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Forex and Gold Trading: New York Summary

Posted by Joseph Trevisani on Aug 5, 2013 4:19:00 PM

EURO

The euro opened in the U.S. at 1.3260 having ebbed from the European high of 1.3300 about four hours earlier.  The drift lower continued for the first two hours touching the American and day's low at 1.3233 just after 10:00 am. 

The Institute for Supply Management services index at 10:00 am was much better than expected at 56.0 vs. the forecast, 53.1, and June, 52.2,  helped give the dollar that edge against the euro. That final spurt was the limit for euro buyers who emerged and brought the united currency back to 1.3260 in about 45 minutes.  A minor sell off then ensued down to 1.3250 into and through the London close at noon followed by a very tight and lackadaisical range of 1.3255 to 1.3263 for about three hours.  Rising U.S. Treasury rates, the generic 10-year bond closed up 4 basis points at 2.63 percent, did not provide appreciable support to the dollar.

Comments from Dallas Fed President Richard Fisher, one of the FOMC critics of quantitative easing, warning investors not to rely on $85 billion a month in securities purchases, that the Fed should begin to taper these purchases in the fall and that the bank was closer to execution on the policy change than before (which is logically inescapable) saw a brief and weak dip to 1.3251. Mr. Fisher's views are neither new or that influential on the FOMC and their repetition did not add anything to the quantitative easing discussion. The balance of the session traded just a few points beneath 1.3260.

Chart: Bloomberg

ScreenHunter 1559 Aug. 05 17.33

 

YEN

Dollar/yen opened at 98.51 (8:00 am) and euro/yen at 130.60 and both were bid in early New York action, particularly the dollar/yen which vaulted 20 points to 98.78 on the ISM at 10:00 am.  The pair had initially faltered near 98.60. The cross jumped about 20 points on the ISM release also to 130.78.

But the dollar was unable to maintain its gains, despite the mildly rising Treasury rates and, dragging the cross with it,  dropped to 98.36 about 30 minutes after the London close with the cross touching 130.46.

The following 30 minutes saw a sharp reversal. The cross moved up to 130.86 and the dollar/yen jumped to 98.70.  That last bit of energy seemed to exhaust both pairs which slipped slowly lower, the dollar/yen 50 points and the eur/yen about 70 points for the day's lows in each: the dollar/yen at 98.19 and the cross at 130.15.  There is good support at 98.00 and 130.00.

Charts: Bloomberg

ScreenHunter 1560 Aug. 05 17.35

ScreenHunter 1561 Aug. 05 18.03

GOLD

Spot gold closed in New York around $1302.59 (5:00 pm), after traversing $1297.65 to $1320.85 in the complete three session market.

The metal had slipped below $1300 mark on Friday (low $1283.43) for the first time since July 21st but was brought back by the U.S. Non-Farm Payrolls report (officially the Employment Situation Report). In the half hour after the report the metal soared from $1292.05 to $1318.55 and touched $1320.85 in early Asian trading on Monday.

Technically a close below $1300 might intensify the downward bias. Gold created a new and steeper down channel with the large two day fall on April 12th and 13th and every daily high beginning on July 23rd has confirmed the upper border of that formation.

Gold would need to break the upper limit of the channel, now at about $1325.00, also the 55 day moving average, to thwart the downward pressure.  But reviving sympathy for gold would face the real test at $1355.00, the functional bottom on April 12th, the top on the 13th and July 23rd and since.

Charts: Bloomberg

ScreenHunter 1563 Aug. 05 18.36

ScreenHunter 1564 Aug. 05 18.38

 

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