NZDCHF Short =Swiss National Bank+Gold up+DXY DOWN
Updated
Swiss National Bank’s Took on Credit Suisse Crisis
The SNB carried out its monetary policy assessment just 4 times per year, half the number of policy meetings that the Fed has scheduled for 2023.
For the upcoming SNB meeting, markets had expected another hike of 50-basis points (bps), following the central bank’s hikes last year totalling 175bps.
Yet, the Credit Suisse saga that’s unfolding in the SNB’s own backyard, noting the irony of Switzerland’s long-held stature as a banking haven, adds a dramatic dimension to the press conference by SNB President Thomas Jordan next week.
Also May inflation figures from China will impact market risk sentiment and the pairings.
Wholesale inflation numbers for April signaled weak demand, with the producer price index falling by 3.6% year-over-year.
Economists forecast the producer price index to decline by 2.8% in May, which would support a pickup in demand. However, a more marked fall in the producer price index would weigh on riskier assets and the AUD/USD and NZD/USD pairings.
Eying the US session, there are no US economic indicators to shift the mood following the jobless claims on Thursday.
However, the Kiwi would need the inflation numbers from China to support a breakout.
The SNB carried out its monetary policy assessment just 4 times per year, half the number of policy meetings that the Fed has scheduled for 2023.
For the upcoming SNB meeting, markets had expected another hike of 50-basis points (bps), following the central bank’s hikes last year totalling 175bps.
Yet, the Credit Suisse saga that’s unfolding in the SNB’s own backyard, noting the irony of Switzerland’s long-held stature as a banking haven, adds a dramatic dimension to the press conference by SNB President Thomas Jordan next week.
Also May inflation figures from China will impact market risk sentiment and the pairings.
Wholesale inflation numbers for April signaled weak demand, with the producer price index falling by 3.6% year-over-year.
Economists forecast the producer price index to decline by 2.8% in May, which would support a pickup in demand. However, a more marked fall in the producer price index would weigh on riskier assets and the AUD/USD and NZD/USD pairings.
Eying the US session, there are no US economic indicators to shift the mood following the jobless claims on Thursday.
However, the Kiwi would need the inflation numbers from China to support a breakout.
Note
GOLD STRONG BUY , short term correction coming soon
Note
nzdchf correction to 0.56396Note
Gold long going to above 2050LONG
Gold Price Analysis: Testing Support Levels Amidst Consolidation and Breakout Attempts
Technical analysis reveals a retracement in gold, testing key support zones and indicating a healthy consolidation phase before an expected continuation of the uptrend.
Gold, FX Empire
Gold Forecast Video for 19.06.23 by Bruce Powers
Gold rises to a three-day high of 1,986 on Friday before pulling back. It attempted to breakout above the top boundary trendline of a small symmetrical triangle consolidation pattern but is now on track to close below it and within the consolidation range.
Attempting to Break Up yet Remains in Consolidation Range
So far, Thursday’s test of the 100-Day EMA with a day’s low of 1,925 has held up but further signs of strength are needed. Gold briefly dropped below the 100-Day line earlier in the session on Thursday but managed to close strong, back above it and near the high of the day. The 100-Day EMA is now at 1,940.
Further Signs of Strength are Needed
Further signs of strength are needed to indicate whether yesterday’s low completes the retracement or further tests will occur. This week’s candlestick pattern is set to close as a bullish doji hammer. Next week an upside breakout signal will occur on a move above the high at 1,971, and the breakout is confirmed on a daily close above that high. Following a move above that high the next weekly resistance levels are 1,973, 1,983, and 1,985. A subsequent daily close above each price level will confirm strength, otherwise some resistance might be seen again around those levels.
If Lows Tested Again
If lower prices occur before a continuation higher the two potential support zones are around the 61.8% Fibonacci retracement at 1,912, followed by the 200-Day EMA at 1,894. The 200-Day EMA was tested as support with a double bottom in the first quarter of this year price reversed higher from there.
Uptrend Intact
The current retracement in gold is a test of support around previous high swing high of 1,960 from early-February. So far, the retracement is normal and healthy for the uptrend. Consolidation has been occurring at the 50% retracement area as well as the 100-Day EMA. Notice that there is a greater distance between the 100-Day EMA and 200-Day than what was seen in February. It reflects an improving trend. Once this retracement is complete, all signs are that gold should continue higher.
Gold held above $1,950 an ounce on Friday after gaining 0.7% in the previous session, benefiting mainly from the dollar’s weakness as the Federal Reserve paused its tightening campaign at a time other major central banks are still raising interest rates. Still, the metal remains close to three-month lows as the Fed hinted at two more quarter-point rate increases this year, while the European Central Bank delivered another 25 basis point rate hike on Thursday and signaled further tightening. The Bank of England is also set to raise rates again at its June policy meeting, a month marked by surprise rate increases from the Reserve Bank of Australia and the Bank of Canada. Meanwhile, the People’s Bank of China lowered key short-term interest rates this week for the first time in ten months, while the Bank of Japan maintained its ultra-easy monetary policy on Friday.
Daily bullish
4H Bullish
34min Bullish
Gold is mostly traded on the OTC London market, the US futures market (COMEX) and the Shanghai Gold Exchange (SGE). The standard future contract is 100 troy ounces. Gold is an attractive investment during periods of political and economic uncertainty. Half of the gold consumption in the world is in jewelry, 40% in investments, and 10% in industry. The biggest producers of gold are China, Australia, United States, South Africa, Russia, Peru and Indonesia. The biggest consumers of gold jewelry are India, China, United States, Turkey, Saudi Arabia, Russia and UAE. The gold prices displayed in Trading Economics are based on over-the-counter (OTC) and contract for difference (CFD) financial instruments. Our gold prices are intended to provide you with a reference only, rather than as a basis for making trading decisions. Trading Economics does not verify any data and disclaims any obligation to do so.
Note
The AUD/USD and NZD/USD found support this morning, with the pairings in recovery mode after Friday’s pullback.There were no economic indicators this morning to shift investor sentiment.
However, monetary policy divergence remains in favor of the dollar following Fed Chair Powell’s two days of testimony.
It is a quiet start to the week for the AUD/USD and NZD/USD. There are no economic indicators from Australia or New Zealand to move the dial.
While investors will try to claw back losses from last week, the theme remains the same. Market angst over the economic outlook for China and a hawkish Fed monetary policy outlook remain headwinds for the Aussie and the Kiwi.
Looking forward to the US session, there are no US economic indicators to influence. The lack of economic indicators will leave the pairs in the hands of Fed chatter. Hawkish chatter would pressure the pairings through the afternoon ahead of influential US stats this week.
This morning, bets on a July Fed interest rate hike remained elevated despite manufacturing sector woes. According to the CME FedWatch Tool, the probability of a 25-basis point July Fed rate hike stood at 71.9% versus 74.4% one week ago.
Significantly, the chances of the Fed lifting rates to 5.75% in September stood at 10.1%, up from 8.9% one week earlier. This could change materially with the Core PCE Price Index numbers out on Friday.
Note
Gold is Being Pulled Between a Hawkish Fed and New Geopolitical ConcernsUS Housing Surprises, Fed Pauses but Remains Hawkish
Last week, US economic data revealed a much stronger than expected housing market, with the NAHB Housing Market Index surpassing expectations to hit its highest level since July of last year. New building permits also beat market expectations, and new housing starts surged to their highest level since May 2022.
Last month, we reviewed the three possibilities of a Federal Reserve pivoting to rate cuts, continuing to hike, or pausing. The June FOMC meeting delivered our most likely scenario of a pause, which we presented as one of the better cases for gold, at least in the short term.
However, what markets received from the June FOMC meeting was a hawkish pause, in which no action was taken, while Chair Powell renewed his hawkish rhetoric, underlining his commitment to the task of bringing down inflation.
In a busy week for FOMC speakers, markets had the opportunity to digest comments from a total of six FOMC members. Jerome Powell also made his semi-annual trip to Capitol Hill, testifying before the House Financial Services Committee, and Senate Banking Committee, where he all-but confirmed that more rate hikes are in store and stated that “we don’t see rate cuts any time soon.”
Gold’s Reaction
The result of this pull between the resilience of the US economy plus a hawkish Fed on the one hand, and growing geopolitical uncertainty on the other, has resulted in muted price action despite the overall bearish trend.
We’re seeing this among investors at HYCM as well, for whom gold is one of the most popular assets this year. Positioning suggests current price action could be a period of short-term profit-taking within a longer-term bullish view.
We can see this reflected in gold’s chart. Between June 20 and 22, which saw the release of US housing data and FOMC speeches, gold prices declined by almost 2.4%.
Note
Dollar Index Hits 14-month LowDXY decreased to a 14-month low of 100.61
Wall Street Rallies after Softer Inflation
US stocks surged on Wednesday after both headline and core inflation fell more than expected in June, reinforcing the view the Federal Reserve may stop the tightening campaign sooner than expected. The Dow Jones gained around 250 points to 34548, the highest level since November last year, with 3M and Goldman Sachs up nearly 2% and among the top performers. The S&P 500 added 0.9% 4477, a level not seen since April of 2022, led by shares in the consumer discretionary, tech and real estate sectors. The Nasdaq was up about 1.2% to 13906, also the highest since April last year. Traders are currently pricing in a 92% chance for a 25bps increase in the fed funds rate this month, while the odds for another quarter-point hike in September fell to 13% from 20% before the CPI release and in November eased to 26% from 34%.
Brazil Business Morale Rises to 8-Month High
The Industrial Entrepreneur Confidence Index (ICEI) in Brazil rose by 0.7 points from the previous month to an eight-month high of 51.1 in July of 2023. This marks the second consecutive month in which the industry has shown confidence, attributed primarily to a more positive evaluation of the current economic conditions (+1.3 points to 45.5). Also, the indicator of future expectations increased (+0.4 points to 53.9), indicating optimism for the next six months.
FTSE MIB Close Rise to 15-Year High
The FTSE MIB index closed 1.8% higher at 28,573 on Wednesday, outperforming other benchmark European indices amid sharp gains for its heavyweight financial sector as markets digested the soft US inflation print. American consumer prices rose by 3% annually in June, below estimates of 3.1%, benefitting from a slowdown in core consumer prices. The development lifted equities amid hopes that the Fed will be able to ease its hawkish pressure. Banks were among the sharpest gainers as BTP yields fell by 15bps, aiding their balance sheet with Banca MPS and Banco BPM both adding more than 2%. In the meantime, STMicroelectronics shares surged 4.8% amid recommendation updates from Jeffries and Citigroup.
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