08, 15.81, and 15.11 respectively.

-The Japanese yen has become the lightning rod of extreme stress in the global financial system, rocketing this week in violent moves that threaten to plunge Japan back into deep deflation and overwhelm the experiment of "Abenomics". The currency has appreciated by 9pc against the US dollar since the Bank of Japan (BoJ) cut interest rates below zero for the first time ever at the end of January, entirely defeating the purpose. The yen broke through ¥111 in early trading on Thursday as safe-haven flows poured into the country and vast positions were unwound on the global derivative markets. This wiped out all the depreciation effects of the country’s "weak yen" policy over the past 15 months. The Nikkei index of stocks in Tokyo has fallen 22pc since early December. The drastic developments have been nothing less than a disaster for Governor Haruhiko Kuroda who pushed through negative rates against strong protests by half the bank’s voting members. The chief motive for the move was counter deflation by weakening the currency.

- SNB boss talking to Bilanz •franc still overvalued •turbulence in Europe could put franc back in focus as safe-haven ccy. Europe? A bit bigger problem than that Thomas. And safe-haven demand already happening. Time for you and boys to step back in I reckon. tying franc to ccy basket doesn't make sense went relatively far with negative interest rates, doesn't rule out further steps.

- WSJ headline Be very careful with these OPEC headlines. Time and time again there is a caveat that says they are ready to cut 'if non-OPEC members join them'. Oil is paring losses.

Major news for today: USD Core Retail Sales m/m, USD Retail Sales m/m, USD Prelim UoM Consumer Sentiment.