Posts by "stationdealer"

Trapped in a relatively small range, mirrored in all yen crosses, barely looking for direction. Expect sideways work, probably above 109.50, this week. Above 114.00 might be too much to hope for. Possibly attempt very small longs at 111.40; stop/reverse below 111.00 for 109.50. First target 112.00/112.65.

Consolidating slightly EURO unsteadily. Expect more consolidation around 1.2600 this week, possibly inching up to 1.2800, as we get used to these new fractionally higher levels. The Euro is not overbought and momentum is bullish.

"Gold registered another down week, but only by a slim margin," says the latest technical analysis from bullion bank Scotia Mocatta of Friday's finish at $1212.

"With a doji on the weekly candlestick, the market may have now finished testing the downside in gold," says Scotia, pointing to last week's price-pattern of falling sharply (down 2.2%), only to recover and end unchanged.

New data released late Friday from US regulator the CFTC meantime showed commercial "industry-side" players in the gold futures and options market cutting their bearish position at the fastest pace since April 2009 last week.

Falling to a 13-week low, the "net short" position of bullish bets minus bearish bets held by miners, refineries and bullion banks often referred to as the "smart money" shrank by 16.1% in the week-ending last Tuesday.

Overall, the commercial traders' "bull ratio" meaning the number of bullish contracts they hold as a proportion of all their directional bets on gold futures and options jumped above 1-in-3, the strongest bull ratio since December 2008.

Non-commercial "speculative" traders meanwhile slashed their net long position (of bullish minus bearish bets) to the equivalent of 852 tonnes, also down by 16.1% from a week earlier as hedge funds and institutional players as well as private investors closed almost one contract in every twelve they held the Tuesday before.

"The latest CFTC figures suggest that weak-handed speculators are largely out of the market," says Standard Bank's latest Precious Metals Monthly.

"Much of the shift in the net [speculative] position had come from short-covering, and so it is unlikely that there is scope for much more speculative liquidation in the current environment."

Over in the physical gold bullion market, "The sharp drop to $1200 has seen strong physical buying reappear and scrap sales dwindle," Standard Bank continues, while gold's typical summer lull now looks set to see gold "treading water" in July and August "all other things being equal".

Nevertheless, "Underlying financial tensions point to a buy-on-dips policy ahead of further inflationary concerns."

Friday saw a further "trickle" of redemptions, notes another London dealer, from the giant SPDR gold ETF the $51 billion gold-backed trust fund that trades as a stock in New York, Tokyo, Hong Kong and Singapore.

Slipping back to 1,314.5 tonnes, the SPDR's hoard of gold bullion held at HSBC bank-vaults in London peaked as June ended at 1,320 tonnes, more 16% greater from the start of the year.

"Debt on government balance sheets and worries that the world could be heading towards a double-dip recession are behind the gold surge," says Charles Cooper at London brokerage Oriel Securities, speaking to The Guardian newspaper.

The fresh threat of economic downturn, he says, means governments "could be tempted to print more money to dig us out of a hole.

"That could precipitate inflation, making gold even more popular as a safe haven."

New figures published Monday showed the UK's 2008-2009 recession cutting GDP more sharply than previously reported, down by 6.4% peak-to-trough.

This week brings a raft of consumer- and business-price inflation data from the European Union, United States, Japan and New Zealand.

EU regulators are now conducting "stress tests" on 91 major banks accounting for almost two-thirds of the 27-nation union. Results will be published on July 23rd.

Minutes from the US Federal Reserve's latest policy meeting will be released on Wednesday, with analysts and traders watching closely for dissent over the promise of exceptionally low policy rates for "an extended period", as well as any talk of fresh quantitative easing of the money supply.

Recall last week I told you that there was a story going around about how Canadian dollars/loonies (CAD) were being picked up by central banks? Well, this report, done by Morgan Stanley analyst, Emma Lawson, goes on to say that central banks have dropped their allocation to US dollars by nearly a full percentage point to 57.3% from 58.1%, and calls this unexpected given the global environment. She adds, Over time we anticipate that reserve managers may reduce their holdings further.

What is surprising is that the managers of those central banks arent buying traditional fall-backs like the euro (EUR), the British pound (GBP) or the Japanese yen (JPY). Instead, she suggests theyre putting their faith in other dollars the kind that come from Australia and Canada. The allocation to those currencies, which fall under other in the data, rose by a full percentage point to 8.5%, accounting almost exactly for the drop in the US dollar allocation.

Thats some good news for loonie and Aussie dollar (AUD) holders, eh? But the big thing in my mind is that central banks are diversifying Shouldnt you? Like that old soap commercial Arent you glad you used Dial? Dont you wish everyone did? HA!

The currencies, led by the Big Dog, euro, are weaker this morning, with the euro backing off 3/4s of a cent (0.75) versus the dollar. I really havent come across anything that points to a reason for this backing off Except the noise regarding the upcoming Street Tests results But, to me, its really just noise

Speaking of the euro I was reading this weekend about how industrial production is rising along with factory output in Germany And that is a Big Deal! Germany is the growth engine of the Eurozone, and with the weaker euro, manufacturing is taking off once again. The BIG automakers, BMW, Audi and Mercedes have all announced that they are hiring workers, and canceling holidays to catch up with demand.

If the German economy werent so strong right now, Chancellor Angela Merkel would not have been able to push through a four-year package of spending cuts that total 81.6 billion euros

Again I love this back and forth between the US who wants to spend their way out of the mess, and wants other countries to follow them, and the other countries that are in the opposite corner, wearing the blue trunks, and their pledge to cut spending and deficits.

Anyway The Chicken Littles who were screaming that the sky was falling and that the euro would collapse and that there would be a break up, have all gone away For now Im not saying the euro is out of the woods, folks But for now The cries have faded

Over in Japan there was an Upper House election called that has rocked the yen a bit I tell you this If I had a 1 oz. gold coin for every new Japanese official and election that Ive seen since 1992 (when I began trading foreign bonds), I would be a very rich man today!

Speaking of gold With the euro backing off some, gold is back above $1,200 Back and forth we go, but the thing to take from this back and forth is that $1,200 seems to be the new base Usually, what you have, in these assets like this, is a probe higher, then profit taking Then a back and forth as the new base forms And once everyone is strapped in, with their arms and legs inside the Gold Express at all times, the asset can then move higher and put the base in the rear view mirror.

And to all those naysayers and doomsday people who said that Chinas economy was going to collapse, I guess theyll have to go drape their black ribbons on some other economy Hint, wink, wink You dont have to go far Wink, wink

China reported record exports for June and their largest trade surplus in eight months! And its just like old times again in China

Especially after the US failed to name China a currency manipulator Chickens Bawk, Bawk I mean wasnt it Obama who pledge to press China hard to stop manipulating its currency during the campaign? And then there was US Treasury Secretary Geithner, who told lawmakers during his confirmation hearings that he thought China was guilty of manipulation

But for the third time since these two took office, they have failed to name China a currency manipulator Hmmm

Aussie Home Loan Data showed the first increase in last October, which is a good thing. However, the home financing is still down almost 12% year-to-date So, heres my take on this data October was about the time the RBA began their rate hike cycle, and it took six months of rate hikes to get in peoples minds that home loan rates were going to be higher, and they should go ahead and book their loan now before they go higher!

And in Canada The jobs data on Friday, has people talking rate hikes left and right for Canada Whooooa there, Im still on board for a July 20 rate hike, which will be next week, when Im in Canada Im not fully convinced theres enough breathing roo

Sell into Yen weakness

Sell USDYEN, CADYEN, AUDYEN, and CHFYEN

Cable Bouncing Within The Range

After this mornings failure to build on gains above 1.5230, cable looked ripe to wipe out stops below 1.5080So what happened? It bounced, and now trades at 1.5155. Such is a day in the life of the worlds worst currency.. I guess Cat & Pipster were right in calling the downside. Well done boys!

EUR/USD is firming in quiet afternoon trade, now at 1.2677 after finding central bank buyers in the 1.2650s.