USD/CAD Daily Forecast – Strong Oil Limits U.S. Dollar Upside

USD/CAD Video 03.08.20.

Resistance At The 20 EMA Stays Strong

USD/CAD tried to gain more upside momentum but faced resistance at the 20 EMA at 1.3450 as the U.S. dollar rebounded against a broad basket of currencies while WTI oil returned back above the key $40 level.

The U.S. Dollar Index continued its rebound and managed to settle above 93.5. However, it faced resistance at the 94 level and pulled back. In case the U.S. Dollar Index manages to get above 94, USD/CAD will have a good chance to develop more upside momentum.

While the rebound of the U.S. Dollar Index was bullish for USD/CAD, the oil price upside limited the American currency’s gains against the Canadian dollar.

For WTI oil, the key level is the resistance at $42.50. A move above this level will likely lead to increased upside momentum and provide significant support to commodity-related currencies including the Canadian dollar.

Today, the U.S. has reported Manufacturing PMI data for July. Manufacturing PMI increased from 49.8 in June to 50.9 in July while analysts expected that it would grow to 51.3. Numbers above 50 show expansion.

Canada is set to provide its Manufacturing PMI report tomorrow.

Technical Analysis

usd cad august 3 2020

USD to CAD did not manage to get above the nearest resistance at the 20 EMA at 1.3450 and declined closer to 1.3400. The nearest material support level for USD to CAD is located at 1.3330. This level has already been tested several times and proved its strength.

The resistance at the 20 EMA has the potential to become a significant obstacle on the way up. At this point, USD to CAD may find itself stuck in a trading range between the support at 1.3330 and the resistance at the 20 EMA.

In case USD to CAD manages to get above the 20 EMA, it will head towards the major resistance level at 1.3500. A move above this level will likely lead to increased upside momentum, and USD to CAD will head towards the next resistance level at the 50 EMA at 1.3550.

On the support side, a move below 1.3330 could trigger a sell-off, taking USD to CAD to the next support level at 1.3270.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Failed To Get Above Resistance At $24.95

Silver Video 03.08.20.

Silver Finds Itself Under Pressure As U.S. Dollar Continues To Rebound

Silver pulled back closer to $24.00 as the U.S. dollar gained ground against a broad basket of currencies while gold corrected from recent highs.

The U.S. Dollar Index continued its rebound, putting pressure on precious metals and other commodities. The U.S. Dollar Index has managed to settle above the resistance at 93.5 and is trying to get above the 94 level.

If the U.S. dollar continues its upside move, silver may experience more pressure since stronger dollar makes it more expensive for buyers who have other currencies. In case the U.S. Dollar Index will be able to get above the 94 level, it will likely head towards the significant resistance at the 20 EMA at 94.90.

Meanwhile, spot gold made an attempt to test the $2000 level but failed to gain more upside momentum and pulled back closer to $1970. At this point, gold is trying to consolidate just below the $2000 level which is a healthy sign for bulls.

However, a continued rebound of the U.S. dollar may put additional pressure on gold and cause a correction which will be also bearish for silver.

Gold/silver ratio is forming a range between 80 and 85 while volatility decreases. Gold/silver ratio did not manage to immediately rebound after the major downside move that happened in July, which is a bullish development for silver.

Technical Analysis

silver august 3 2020

Silver failed to settle above the nearest resistance level at $24.95 and pulled back. The nearest support level at $24.00 has also been tested during today’s trading session.

Volatility may decrease in the upcoming trading sessions, and silver may find itself in a new trading range between support at $24.00 and resistance at $24.95.

However, this scenario is not guaranteed since silver volatility may increase as a result of rapid moves on the U.S. dollar front or a gold price breakout.

In case silver settles below the support level at $24.00, it will head towards the next support at $23.25.

A move above the nearest resistance at $24.95 will open the way to the test of the next resistance level which is located at recent highs at $26.20.

For a look at all of today’s economic events, check out our economic calendar.

The Trifecta of Key Signals for Gold Miners

Nothing lasts forever, and the brightest flame burns itself out the fastest. That could very well apply to the current situation around PMs.

Speaking of indications pointing to the situation being excessive, let’s take a look at the USD Index.

Remember when in early 2018 we wrote that the USD Index was bottoming due to a very powerful combination of support levels? Practically nobody wanted to read that as everyone “knew” that the USD Index is going to fall below 80. We were notified that people were hating on us in some blog comments for disclosing our opinion – that the USD Index was bottoming, and gold was topping. People were very unhappy with us writing that day after day, even though the USD Index refused to soar, and gold was not declining.

Well, it’s the same right now.

The USD Index is at a powerful combination of support levels. One of them is the rising, long-term, black support line that’s based on the 2011 and 2014 bottoms.

The other major, long-term factor is the proximity to the 92 level – that’s when gold topped in 2004, 2005, and where it – approximately – bottomed in 2015, and 2016.

The USDX just moved to these profound support levels, and it’s very oversold on a short-term basis. It all happened in the middle of the year, which is when the USDX formed major bottoms on many occasions. This makes a short-term rally here very likely.

We even saw a confirmation from USD’s short-term chart.

The U.S. currency finally after a decisive short-term breakout. Back in March, the short-term breakout in the USD Index was the thing that triggered the powerful rally in it, as well as a powerful plunge in the precious metals market.

Consequently, based on this analogy, the implications for the near term are bearish for the PMs. Especially, when we consider the fact that Gold Miners Bullish Percent Index showed the highest possible overbought reading recently.

The excessive bullishness was present at the 2016 top as well and it didn’t cause the situation to be any less bearish in reality. All markets periodically get ahead of themselves regardless of how bullish the long-term outlook really is. Then, they correct. If the upswing was significant, the correction is also quite often significant.

Please note that back in 2016, there was an additional quick upswing before the slide and this additional upswing has caused the Gold Miners Bullish Percent Index to move up once again for a few days. It then declined once again. We saw something similar also this time. In this case, this move up took the index once again to the 100 level, while in 2016 this wasn’t the case. But still, the similarity remains present.

Back in 2016, when we saw this phenomenon, it was already after the top, and right before the big decline. Given the situation in the USD Index, it seems that we’re seeing the same thing also this time.

On Friday, gold moved higher once again, but senior mining stocks refused to move to new highs. They didn’t manage to even erase their Thursday’s decline. The volume that accompanied this daily upswing was relatively low. This means that it’s likely that this is a counter-trend bounce, and not the bigger move higher.

Miners were the first to top, and the short-term breakout in the USD Index indicates that other PM markets are likely to follow.

Please note that the miners topped almost right at the vertex of the huge rising wedge pattern. Quoting last week’s analysis:

(…) huge rising wedge pattern is about to form a vertex today or tomorrow. The same rule that applies to triangles has implications also here. The vertex is quite likely to mark a reversal date. Given the overbought status of the RSI (given today’s upswing, it’s almost certain to move above 70 once again) as well as miners recent unwillingness to track gold during its continuous rally, it’s highly likely in my view that this will be a top.

Combine the USDX situation with Gold Miners’ Bullish Percent and vertex-based reversal, and you get a high likelihood of lower prices in miners next.

Thank you for reading today’s free analysis. Please note that it’s just a small fraction of today’s full Gold & Silver Trading Alert. The latter includes multiple details such as the interim target for gold that could be reached in the next few weeks.

If you’d like to read those premium details, we have good news. As soon as you sign up for our free gold newsletter, you’ll get 7 access of no-obligation trial of our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits: Analysis. Care. Profits.

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Daily Gold News: Monday, August 3 – Gold’s Consolidation – a Topping Pattern?

The gold futures contract reached another new record high on Friday at the price level of $2,005.40. The market has slightly extended its recent advance again. The market gained 0.97%, but the closing price was at around $20 below the daily high. Gold reached the highest in history following U.S. dollar sell-off, among other factors.

Gold is 0.4% lower this morning as it is slightly retracing Friday’s advance. What about the other precious metals? Silver gained 3.66% on Friday and today it is 1.3% lower. Platinum gained 0.69% and today it is 0.3% higher. Palladium gained 0.49% on Friday and today it’s 1.2% higher. So precious metals trade within a short-term downward correction this morning. The gold price remains within a week-long consolidation along $1,950-2,000.

Friday’s Personal Income/ Personal Spending data release along with the sentiment numbers have been mixed. Today we will get the ISM Manufacturing PMI number at 10:00, among others. Expectations are at 53.6 – one point above the previous month’s release. The ISM Manufacturing PMI got back above the neutral level of 50 following steep declines in May and June.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, August 3

  • 9:45 a.m. U.S. – Final Manufacturing PMI
  • 10:00 a.m. U.S. – ISM Manufacturing PMI, Construction Spending m/m, ISM Manufacturing Prices
  • All Day, Canada – Bank Holiday

Tuesday, August 4

  • 00:30 a.m. Australia – Cash Rate, RBA Rate Statement
  • 10:00 a.m. U.S. – Factory Orders m/m, IBD/TIPP Economic Optimism
  • 9:45 p.m. China – Caixin Services PMI

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

GBP/USD Daily Forecast – U.S. Dollar Tries To Gain More Ground

GBP/USD Video 03.08.20.

U.S. Democrats And Republicans Fail To Reach Coronavirus Aid Package Deal

GBP/USD trades near 1.3100 as the U.S. dollar is mostly flat against a broad basket of currencies amid continued negotiations about the new U.S. coronavirus aid package.

The U.S. Dollar Index has stabilized near 93.5 after rebounding from recent lows at 92.5. Meanwhile, Republicans and Democrats continued their negotiations during the weekend but failed to reach a deal.

According to White House Chief of Staff Mark Meadows, Republicans wanted to extend some federal unemployment benefits while continuing negotiations on the whole package but Democrats wanted a comprehensive deal.

He also added that he was not optimistic that negotiations would successfully conclude in the near term.

Failure to extend special unemployment benefits poses risks for consumer activity which is the main driver of the U.S. economy. On the other hand, excessive money-printing could put additional pressure on the U.S. dollar and its status as the world’s main reserve currency.

Today, traders will have to digest UK Manufacturing PMI and U.S. Manufacturing PMI reports for July.

UK Manufacturing PMI is projected to increase from 50.1 in June to 53.6 in July.

In the U.S., Manufacturing PMI is expected to grow from 49.8 to 51.3. Numbers above 50 show expansion.

Manufacturing was not hit as hard as services during the current crisis so there’s a good chance that today’s data will be optimistic and provide some additional support to riskier assets.

Technical Analysis

gbp usd august 3 2020

GBP/USD tries to stabilize near 1.3100 following the major upside move.

In case GBP/USD manages to settle above 1.3100, it will have a good chance to test the nearest resistance level at 1.3200.

On the support side, the nearest support level is located at 1.3070. GBP/USD has already made an attempt to settle below this level but this attempt was unsuccessful.

If GBP/USD settles below 1.3070, it will head towards the next support level at 1.3020.

Currently, GBP/USD continues to move in a rather tight upside channel, and the upside trend remains intact.

However, RSI is still in the overbought territory, suggesting that risks of correction remain elevated.

For a look at all of today’s economic events, check out our economic calendar.

The COVID-19 Stimulus Package and Manufacturing PMIs Put the Dollar and EUR in Focus

Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning.  The Japanese Yen and the Aussie Dollar were in action, with economic data from China also in focus.

Away from the economic calendar, COVID-19 and the U.S stimulus package continued to be an area of focus.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 249,532 to 18,231,469 on Sunday. On Saturday, the number of new cases had risen by 250,087. The daily increase was lower than Saturday’s rise while up from 213,347 new cases from the previous Sunday.

Germany, Italy, and Spain reported 623 new cases on Sunday, which was down from 707 new cases on Saturday. On the previous Saturday, 663 new cases had been reported.

From the U.S, the total number of cases rose by 50,702 to 4,813,647 on Sunday. On Saturday, the total number of cases had increased by 60,171. On Sunday, 26th July, a total of 56,130 new cases had been reported.

For the Japanese Yen

Finalized GDP numbers for the 1st quarter remained unchanged from 2nd estimates. In the 1st quarter, the Japanese economy contracted by 0.6%, following a 1.9% contraction in the 4th quarter.

On an annualized basis, the economy contracted by 2.2%, which was also in line with 2nd estimates. In the 4th quarter, the economy had contracted by 7.3%.

The Japanese Yen moved from ¥105.858 to ¥105.844 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.07% to ¥105.90 against the U.S Dollar.

For the Aussie Dollar

The AIG Manufacturing Index rose from 51.5 to 53.5 in July.

According to the July Survey,

  • The sector expanded for a 2nd consecutive month, a first since October of last year.
  • The food & beverage and machinery & equipment sectors delivered much-needed support in the month.
  • In spite of the expansion, there was continued weakness across the other sectors.
  • Production, employment, supplier deliveries, and finished stocks expanded at a faster rate than in June, however.

The Aussie Dollar moved from $0.71412 to $0.71423 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.14% to $0.7133.

Out of China

In July, the Caixin Manufacturing PMI rose from 51.2 to 52.8. Economists had forecast a rise to 51.3.

According to the July survey,

  • New business from overseas fell at the slowest rate in 6-months, as new orders rose at the quickest pace since Jan-11.
  • Companies also reported the quickest expansion in output since January 2011.
  • Output expanded for a 5th consecutive month, driven by greater client demand as the economic recovery gathered pace.
  • Manufacturers ramped up their buying activity, the rate of expansion the most marked in seven-and-a-half years.
  • In spite of a rise in backlogs and new orders, firms cut staffing levels again in July.

The Aussie Dollar moved from $0.71303 to $0.71366 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar up by 0.02% to $0.6630.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include July manufacturing PMI figures for Spain and Italy.

Finalized manufacturing PMIs are also due out of France, Germany, and the Eurozone.

Barring a marked revision to Germany’s numbers, we would expect Italy and the Eurozone’s PMIs to have the greatest impact.

Following some quite dire 2nd quarter GDP numbers last week, a further pickup in manufacturing sector activity would be welcome.

At the time of writing, the EUR was down by 0.07% to $1.1770.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. July’s finalized manufacturing PMI is due out later this morning.

Barring any revisions, however, the PMI should have a muted impact on the Pound.

Chatter on Brexit and market risk sentiment will influence, as will updates on the latest COVID-19 outbreak.

At the time of writing, the Pound was up by 0.02% to $1.3088.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. July’s ISM Manufacturing PMI and finalized Markit Manufacturing PMI figures are due out.

Expect the ISM figures to have the greatest impact on the day. The employment and new orders sub-indexes will likely garner plenty of interest.

Away from the calendar, the focus will remain on Capitol Hill and the progress of the COVID-19 stimulus package.

At the time of writing, the Dollar Spot Index was up by 0.16% to 93.499.

For the Loonie

It’s a quiet day ahead on the economic calendar, with no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment and the PMI numbers on the day.

At the time of writing, the Loonie was up by 0.03% to C$1.3408 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD Bears Increase their Bets, on Fragile Economic Macros and Potential Biden Presidency

The US Dollar Index bears increased their stakes the third straight week.

In the short term currency traders are concerned about the latest U.S Federal Reserve statement on the pace of the world’s largest economy and the dirty politics coming to play in the corridors of power at Washington, triggered with heightened geopolitical risks by President Trump’s alleged statement in the form of an election delay.

Such macros give the U.S dollar index little hope to stay above its critical support level of 93.5 where more global investors and currency traders in and accelerating fashion, throw aside the previously established assumption that the US will lead the global economic recovery.

The recent sell-off observed in the U.S dollar Index has reached levels last seen in mid-2018. On the present horizon, currency traders will watch the 93.00 zone cautiously, as any breach could result the greenback tracker to fall around the 91.80 support zone, leaving the negative stance on the dollar intact in the mid-term.

With the US dollar outlook extremely sour, foreign investors seems to move their attention to other safe haven asset options like gold.

Still, currency traders are betting that a continual outburst between the two leading economies, China and the United States, would trigger investors move into the recent forgotten safe haven currency.

Although the market appears to be desensitizing again, one never really feels sure of which US-China political powder keg is about to explode, especially with the US administration considering still naming China a currency manipulator. This macro is expected to reduce the bearish bias of currency traders in the mid-term.

Ultimately, currency traders will take a more strategic tack and soon begin to factor the probability of a return to globalization and a non-tariff approach to trade under a potential Biden Presidency.

Precious Metals Weekend Wrap-up August 1, 2020

Now that we have encouraging data, we should be able to make informed decisions concerning on how to move forward. Unfortunately, politicians are making this much worse than it needs to be. The damage they have done to the economy is immeasurable.

It’s reported that 55% of restaurants on Yelp have shut their doors for good. And some estimate that 33% of the hotels in the U.S. could go out of business. In my opinion, the economy is yet to feel the long-term consequences of this economic shutdown.

Gold reached new all-time highs on the back of a declining dollar. I expected a breakout above $2000, but not until 2021 or 2022. What happens next depends on the dollar. If the dollar stabilizes and turns higher, then gold should correct and begin to consolidate. If the dollar continues to crash, then gold could enter a runaway move higher.

The Fed announced no change in its interest rate policy on Wednesday and said it would do everything necessary to support the economy. Sometimes gold and the dollar reverse trends (top or bottom) just after a Fed decision. The dollar formed a bullish engulfing candle on Friday, supporting the potential for a reversal.

The gold cycle indicator remains pegged at 450, and gold is very overbought.

US DOLLAR

Gold is higher as a direct result of the crashing dollar. The dollar is incredibly oversold and due for a bottom, which would imply a top in gold. I’ve mentioned before how prices often reverse on or just after a crucial Fed meeting. The dollar formed a bullish engulfing candle on Friday, 2-days after Wednesday’s announcement. Closing above the 10-day EMA (currently 94.11) next week would sponsor a bottom.

GOLD WEEKLY

It’s rare for prices to slice through a significant resistance level without consolidating first. And for that reason, I’m suspicious of the recent breakout to new all-time highs. When momentum is strong, like now, prices will sometimes overshoot a major level. If this is a momentum overshoot, then gold should stay below $2050 and finally turn lower. A sustained advance above $2100 would signal a potential runaway move.

GOLD DAILY

Gold reached an intraday high of $2005.40 on Friday. Prices are very overbought, and the cycle indicator is maxed out at 450. The trend is well-overdue for a correction. A daily finish below $1971.40 would secure a swing high and signal a potential top.

SILVER

After breaking out above $20.00, silver exploded to our $26.00 target. Prices are overbought and due for a pullback. Closing below $22.50 would support a top. To extend this advance, prices would have to close above the $26.27 spike high.

PLATINUM

Platinum is the last precious metal to breakout to fresh highs. Prices would have to close above $1050 to signal a breakout. Whereas dropping below the cycle trendline would indicate a correction.

GDX

On Thursday, miners closed below Monday’s gap, issuing a potential exhaustion gap sell signal. Miners would have to close above $44.46 to reverse the short-term bearish signal. To confirm a multi-week correction – GDX would have to close below $36.87.

GDXJ

Juniors also closed below Monday’s gap, triggering a short-term sell signal – prices would have to close above $63.31 to reverse it. Otherwise, breaking below $50.00 would confirm the onset of a multi-week cycle correction.

SPY

Stocks consolidated throughout the week but managed to close above the short-term trendline on Friday. It looks like prices will attack the February 329 gap next week. Like gold, the trend is incredibly overbought and ready for a correction.

Have a safe and pleasant weekend.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

The Week Ahead – COVID-19, Economic Data and US Politics in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 59 stats in focus in the week ending 7th August. In the week prior, just 57 stats had been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front.

In the 1st half, the ISM’s July private sector PMIs, ADP nonfarm employment change figures, and June factory orders are in focus.

We would expect Wednesday’s ISM Non-Manufacturing PMI and ADP Nonfarm Employment Change to have the greatest impact.

The focus will then to Thursday’s initial jobless claims and Friday’s nonfarm payroll numbers and unemployment rate.

Following some disappointing weekly jobless claims figures and the rise in COVID-19 cases, the labor market figures will be key.

For the service sector, any contraction in July, following a jump in productivity in June, would also weigh on riskier assets.

The Dollar Spot Index ended the week down by 1.15% to 93.349.

For the EUR:

It’s also another busy week ahead on the economic data front.

On Monday and Wednesday, July’s manufacturing and services PMIs are due out of Italy and Spain.

Finalized PMIs are also due out of France, Germany, and the Eurozone.

With Spain seeing a spike in new COVID-19 cases, expect some attention to the PMIs. Ultimately, however, the Eurozone’s services and composite will likely have the greatest impact.

The focus will then shift German factory orders for June, due out on Thursday.

At the end of the week, Germany remains in focus, with June’s industrial production and trade figures due out.

Barring disappointing numbers, June retail sales figures for the Eurozone should have a muted impact on Thursday.

The EUR/USD ended the week up by 1.05% to $1.1778.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. July’s finalized private sector PMIs are due out and will garner plenty of interest.

Expect any downward revision to the Services PMI on Wednesday to have the greatest impact.

On Thursday, the focus will then shift to the BoE. More action is expected and the Bank may consider an extension to the suspension of banks paying dividends and buybacks.

While the BoE is in action, we can also expect any further updates on Brexit to also influence in the week.

The GBP/USD ended the week up by 2.27% to $1.3085.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, June’s trade figures are due out ahead of July employment numbers on Friday.

Expect the employment figures to have the greatest impact, however.

Barring dire numbers, the Ivey PMI for July should have a muted impact on the Loonie on Friday.

Away from the stats, COVID-19 and geopolitics will continue to influence crude oil prices and risk sentiment.

The Loonie ended the week up by 0.02% to C$1.3412 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead for the Aussie Dollar.

At the start of the week, the Manufacturing Index figures are due out ahead of a busy Tuesday.

We would expect manufacturing PMIs from China, the EU, and the U.S to have a greater impact, however, on Monday.

The focus will then shift June trade and retail sales figures due out on Tuesday. Expect the retail sales figures to have the greatest impact. The RBA continues to rely on consumer spending to support the economy. Weak numbers will be a test for the Aussie Dollar.

For the week, however, the main event is the RBA monetary policy decision on Tuesday.

Following the spike in new COVID-19 cases, will the RBA remain optimistic about the economic recovery?\

Any dovish chatter and the Aussie Dollar could eye sub-$0.70 levels. At the end of the week, the RBA’s statement on monetary policy will also draw interest.

The Aussie Dollar ended the week up by 0.53% to $0.7143.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic calendar.

2nd quarter employment figures are due out on Wednesday. The markets will likely be forgiving to an extent, with COVID-19 expected to have an impact on employment.

With economic data on the lighter side, private sector PMIs from China, the EU, and the U.S will influence.

Expect geopolitics and COVID-19 news to also have an impact in the week. Any signs of a slowdown in new cases globally and expect support to kick in.

The Kiwi Dollar ended the week down by 0.18% to $0.6629.

For the Japanese Yen:

It is a busy week ahead on the economic calendar.

Finalized 2nd quarter GDP and July’s manufacturing PMI numbers are due out on Monday.

The focus will then shift to July’s service PMI on Wednesday and June household spending figures on Friday.

While the stats will influence sentiment towards BoJ monetary policy, the Yen will remain at the mercy of COVID-19 and geopolitics.

The Japanese Yen ended the week up by 0.29% to ¥105.83 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead on the economic data front.

July’s private sector PMIs are due out on Monday and Wednesday. Expect the figures to influence risk appetite in the week.

On Friday, July trade figures will also garner plenty of attention. While exports remain the main area of focus, any sizeable fall in imports would test risk appetite on the day.

Away from the economic calendar, any chatter from Beijing will also need monitoring.

The Chinese Yuan ended the week up 0.62% to CNY6.9752 against the U.S Dollar.

Geo-Politics

UK Politics:

Brexit will remain in focus. Talks are set to continue through August and September ahead of an EU Summit in October.

60 days may sound like a lot but when considering the lack of progress over 4-years…

A light economic calendar and Brexit chatter have provided the Pound with support. We may even see the markets brush off the chances of a hard Brexit.

Getting on with it seems to be the key desire now rather than dragging it out any longer. Either way, we’re not expecting Johnson and the team to give too much away…

U.S Politics:

Last week, the Republicans showed signs of fragmentation. As Presidential Election stress builds, we could see more fractures as Trump attempts to distract voters.

The immediate issue at hand, however, is the COVID-19 stimulus package. Any failure to deliver will weigh on the Dollar. Labor market conditions have not improved and the 2nd wave has shown little sign of slowing. A lack of benefits for the unemployed will raise more issues than a fall in household spending. We have already seen social unrest…

The Coronavirus:

It was yet another bad week, with the number of new COVID-19 cases continuing to rise at a marked pace.

From the market’s perspective, the 3 key considerations have been:

  1. Progress is made with COVID-19 treatment drugs and vaccines.
  2. No spikes in new cases as a result of the easing of lockdown measures.
  3. Governments continue to progress towards fully opening economies and borders.

Last week, we saw a number of countries including Hong Kong and the UK reintroduce containment measures. Hopes of progress towards a vaccine had limited the damage last week. In the week ahead, however, the numbers will need to ease off to avoid spooking the markets.

At the time of writing, the total number of coronavirus cases stood at 17,981,937. Monday to Saturday, the total number of new cases increased by 1,782,490. Over the same period in the previous week, the total number had risen by 1,531,149.

Monday through Saturday, the U.S reported 447,236 new cases to take the total to 4,762,945. This was up marginally from the previous week’s 417,070

For Germany, Italy, and Spain, there were 22,814 new cases Monday through Saturday. This took the total to 793,804. In the previous week, there had been 17,083 cases over the same period. Spain accounted for 16,101 of the total new cases in the week.

The Weekly Wrap – Economic Data, the FED, and Trump Sank the Dollar

The Stats

It was a busy week on the economic calendar, in the week ending 31st July.

A total of 56 stats were monitored, following the 41 stats from the week prior.

Of the 56 stats, 31 came in ahead forecasts, with 24 economic indicators coming up short of forecasts. Just 1 stat was in line with forecasts in the week.

Looking at the numbers, 19 of the stats reflected an upward trend from previous figures. Of the remaining 37, 35 stats reflected a deterioration from previous.

For the Greenback, it was a 6th consecutive week in the red. In the week ending 31st July, the Dollar Spot Index fell by 1.15% to 93.349. In the week prior, the Dollar had fallen by 1.57%.

The continued slide through the month of July left the Dollar Spot Index down by 4.15% for the month.

Dire economic data, the continued spread of COVID-19, and a dovish FED delivered the loss. Adding to the Dollar angst in the week was Trump’s Presidential Election delay tweet on Thursday…

According to a Reuters report, U.S Dollar net shorts surged to the highest in 9-years, delivering the largest monthly loss Since Sept-2010.

Looking at the latest coronavirus numbers

At the time of writing, the total number of coronavirus cases stood at 17,731,750 for Friday, rising from last Friday’s 15,930,779 total cases. Week-on-week (Saturday thru Friday), the total number of cases was up by 1,801,071 on a global basis. This was higher than the previous week’s increase of 1,741,556 in new cases.

In the U.S, the total rose by 454,463 to 4,702,774. In the week prior, the total number of new cases had risen by 478,299.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 22,753 to bring total infections to 793,804. In the previous week, the total number of new cases had risen by 17,404. Spain alone reported 16,101 new cases in the week.

Out of the U.S

It was a busy week on the economic data front.

Key stats included July consumer confidence, the weekly jobless claims, and 2nd quarter GDP figures.

The stats were skewed to the negative. Consumer confidence deteriorated in July, as a result of the 2nd wave of the pandemic. Initial jobless claims increased for a 2nd consecutive week, with the U.S economy contracting by 32.9% in the 2nd quarter.

At the end of the week, July consumer sentiment figures were also revised down.

There were some positives, however. Durable and core durable goods continued to rise in June.

Chicago’s PMI returned to expansion in July, with personal spending rising for a 2nd consecutive month in June. These were good enough to give the Dollar much-needed support at the end of the week.

In the equity markets, the NASDAQ and S&P500 rose by 3.69% and by 1.73% respectively. The Dow bucked the trend, however, falling by 0.16%.

Out of the UK

It was a particularly quiet week on the economic calendar, with no material stats to provide the Pound with direction.

A lack of economic data contributed to the upside in the Pound that benefitted from Dollar weakness. News of the government reintroducing lockdown measures in the North weighed at the end of the week, however.

In the week, the Pound rallied by 2.27% to $1.3085 in the week, following on from a 1.80% gain from the previous week. The FTSE100 ended the week down by 3.69%, following on from a 2.65% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In a quiet 1st half of the week, Germany’s IFO Business Climate Index figures for July provided support on Monday.

The focus then shifted to 2nd quarter GDP numbers. France, Germany, and the Eurozone reported particularly dire 2nd quarter numbers.

The German economy contracted by 10.1%, the French economy by 13.8%, and the Eurozone economy by 12.1%.

It wasn’t enough to send the EUR into the red, however, as the U.S delivered darker numbers.

For the week, the EUR rose by 1.05% to $1.1778, following a 2.00% rally from the previous week. A 0.58% pullback on Friday limited the upside for the week.

For the European major indexes, it was another bearish week. The DAX30 slid by 4.09%, with the CAC40 and EuroStoxx600 falling by 3.49% and by 2.98% respectively.

For the Loonie

It was a quiet week on the economic calendar.

Economic data included May GDP and June RMPI numbers at the end of the week.

The stats were positive, with the Canadian economy expanding by 4.5% in May, following April’s 11.7% contraction. In June, the RMPI rose by a further 7.5%, following a 16.4% jump in May.

While the other majors lost ground against the Greenback on Friday, the stats delivered support at the end of the week.

The Loonie rose by 0.02% to end the week at C$1.3412 against the Greenback. In the week prior, the Loonie had rallied by 1.22% to C$1.3415.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 31st July, the Aussie Dollar rose by 0.53% to $0.7143, while the Kiwi Dollar fell by 0.18% to $0.6629. A 1.04% slide on Friday, left the Kiwi in the red for the week.

For the Aussie Dollar

It was a relatively quiet week for the Aussie Dollar.

Inflation and private sector credit figures delivered mixed results in the week.

In the 2nd quarter, consumer prices slid by 1.9%, with prices down by 0.30% year-on-year.

Final delivery numbers were not much better, with the Producer Price Index falling by 1.20% in the 2nd quarter. Year-on-year, the index fell by 0.40%.

The numbers were better than forecasts, which propped up the Aussie Dollar.

Private sector credit disappointed, however, falling by 0.3% in June.

While the Aussie Dollar found support against the Greenback, the latest COVID-19 outbreak pinned back the Aussie.

For the Kiwi Dollar

It was another relatively quiet week on the economic data front.

While stats included building consent and business confidence figures, the focus was on the business confidence figures.

A marginal improvement in business confidence did little to support the Kiwi, however.

In July, the ANZ Business Confidence Index rose from -34.4 to -31.8.

According to the latest ANZ Report,

  • A net 9% of firms expect weaker economic activity in their own business, rising from -26% in June.
  • The retail sector drove the recovery, while the agriculture sector was the most negative.
  • 31% of firms say they intend to lay off staff, and 24% say they have less staff than a year ago.

For the Japanese Yen

It was a relatively quiet week on the economic calendar.

Retail sales continued to fall in June. Following a 12.5% slump in May, retail sales fell by 1.20%.

Industrial production delivered hope, however, rising by 2.7% in June, according to prelim figures. In May, production had tumbled by 8.9%.

A weakening U.S Dollar stemming from particularly dire economic data and a dovish FED supported the Yen.

The Japanese Yen rose by 0.29% to end the week at ¥105.83 against the Greenback. A 1.05% slide on Friday, cut the gains from earlier in the week. In the week prior, the Yen had risen by 0.82%.

Out of China

It was a quiet week on the economic data front.

July’s NBS private sector PMI figures delivered mixed results on Friday.

While the Non-Manufacturing PMI slipped from 54.4 to 54.2, the Manufacturing PMI rose from 50.9 to 51.1.

With Beijing and Washington silent, following the previous week’s diplomatic spat, the Yuan recovered to sub-CNY7 levels.

In the week ending 24th July, the Chinese Yuan rose by 0.62% to CNY6.9752 against the Dollar. In the week prior, the Yuan had fallen by 0.37%.

The CSI300 rallied by 4.20%, while the Hang Seng falling 0.45%, as a 2nd wave of the pandemic hit HK.

U.S. Dollar Index (DX) Futures Technical Analysis –Watching for Confirmation of Closing Price Reversal Bottom

The U.S. Dollar closed higher against a basket of major currencies after posting a dramatic mid-session reversal to the upside. The move erased all of the earlier losses. Nonetheless, the market was still on pace for its biggest monthly drop in a decade as concerns that an increase in U.S. coronavirus cases will slow the rebound in the economic recovery.

On Friday, September U.S. Dollar Index futures settled at 93.321, up 0.312 or +0.34%. This was up from a low of 92.510.

The strong rebound was partly fueled by data on Friday that showed U.S. inflation-adjusted consumer spending has pulled out of April’s deep hole but remains below its pre-pandemic level. End of the month position-squaring and profit-taking may have been other reasons for the higher close.

The heavily weighted Euro settled down -0.64%. The Japanese Yen lost 0.19% and the British Pound was off 0.13%. The commodity-linked Canadian Dollar gained 0.01% and the safe-haven Swiss Franc fell 0.52% against the U.S. Dollar.

Daily September U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 92.510 will signal a resumption of the downtrend.

A trade through 97.810 will change the main trend to up. This is highly unlikely over the near-term, but Friday’s closing price reversal bottom suggests the buying may be greater than the selling at current price levels.

The minor trend is also down. A trade through 96.380 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 96.380 to 92.510. Its retracement zone at 94.445 to 94.900 is the first upside target.

The main range is 97.810 to 92.510. Its retracement zone at 95.160 to 95.785 is the second upside target.

Short-Term Outlook

The closing price reversal bottom only stops the selling; it’s the follow-through to the upside to the upside through the session’s high that confirms the potentially bullish chart pattern. The market hasn’t crossed the previous day’s high since July 16 so taking out 93.525 could develop into something significant.

Typically, a confirmed closing price reversal bottom triggers the start of a 2 to 3 day counter-trend rally often combined with a 50% retracement of the last break. This would make 94.445 and 95.160 potential upside targets.

The closing price reversal bottom will be negated on a trade through 92.510. This will also signal a resumption of the downtrend.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Resistance At The 20 EMA At 1.3460 Stays Strong

USD/CAD Video 31.07.20.

U.S. Dollar Fails To Gain More Momentum Against The Canadian Dollar

USD/CAD failed to settle above the 20 EMA at 1.3460 and pulled back closer to 1.3400.

Interestingly, the U.S. dollar is gaining ground against a broad basket of currencies today while WTI oil is making another attempt to settle below the $40 level but these catalysts fail to provide support to USD/CAD.

The U.S. Dollar Index has found support near 92.5 and managed to rebound above the 93 level.

The U.S. Dollar Index is seriously oversold so the current rebound may continue in case the right catalysts emerge. Such scenario will be bullish for USD/CAD.

The main worry for U.S. dollar bulls right now is the continued delay of the new U.S. coronavirus aid package due to disagreements between Republicans and Democrats.

The special unemployment benefits of $600 per week are set to expire, and U.S. consumers clearly need additional support.

As shown by today’s U.S. Personal Income and Personal Spending reports, the current measures were working well to support consumer activity.

While Personal Income declined by 1.1% in June after falling by 4.4% in May, Personal Spending increased by 5.6%. This would have not been possible without material government aid.

Meanwhile, Canada reported that its GDP increased by 4.5% month-over-month in May after falling by 11.7% in April. Unfortunately, Canada reports GDP data with a significant time lag so the current report will have no material impact on USD/CAD trading dynamics.

Technical Analysis

usd cad july 31 2020

USD to CAD is currently trading in a range between the support level at 1.3330 and the resistance level at the 20 EMA at 1.3460.

At this point, it looks like USD to CAD will need material catalysts to get out of this range.

In case USD to CAD manages to settle below the low end of the current trading range at 1.3330, it will head towards the next support level at 1.3270.

On the upside, a move above the 20 EMA will signal that USD to CAD is ready for an upside move.

However, USD to CAD will have to get above the major resistance at 1.3500 before it may gain significant upside momentum.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Attempts To Get Back Above $24.00

Silver Video 31.07.20.

Silver Tries To Rebound After The Recent Pullback

Silver tries to settle back above $24.00 as gold continues its upside move while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently declined below the 93 level but found support near 92.5 and is attempting to get back above 93.

U.S. dollar weakness is bullish for precious metals as it makes them cheaper for investors who have other currencies, and the major decline of American currency has certainly helped the rally in gold and silver.

However, the U.S. dollar is clearly oversold against a broad basket of currencies so there is a significant risk of a pullback which may put some pressure on precious metals.

Meanwhile, gold continues its upside move, which is bullish for silver. Gold futures have even touched the $2000 level while spot gold is yet to break above $1985.

Gold/silver ratio faced resistance below the 85 level and pulled back below 82. Gold/silver ratio’s RSI has returned back into the moderate territory so gold/silver ratio may continue the downside trend in case the right catalysts emerge.

In the near term, silver trading will likely be impacted by the outcome of coronavirus aid package negotiations in the U.S. Successful negotiations may provide material support to the American currency, which will be bearish for silver.

Technical Analysis

silver july 31 2020

Silver faced resistance near $24.50 and is pulling back. However, silver still maintains chances to settle above $24.00 and get to the test of the nearest resistance at $24.50.

In case this test is successful, silver will head towards the next resistance level at $24.95. A move above $24.95 will open the way to the recent highs at $26.20.

On the support side, the nearest support level is located at $23.25. A move below this level will likely lead to increased downside momentum, pushing silver towards the major support at $22.30.

At this point, silver is set for choppy trading action after the major upside move. For now, silver will likely stay in the range indicated by the recent wild trading day when silver touched resistance at $26.20 and support at $22.30.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Friday, July 31 – Gold at New Record but Precious Metals Mixed

The gold futures contract reached another new record high of $1,987.30 on Thursday, as it slightly extended its recent advance again. The market gained 0.69%, but the closing price was $20 below the daily high. Gold reached the highest in history following U.S. dollar sell-off, among other factors.

Gold is 0.9% higher this morning as it is trading along the new record high. What about the other precious metals? Silver lost 3.94% on Thursday and today it is 2.1% higher. Platinum lost 4.79% and today it is 0.3% lower. Palladium lost 5.59% on Thursday and today it’s 1.0% lower. So precious metals are mixed this morning.

Yesterday’s U.S. Advance GDP number has been slightly better than expected. However, the economy contracted by a stunning 32.9% in the second quarter. The Unemployment Claims number surpassed 1.4 million again.

Today we will get Personal Income/ Personal Spending release at 8:30 a.m. The Chicago PMI will be released at 9:45 a.m. and at 10:00 a.m. we will get the revised Michigan Sentiment number.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, July 31

  • 8:30 a.m. U.S. – Personal Spending m/m, Personal Income m/m, Core PCE Price Index m/m, Employment Cost Index q/q
  • 8:30 a.m. Canada – GDP m/m, IPPI m/m, RMPI m/m
  • 9:45 a.m. U.S. – Chicago PMI
  • 10:00 a.m. U.S. – Revised UoM Consumer Sentiment

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

GBP/USD Daily Forecast – British Pound Continues Its Major Upside Move

GBP/USD Video 31.07.20.

U.S. Dollar Remains Under Serious Pressure

GBP/USD rallied above 1.3100 as the U.S. dollar continued to lose ground against a broad basket of currencies on fears about the speed of U.S. economic recovery.

The U.S. Dollar Index continued its slide and managed to get below the 93 level.

The continued spread of coronavirus in the U.S., challenging negotiations about the next coronavirus aid package and recent Trump’s tweet suggesting a possible delay in U.S. elections were the key catalysts for the downside move.

After his tweet, U.S. President Donald Trump stated that he did not want to postpone the election but was worried about problems with mail-in ballots.

However, the damage to the U.S. dollar was already done as traders started to think about potential problems with the upcoming U.S. presidential election.

Meanwhile, Republicans and Democrats continue to negotiate the new coronavirus aid package. It’s the last day of month, and the federal jobless benefit is set to expire.

Failure to maintain the program will lead to an additional blow to the U.S. economy as consumer spending will quickly decline, putting pressure on businesses and causing job losses.

Yesterday’s employment reports showed that the job market has started to succumb to pressure from the spread of coronavirus. U.S. Initial Jobless Claims increased to 1.43 million while Continuing Jobless Claims jumped to 17 million.

Technical Analysis

gbp usd july 31 2020

GBP/USD continues to rally and is trying to settle above 1.3100. The nearest resistance for GBP/USD is located at 1.3200.

RSI is at extremely overbought levels but broad weakness of the U.S. dollar continues to push GBP/USD higher. That said, the risks of a pullback increase day by day.

On the support side, the nearest support level for GBP/USD is located at 1.3070. In case GBP/USD moves below this support level, it will head towards the next support at 1.3020.

Currently, the U.S. dollar sell-off looks like a true panic so the market may easily ignore the fact that U.S. dollar is seriously oversold. At this point, GBP/USD maintains good chances to test the nearest resistance at 1.3200.

For a look at all of today’s economic events, check out our economic calendar.

The U.S Dollar Slide Continues on a Busy Day of Stats and Updates from Capitol Hill

Earlier in the Day:

It’s was another busy start to the day on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in action, with economic data from China also of influence.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus ahead current unemployment benefits expiring today.

The markets were also able to react to particularly dire GDP numbers from Germany and the U.S and Trump’s tweet.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the number of new cases had risen by 287,638. The daily increase was lower than Wednesday’s rise and down from 270,301 new cases from the previous Thursday.

Germany, Italy, and Spain reported 3,961 new cases on Thursday, which was up from 3,179 new cases on Wednesday. On the previous Thursday, 3,593 new cases had been reported.

From the U.S, the total number of cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the total number of cases had increased by 69,828. On Thursday, 23rd July, a total of 69,116 new cases had been reported.

For the Japanese Yen

Industrial production rose by 2.70% in June, following an 8.9% slump in May. Economists had forecast a 1.2% rise.

According to the Ministry of Economy, Trade and Industry,

Industries that mainly contributed to the increase were:

  • Motor vehicles, production machinery, and plastic products.

Industries that mainly contributed to the decrease were:

  • Inorganic and organic chemicals, pulp, paper, and paper products, and other manufacturing.

Industrial production forecasts for July were also positive. Following a 9.2% jump in production forecasted back in June, production is now forecasted to surge by 11.3% in July. In August, production is forecast to rise by 3.4%.

The Japanese Yen moved from ¥104.698 to ¥104.597 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.37% to ¥104.34 against the U.S Dollar.

Out of China

In July, the NBS Manufacturing PMI rose from 50.90 to 51.1, while the Non-Manufacturing PMI slipped from 54.4 to 54.2.

Economists had forecast PMIs of 50.7 and 54.1 respectively.

The Aussie Dollar moved from $0.72039 to $0.72052 upon release of the figures.

For the Aussie Dollar

Producer Price Index and private sector credit figures were in focus early in the day.

According to the ABS,

  • Final demand excluding exports fell by 1.2% in the 2nd quarter and by 0.4% over the past 12-months.
  • Petroleum refining and petroleum fuel manufacturing (-30.1%), child care services (-36.7%), and other agri (-6.4%) weighed.
  • There were increases in other transport equipment (+3.6%), computer and electronic equipment (+3.1%), and other motor vehicle and motor vehicle part manufacturing (+1.2%).

According to the RBA,

Total credit fell by 0.2% in June, following a 0.1% decline in May.

  • Housing credit increased by 0.2%, following a 0.2% rise in May.
  • Personal credit fell by 0.6%, following a 1.3% slide in May, with business credit falling by 0.8%. In May, business credit had fallen by 0.6%.

The Aussie Dollar moved from $0.72032 to $0.72169 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.29% to $0.72145.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.01% to $0.6698.

The Day Ahead:

For the EUR

It’s another busy day ahead on the economic calendar. Key stats include 2nd quarter GDP numbers from France, Spain, and the Eurozone that are scheduled for release. June’s consumer spending and retail sales figures for France and Germany will also draw attention.

Prelim June inflation figures for France, Italy, and the Eurozone, also due out but will likely have a muted impact.

Away from the economic calendar, the Dollar could crumble further should lawmakers fail to pass the stimulus package. An alternative would be an agreement to extend the current enhanced federal unemployment insurance policy.

At the time of writing, the EUR was up by 0.30% to $1.1882.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and the Dollar. The recent lack of economic data from the UK has allowed Dollar weakness to support a move back through to $1.31 levels.

At the time of writing, the Pound was up by 0.26% to $1.3130.

Across the Pond

It’s a busy day ahead for the U.S Dollar. June’s personal spending and inflation figures are key stats due out later today. Finalized consumer sentiment figures for July are also due out. Barring any material downward revision, however, it will likely be brushed aside.

Away from the calendar, the focus on the day will be on Capitol Hill. A failure by lawmakers to pass the stimulus package or to extend the current unemployment benefit would weigh.

We can also expect plenty of Trump tweets as COVID-19 numbers continue to rise across the U.S.

At the time of writing, the Dollar Spot Index was down by 0.31% to 92.731.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. Key stats include May GDP and June RMPI figures.

Expect the GDP numbers to be the key driver on the day.

Away from the economic calendar, however, any further risk aversion would likely mask any upbeat numbers…

At the time of writing, the Loonie was up by 0.04% to C$1.3418 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Canadian Dollar Loses Ground As WTI Oil Dips Below $40

USD/CAD Video 30.07.20.

U.S. Dollar Tries To Develop Upside Momentum

USD/CAD returned back above 1.3400 as WTI oil dipped below the $40 level and put pressure on commodity-related currencies.

The U.S. dollar is mostly flat against a broad basket of currencies, and the U.S. Dollar Index has settled below 93.5 in a rather volatile trading session.

The recent U.S. Initial Jobless Claims report indicated that 1.43 million Americans filed for unemployment benefits in a week, mostly in line with the analyst consensus of 1.45 million.

The Continuing Jobless Claims report brought a negative surprise as it showed that Continuing Jobless Claims increased from 16.2 million to 17 million.

This increase indicates that the U.S. job market has likely taken another blow from the continued spread of the virus.

Second-quarter U.S. GDP report was horrific as GDP declined by 32.9%. However, the market was ready to hear the bad news since analysts expected a decline of 34.1%.

It remains to be seen whether the recent employment data will be able to boost safe haven buying in U.S. dollar since search for protective assets has recently shifted into the precious metals.

In addition, U.S. Treasury yields continue to decrease, making the American currency less attractive from an income point of view.

The U.S. President Donald Trump has recently added to uncertainty, raising the possibility of delaying the Presidential election due to mail-in voting because of coronavirus.

Technical Analysis

usd cad july 30 2020

USD to CAD has once again tested the resistance level at 1.3440. USD to CAD managed to get above this level but met additional resistance just below the 20 EMA level at 1.3470 and pulled back below 1.3440.

In case USD to CAD manages to settle above 1.3440, it will have good chances to get to the test of the major resistance level at 1.3500.

A move above 1.3500 will indicate that USD to CAD is ready for another attempt to establish an upside trend.

On the support side, USD to CAD has recently received support near 1.3330, just above the low of the previous downside move at 1.3315.

A move below this level will likely lead to increased downside momentum, taking USD to CAD closer to the next support level at 1.3270.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Pulls Back Below $24.00

Silver Video 30.07.20.

Silver Tests The Support At $23.25

Silver fell below the support level at $24.00 and is testing the next support level at $23.25 as gold pulled back from record highs while gold/silver ratio rebounded above 83.

Gold has declined closer to the $1950 level as some traders started to take their profits after the major rally. Yesterday’s Fed commentary put pressure on the global markets so some market participants may want to raise more cash.

Gold/silver ratio continued its rebound and is trying to settle above the 84 level. This is an important resistance level for gold/silver ratio, and a move above 84 will open the way to the test of the 20 EMA level at 88.40. This scenario will be bearish for silver.

Meanwhile, the U.S. dollar is flat against a broad basket of currencies. The U.S. Dollar Index made an attempt to settle above 93.5 but failed to gain more upside momentum and declined closer to recent lows.

Additional weakness of the U.S. dollar will be bullish for silver and other precious metals as it will make them cheaper for buyers who have other currencies.

However, I’d note that U.S. Dollar Index is in the oversold territory and the risk of a rebound is still significant.

Technical Analysis

silver july 30 2020

Silver has made an attempt to settle below the support level at $23.25 but this attempt was not successful so silver stays in the range between the previous support at $24.00 and support at $23.25.

RSI is returning to more normal levels so silver may develop additional upside momentum in case the right catalysts emerge. At this point, an additional U.S. dollar weakness may serve as a catalyst that may support silver.

In case silver settles below the support at $23.25, it will head towards the next support level at $22.30. A move below this level will signal that the current upside momentum has come to an end. In this scenario, silver will decline towards the 20 EMA at $21.30.

On the upside, silver will likely face some resistance at the previous support level at $24.00. If silver manages to get above this level, it will head towards the next resistance level at $24.95. A move above $24.95 will likely provide silver with an opportunity to test the recent highs at $26.20.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Thursday, July 30 – Gold’s Volatility Increase Following Record-Breaking Rally

The gold futures contract reached new record high of $1,974.90 on Wednesday, as it slightly extended its recent advance. But the market has closed just 0.45% higher and over $20 below yesterday’s daily high. Gold reached the highest in history following U.S. dollar sell-off, among other factors.

Gold is 0.9% lower this morning as it is trading within a short-term consolidation following record-breaking advance. What about the other precious metals? Silver gained 0.09% on Wednesday and today it is 3.9% lower. Platinum lost 2.81% and today it is 2.5% lower. Palladium lost 4.41% on Wednesday and today it’s 5.3% lower. So precious metals are retracing some of their recent rally this morning.

Yesterday’s U.S. Pending Home Sales number release has been slightly better than expected. At 2:00 p.m. we got the FOMC Statement announcement that has led to an increased volatility. Gold went higher before retracing the whole intraday advance.

Today we will get the important U.S. Advance GDP number, among others. The GDP is expected to decline by a stunning 34.5% q/q!

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Thursday, July 30

  • 4:00 a.m. Eurozone – German Preliminary GDP q/q, ECB Economic Bulletin
  • 5:00 a.m. Eurozone – Unemployment Rate
  • 8:30 a.m. U.S. – Advance GDP q/q, Advance GDP Price Index q/q, Unemployment Claims
  • 9:00 p.m. China – Manufacturing PMI, Non-Manufacturing PMI

Friday, July 31

  • 8:30 a.m. U.S. – Personal Spending m/m, Personal Income m/m, Core PCE Price Index m/m, Employment Cost Index q/q
  • 8:30 a.m. Canada – GDP m/m, IPPI m/m, RMPI m/m
  • 9:45 a.m. U.S. – Chicago PMI
  • 10:00 a.m. U.S. – Revised UoM Consumer Sentiment

What future gold price behavior may be? Let’s take a look at our proprietary Gold True Seasonality for the third quarter of 2020 where we combined the regular seasonality with the effect of the expiration of options and accuracy estimation. The yearly seasonal pattern of the price of gold was calculated using a 18-year-long period from 2002 to 2019 and then adjusted for the expiration of options that we observed between 2009 and 2019.

We can see that gold is usually going higher in August and September. But will the market continue upwards despite some clear technical overbought conditions and a possible uptrend exhaustion?

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

The Key USDX Sign for PMs

Yesterday’s session was indeed volatile around the FOMC, just like we warned, and gold even moved to its previous high, likely forming a double-top pattern. Even though gold moved higher on an intraday basis, it didn’t invalidate its previous breakdown, which was a bearish sign. Gold was likely to decline, and it is declining so far in today’s pre-market trading.

The above chart shows just how precisely yesterday’s upswing ended at the previous support line, verifying it (most likely finally) as resistance. The implications are bearish.

The next short-term support is at about $1,850, but we don’t think that the decline will completely stop there. Instead, after a pause or corrective upswing, a move to about $1,700 – or even lower is likely in the cards. Naturally, this is based on the information that we have available at the moment of writing these words, and the outlook could change in the future.

Why? Because of the confirmations from other markets, including silver and – perhaps most importantly at this time – the USD Index.

Just like gold, silver moved back to its previous support line and verified it as resistance. It seems that both markets are waiting for USD’s rally (which is likely to arrive shortly) to plunge.

And what did the USD Index do recently?

While gold didn’t move back above its rising support / resistance line, let alone the previous high, the USD Index did move below its previous low.

This means that after a powerful short-term rally, gold is refusing to react to additional bullish indications. This is a strongly bearish sign. Naturally, gold’s verification of its breakdown is bearish as well.

The USD Index itself is also very important, because while the move to new lows is not encouraging, it’s worth keeping in mind that the early March bottom was actually a series of tiny bottoms, when the initial bottom was broken by just a little right before the USD soared.

Consequently, the loss of USD’s bearish momentum might be the thing that one should focus on at the current juncture, and view the breakdown as bearish only if it is confirmed. At the moment of writing these words, the USD Index is already back above its Monday’s intraday low.

At the same time, the USD Index is attempting to move back above its declining short-term resistance line. It seems that this attempt might finally succeed. Let’s keep in mind that breaking above the analogous line in early March was the start of USD’s powerful upswing.

Zooming out shows that there’s a very good reason for the USD Index to rally here.

The USD Index just moved to the early-2018 lows, which were also the mid-2015 and 2016 lows (approximately). Additionally, the USDX moved to the rising long-term support line based on the 2011 and 2014 bottoms. And it all happened relatively shortly after the USDX moved below two important Fibonacci retracement levels: 61.8% retracement based on the 2018 – 2020 rally, and the 38.2% retracement based on the 2014 – 2020 rally.

All the above-mentioned factors suggest that the USD Index is going to rally in the very near future. Gold has been magnifying USD’s tiny shows of strength, which suggests that any really visible rally in the USDX is likely to trigger a big sell-off in gold.

And a big sell-off in gold is likely to translate into an even bigger plunge in the gold stocks.

During Monday’s session, miners reversed on big volume and it happened almost right at the vertex-based reversal. Gold stocks then continued to decline on volume that was not minor.

So far, the decline was relatively calm, but let’s keep in mind that the same was the case during the first three trading days of both early-2020 declines. The GDX ETF declined rather insignificantly in late February, and the same was the case in the early March.

The important detail is that while gold moved to the precious high during yesterday’s session, gold miners didn’t. Their underperformance relative to gold along with the RSI above 70, and the recent reversal make the outlook very bearish for gold and silver mining stocks.

Summing up, it seems that gold has formed a double-top pattern, just as the USD Index seems to have finally bottomed. Gold and silver have both reacted very strongly to the USDX developments, which has very bearish implications for the following days. The verifications of the very short-term breakdowns in gold and silver serve as bearish confirmations.

The miners have reversed this week on strong volume and practically right at the vertex-based reversal, and it all happened after they had flashed the extremely overbought signal through the Gold Miners Bullish Percent Index.

The implications are very bearish for the next several days – weeks.

Thank you for reading today’s free analysis. Please note that it’s just a small fraction of today’s full Gold & Silver Trading Alert. The latter includes multiple other details such as the details of the current trading position.

If you’d like to read those premium details, we have good news. As soon as you sign up for our free gold newsletter, you’ll get 7 access of no-obligation trial of our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits: Analysis. Care. Profits.

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.