Gold firmer as death toll tops 2,000

Andrew Robinson MarketPulse

Gold at six-week high

A warning from Apple yesterday about not hitting Q1 targets due to the impact of CoVid-19 started gold on an upward trajectory yesterday. Apple’s warning comes as other corporates update markets about supply chain issues as a result of the shutdown of some of China’s manufacturing capability, and raises fears that the nascent global growth could be nipped in the bud.

Adding to gold’s appeal was the news that the death toll from the virus had topped the 2,000 mark and as at 11.30am Singapore time, it had reached 2,010. The total number of confirmed cases was 75,199 with 74,186 in mainland China (Source: Johns Hopkins University). Though the numbers keep rising, yesterday’s total of new cases was the lowest since the methodology of reporting was changed on February 13.

Gold surpassed the 1,600 mark for the first time since January, hitting the highest since the January 8 peak of 1,612. Prices are little changed today but the surge yesterday forced the gold/silver (Mint) ratio to the lowest level in nearly two weeks. The 55-day moving average at 87.15 is now above the 200-day moving average at 87.085 since Monday and offers the first technical support level to the downside.

Gold/Silver Daily Chart

Source: OANDA fxTrade

Corporate China starts to hurt

Local press is reporting that a growing number of private Chinese companies have either cut wages, delayed pay checks or even stopped paying staff altogether as the impact of CoVid-19 worsens. The reports say the economic toll of the virus has meant they cannot cover their labour costs. It’s not impossible to assume that, with the supply chain disruptions, the impact might start to be felt further afield, not just in China.

Strangely, the China50 index is having a good day today, recouping almost all of yesterday’s losses as it rebounds from the 200-day moving average at 13,620. USD/CNH is little changed today after surpassing the 7.0 mark yesterday for the first time in eight days. It’s now testing the 100-day moving average at 7.0111, which has capped prices on a closing basis since December 4.

USD/CNH Daily Chart

Source: OANDA fxTrade

A US housing slump?

Data today could show that US housing starts fell 30.7% in January, according to the latest survey of economists. That’s a dramatic drop from the +16.9% posted in December and the worst reading on records going back to 2016. Building permits are seen better, with only a 0.1% decline forecast for the month.

Aside from housing, we see US producer prices and speeches from Fed’s Mester, Kashkari and Kaplan ahead of the release of the minutes of the last FOMC meeting.

Prior to all this, the European calendar features UK’s PPI, CPI and RPI for last month and Euro-zone construction output and current account data for December.

Author

Andrew Robinson

MarketPulse

A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentar

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.