Investing.com - Gold prices settled higher on Monday morning in Asia, along with an advance in the U.S. dollar. The increase in gold prices, a safe-haven asset, is likely to be impacted by geopolitical tensions including the Saudi murder of a journalist, Italy’s budget and Brexit uncertainty.
Rising oil prices and political uncertainty ahead of state elections will see Asia’s worst-performing currency resume losses, according to Prakash Sakpal, an economist at ING in Singapore, whose new estimate of 76.50 per dollar is the most bearish in a Bloomberg survey. The rupee is “is highly correlated with oil prices, which are definitely moving higher, and that’s going to make the current-account situation more difficult,” Sakpal said in an interview.
There are no major domestic reports out of Australia and New Zealand this week so the direction of the Aussie and Kiwi is likely to be driven by the movement in China’s stock market. Both currencies could continue their short-covering rallies if the major Chinese indices continue to strengthen. Another steep sell-off in the Chinese stock markets should lead to further weakness in the Aussie and Kiwi.
The divergence in the monetary policies of the U.S. Federal Reserve and the Bank of Japan continued to support the Dollar/Yen last week and is likely to continue to underpin the USD/JPY this week as long as Treasurys continue to move higher and stocks remain steady. Renewed volatility and selling pressure in U.S. equity markets could make the Japanese Yen desirable as a safe-haven asset.
Investing.com - This week precious metals traders will continue to watch developments in equity markets and monitor geopolitical risks after gold prices notched up a third week of gains.
Investing.com - This week investors will be looking ahead to Friday’s data on U.S. third quarter growth, while monetary policy decisions from the European Central Bank and Bank of Canada will also be in focus.
Fresh economic data will be sparse next week so gold traders are likely to continue to respond to the movement in Treasury yields, the direction of the U.S. Dollar and stock market volatility. Gold could start to feel pressure if yields rise and the stock market remains steady. This will be a sign that investors have priced in a few of the Fed’s future rate hikes.
Based on Friday’s close at 1.1515, the direction of the EUR/USD on Monday is likely to be determined by trader reaction to the main Fibonacci level at 1.1498.
A busy week ahead sees the BoC and ECB in action, with the Saudis joining China on the hit list and then there’s Brexit and Italy to consider.
Based on Friday’s price action, the direction of the USD/JPY on Monday is likely to be determined by trader reaction to the main 50% level at 112.175.
Based on Friday’s close at .6591, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the main Fibonacci level at .6595.
Based on Friday’s price action, the direction of the AUD/USD on Monday will be determined by trader reaction to the short-term Fibonacci level at .7101.
Consumer prices in New Zealand were up 0.9 percent on quarter in the third quarter of 2018, Statistics New Zealand said on Tuesday. That exceeded expectations for an increase of 0.7 percent and was up from 0.4 percent in the three months prior.
As easing of tensions in the U.S. stock market and higher U.S. Treasury yields helped the Dollar/Yen close higher last week. The previous week’s stock market volatility led to the dumping of risky assets and the buying of the safe haven Japanese Yen. This week, stock market volatility eased somewhat, allowing Treasury yields to challenge multi-year highs once again. This encouraged investors to take profits in Japanese Yen positions they had bought the previous week.
The Fed minutes showed policymakers were confident in the current path of interest rate hikes, saying that a series of gradual rate hikes was the correct strategy in helping to maintain a stable economy. The minutes also showed central bankers were wary of “excesses” in financial markets.
Bitcoin (BTC) is down a little under percent on the day, and is trading at $6,470 as of press time. With one notable exception Oct. 15 – a brief spike correlated with Tether’s slight untethering from its dollar peg – the top coin has been trading sideways between $6,500-$6,500 for the past few days, before slipping below the $6,500 today, still above where it started the week, close to $6,300. On the week, Bitcoin is 2.7 percent in the green, and is also up just about 2 percent on the month.
Gold markets rallied a bit for the week, as we have cleared the recent consolidation and it now looks like the rally is going to continue. The $1250 level above looks to be rather resistive and perhaps a nice target for the time being.
The US dollar has found significant support at the 61.8% Fibonacci retracement level, near the ¥111.50 level. This is a market that has been in a strong uptrend for some time, and it now looks as if that is trying to continue.
The British pound continues to be very messy overall, forming a bit of a shooting star during the week, but quite frankly we are just simply bouncing around between the 1.30 level and the bottom, and the 1.3250 level in the top. This makes perfect sense considering everything that’s going on though.
It’s been a wild week, but it looks like we are going to close the GBP/JPY pair relatively flat which of course is a victory after the massive selloff last week.
The Euro is looking for a bottom on the longer-term charts, and as you can see on the accompanying chart, I have a yellow circle around the massive hammer underneath the 1.1450 level. That’s an area that I think continues to hold this market up, so this point I would expect a bit of a bounce.
The Australian dollar shows signs of trying to form a bit of a bottom down here, as the 0.70 level of course would attract a lot of attention due to it being a large, round, psychologically significant figure.
Gold markets were rather quiet on Friday as traders start to look towards the weekend. We have recently seen a significant move to the upside on the chart, and at this higher-level it looks like we are simply trying to digest some of the recent explosive gains.
Confidence in the Italian economy may be dented as a result of the budget issue, which could impact ECB policy action down the line, according to Jonathan Cavenagh of J.P. Morgan.
Sean Taylor of DWS says any further movement in the dollar against the euro from here is "going to be driven by the European weakness."