FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%

Dollar jumps, gold slumps, stocks nervous


17 September 2021

Worries that the US consumer is rolling over were dealt a major blow yesterday after the nation’s retail sales for August overpowered some gloomy forecasts. The retail sales control group that is used in GDP calculations rose by 2.5%, more than erasing last month’s decline. The news catapulted the dollar higher along with Treasury yields as traders positioned for a more constructive tone by the Fed, which might use next week’s meeting to prepare the ground for dialing back its asset purchases in November. 

Beyond tapering signals, markets will pay close attention to the famous ‘dot plot’ of interest rate projections. If three more FOMC officials pencil in a rate increase for 2022, that would push the ‘median dot’ for that year higher, signaling a hike faster than markets currently expect. 

The wild card is whether policymakers will incorporate into their new economic forecasts some probability of greater fiscal spending to reflect what Congress might deliver over the next few months. If so, that would allow for rosier economic projections and make it easier for another three officials to upgrade their rate path estimates for next year. 

Gold hammered 

As always, what is good for the dollar and Treasury yields is negative for gold, which is priced in dollars and pays no interest to hold. The yellow metal sank yesterday as some investors abandoned ship, fearful of deeper losses in case the Fed strikes a hawkish chord next week. 

Bullion amassed losses of almost 2.7% before triggering some fresh buy orders around the $1745 region and it subsequently rebounded a little. The fundamental outlook remains quite grim in an environment where the Fed begins to inject less liquidity into the financial system and ultimately raises rates. 

Indeed, it’s difficult to find any strong bullish arguments for gold. Even the Fed delaying its hiking cycle by a few months wouldn’t change much. The best gold bugs can hope for is some cataclysmic event that reignites bullion’s status as a defensive hedge.

Wall Street nervous

There is a lot of indecision in stock markets lately. The major indices on Wall Street closed a volatile session little changed on Thursday as traders weighed a stronger US consumer against worries around less central bank liquidity and risks in the Chinese property market. 

So far, there has been almost no spillover from the Evergrande fiasco. The fallout has been contained in local real estate stocks and junk bonds. There haven’t been any real signs of stress in the nation’s massive banking system, with interbank lending rates being relatively stable - a sign that financial institutions aren’t panicking about a liquidity crisis. 

Still, this is a huge risk hanging over global markets. Not because it could set off a domino effect of cross defaults - Beijing would stop that in its tracks. Rather, because a massive hangover in a real estate sector that accounts for roughly 28% of GDP could compound an already-slowing economic data pulse, suppressing growth. 

As for today, a ‘quad witching’ event might spice things up. This is when options and futures on stocks and indices expire, often generating some wild moves as funds and money managers refresh their exposure. Finally, there is an avalanche of events next week to keep traders entertained, including central bank meetings in America, Japan, Switzerland, and the United Kingdom, along with elections in Canada. 

By XM.com
#source

Related

Three things you need to know about Tesla's latest nickel mining deal
Three things you need to know about Tesla's latest nickel mining deal

Tesla announced last week it struck a multi-year deal with Prony Resources for the purchase of 42000 tonnes of nickel. As transport undergoes a deep...

27 Oct 2021

Nascent XAU/USD bull to knock on the $1980 door
Nascent XAU/USD bull to knock on the $1980 door

As Benjamin Wong, Strategist at DBS Bank, notes, XAU/USD’s technical chart shows the possibility of a near-term bullish inverse head-and-shoulders pattern...

27 Oct 2021

Bank of Canada showtime, US spending deal in sight
Bank of Canada showtime, US spending deal in sight

The main event today will be the Bank of Canada decision at 14:00 GMT, which will likely spark fireworks in the loonie as policymakers either validate market...

27 Oct 2021

XAU/USD flirts with $1,800 amid stronger USD
XAU/USD flirts with $1,800 amid stronger USD

Gold witnessed some selling during the first half of the trading action on Tuesday and eroded a part of the previous day's gains back closer to multi-week tops...

26 Oct 2021

Euro slides, Wall Street conquers new heights
Euro slides, Wall Street conquers new heights

Wall Street started the week in good spirits. The heavy lifting was done by Tesla, which rose 12.6% to become a trillion-dollar company after it received...

26 Oct 2021

Stocks defy gravity, oil storms higher, dollar retreats
Stocks defy gravity, oil storms higher, dollar retreats

The overarching market theme continues to be how persistent this inflation episode will be and whether central banks will go into battle to suppress it. Hopes that price...

25 Oct 2021


Forex Forecasts

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
AvaTrade information and reviews
AvaTrade
76%
LegacyFX information and reviews
LegacyFX
75%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.