Tag Archives: Fawad Razaqzada

Gold On Shaky Footing As Dollar Surges To Highest Since 2003

Fawad Razaqzada

Sentiment towards gold remains and grows negative by each passing day. The perceived safe-haven metal’s recent big plunge has been in part due to a sharp improvement in risk appetite, as highlighted for example by the rally in US equity prices. In addition, benchmark global bond yields have been rising, further damaging the appeal of the noninterest-bearing precious metal. But it is the dollar which is exerting the most pressure on the buck-denominated gold, as after all the metal in euro terms is still positive on the week (see the inset). more…

Dollar Shines In An Eventful Week In US Politics

Fawad Razaqzada

Contrary to most analyst predictions, including ourselves, the US dollar looks set to close the week higher after an eventful week in US politics. The greenback has surged higher against most currencies except the British pound, which has been supported by the Bank of England dropping its dovish bias amid concerns about overcooking inflation in the UK. In contrast, the euro, yen, Swiss franc and all the commodity majors have slumped versus the dollar. The Canadian dollar has resumed its downward trend amid slumping oil prices, weak domestic data and on the back of a dovish Bank of Canada. Elsewhere, the Reserve Bank of New Zealand cut interest rates in mid-week and warned of more easing steps due mainly to a strong currency and the kiwi has correspondingly sold off. more…

Could The FTSE Hit New Record Highs?

Fawad Razaqzada

European stock markets have started Friday’s session brightly, extending their advance from the late afternoon rebound on Thursday. The rally has probably taken many people by surprise, although this shouldn’t be the case given that the markets in both the UK and US are still very close to their all-time highs. There is a reason why the markets are still elevated despite all the doom and gloom out there, and it continues to be this: cheap central bank money. Although the Fed looks almost certain to raise rates in December, central banks elsewhere will remain extremely accommodative – not least the Bank of Japan and the Bank of England. The focus will be on the European Central Bank next week and market participants will want to know whether policymakers here have started discussing the prospects of tapering ECB’s QE stimulus programme. If Mario Draghi again denies this and delivers a dovish message then we could see further gains for the European markets. more…

GBP/USD: After The Flash Crash, What Will NFP Do To Cable?

Fawad Razaqzada

Besides form the obvious question of what the actual hell happened to sterling overnight, there are so many other questions marks participants will be asking themselves. Has the pound now bottomed out, what exactly was the overnight “low,” what will the Bank of England do now? The pound’s crash has obviously overshadowed today’s supposed big event: the US non-farm payrolls report. This is scheduled for release shortly and the headline jobs report is expected to come in at around 170 thousand net jobs gained, which, if correct, would be slightly higher than the prior month’s total of 151 thousand. The unemployment rate is expected to have remained unchanged at 4.9% while the average hourly earnings index is seen rising 0.2% month-over-month. A strong set of data would reinforce expectations that the Fed will raise rates in December. more…

OPEC’S Decision Will Likely Boost Oil Prices Further In Short Term

Fawad Razaqzada

The OPEC surprised the market yesterday and actually managed to agree on a production cut, with details to follow in their November meeting. Up to 800,000 barrels of oil per day will potentially be removed from the oversupplied market which would lower the production target for the cartel to a range between 32.5 and 33.0 mb/d. Oil prices surged some 6% in the immediate aftermath of the news, though they have since eased off a tad as traders make a more sober assessment of the whole situation. more…

Silver Shines As Yields, Dollar Dip

Fawad Razaqzada

Precious metals have found strong support over the past couple of days, with gold surging back to $1340 and silver to $20.00 per troy ounce. The US dollar has weakened while benchmark government bond yields have fallen across the board once again. This is mainly due to a slightly more dovish Federal Reserve and as the Bank of Japan announced new set of policy measures aimed at extending its quantitative easing programme in order to overcook inflation. The lower government bond yields have boosted the appetite for racier assets like equities, while at the same time they have made precious metals – which, unlike bonds and stocks, pay no interest or dividend – appear more appealing to investors on a relative basis. more…

Dollar’S Consolidative Days Numbered?

Fawad Razaqzada

The dollar’s laborious consolidative days seem to be numbered from both the technical and fundamental points of view. More on the technicals later, but from a fundamental perspective, this makes sense as not only do we have the latest US inflation data coming up later on today, but the much-anticipated Federal Reserve rate announcement on Wednesday is now just around the corner, too. Against a backdrop of deteriorating data, the Fed is unlikely to raise interest rates and a potentially soft reading on the Consumer Price Index (CPI) today could deliver the final nail. more…

EUR/USD Soon To Turn Decisively Lower?

Fawad Razaqzada

At the moment there is lots of noise around the 200-day moving average for the EUR/USD, and this indecision is reflected in the moving average remaining fairly flat for over the past 7/8 months. But price action continues to look bearish inside what effectively is a long-term consolidation pattern. Yesterday, for example, saw the EUR/USD form a bearish pin bar/doji candlestick pattern on its daily chart as the buyers’ latest attempt to break back above the 200-day MA was rejected. Both the 21-day exponential and 50-day simple MAs are pointing lower now, though they still remain above the 200 MA for the time being. What’s more, the EUR/USD recently broke through a long-term bullish trend line, the backside of which has since turned into resistance. more…

EUR/USD Tests Key Level As Eurozone Climbs Out Of Deflation

Fawad Razaqzada

Inflation in the Eurozone moved in the positive territory after spending no less than four straights months below zero. According to the Eurostat, the headline ‘flash’ Consumer Price Index (CPI) measure of inflation rose 0.1 per cent in June from -0.1% in May on a year-over-year basis. Core CPI was up 0.9% versus 0.8% previously. Both measures topped expectations by 0.1 percentage points. There was good news from Germany, too, as the rate fell of unemployment remained at a record low level of 6.1% after the number of unemployed fell by a larger-than-expected 6,000 in May. What’s more, German retail sales climbed 0.9% in May when a drop of 0.7% was expected, while the decline in April was revised favourably to -0.3% from -0.9%. In France however, consumer spending declined for the second consecutive month in May, this time by a larger than forecast 0.7% (vs. 0.1% expected). more…

Markets React To Shock Brexit Outcome

Fawad Razaqzada

As it became clear that the outcome of the UK referendum was going to be an exit from the EU, the pound literally got pounded as it dropped from an overnight high of 1.50 to sub 1.33 when the news was confirmed, while the FTSE tanked nearly 10% at the open. Most people were undoubtedly wrong-footed given how confident some betting companies were in pricing in the odds for remain. Naturally, the markets have rebounded sharply off their lows as you would expect. Profit-taking and dip buyers have, for now, provided some relief. Traders who have not yet expressed their views are starting to come back into the markets as key levels are re-tested, so volumes and volatility should remain high for a while yet. Given what has happened, most speculators are likely to step in and fade the rallies rather than buy the dips. more…