Gold Price Climbs after GDP Report, Fed Meeting

Gold Price Climbs after GDP Report, Fed Meeting



GOLD PRICE NEWS – The gold price turned higher on Wednesday after a disappointing U.S. GDP report and maintained its gains following the latest Federal Reserve meeting.  The spot price of gold advanced to an intra-day high of $1,682.87 per ounce before settling up by $12.84, or 0.8%, at the $1,676.07 level.  Gold prices were also boosted by weakness in the U.S. Dollar Index (DXY), which fell by 0.4% to 79.258 against a basket of the world’s most-traded currencies.

Silver outperformed the price of gold, as it jumped by $0.68, or 2.2%, to $32.06 per ounce.  Gold and silver stocks initially rallied alongside precious metals, but later turned south in conjunction with the broader equity markets.  The Philadelphia Gold & Silver Index (XAU) closed lower by 0.5% at 150.95 while the S&P 500 Index slid by 0.4% to 1,501.96.

Among widely-traded gold stocks, notable decliners included XAU components Barrick Gold (ABX), Goldcorp (GG), and IAMGOLD (IAG).  Shares of ABX dropped by 1.3% to $32.39, GG by 0.4% to $35.94, and IAG by 2.6% to $8.27.

The price of gold held steady in early morning trading, but surged higher after the latest U.S. GDP report showed that the nation’s economy contracted by 0.1% in the fourth quarter of 2012.  The negative reading was the first of its kind since the third quarter of 2009, and well below the 1.1% consensus estimate among economists.

Later on in the day, Federal Reserve Chairman Ben Bernanke and his peers on the Federal Open Market Committee (FOMC) decided to stand pat with their set of accommodative monetary policies.  Specifically, the Fed chose to maintain its quantitative easing program at $85 billion per month and reiterated its 6.5% unemployment rate threshold with respect to eventually raising the Federal Funds rate.

Commenting on the outlook for the price of gold in light of today’s events, analysts at Standard Bank wrote in a note to clients that “We feel it is important to note that the Fed’s balance sheet is only one piece in a puzzle of growing liquidity and negative real interest rates…Strategically we remain bullish on gold over the long term. The cost of holding gold relative to cash remains negligible.”

Gold Prices Await Busy Week of U.S. Economic Data

Gold Prices Await Busy Week of U.S. Economic Data



GOLD PRICE NEWS – The gold price inched lower on Monday amid further weakness in precious metals and a modest advance in the U.S. dollar.  The spot price of gold dipped $4.46, or 0.3%, to $1,654.94 per ounce while the U.S. Dollar Index rose by 0.1% to 79.813.  The SPDR Gold Trust (GLD), the world’s largest gold price proxy and gold ETF, fell $0.46, or 0.3%, to $160.19 per share.

Silver fared worse than the price of gold, as it slipped by $0.43, or 1.4%, to $30.81 per ounce.  Among other precious metals, platinum futures dropped by 1.5% to $1,670.01 per ounce, while palladium bucked the trend with a 0.3% rise to $743.50 per ounce.  As for cyclical commodities, copper futures advanced by 0.2% to $3.66 per pound while crude oil added 0.3% to $96.18 per barrel.

Gold stocks came under selling pressure alongside the gold price, as the Market Vectors Gold Miners ETF (GDX) retreated by $0.32, or 0.8%, to $41.60 per share.  The sector also lagged the broader equity markets, as the S&P 500 Index fell by just 0.1% to 1,501.19.

Notable gold stocks in the red included GDX components Harmony Gold (HMY), Kinross Gold (KGC), and Newmont Mining (NEM).  Shares of HMY slid by 2.7% to $6.79, KGC by 2.6% to $8.31, and NEM by 1.4% to $42.67.

Looking to the week ahead, the U.S. economic calendar is particularly full of items likely to impact the price of gold and the broader financial markets.  This morning, Durable Goods for December increased by 4.6%, well above the 2.5% consensus estimate among economists.  However, Pending Home Sales for last month declined by 4.3%, missing the unchanged mark economists were expecting.

Tomorrow’s schedule includes the Case-Shiller home price index, along with a report on Consumer Confidence.  On Wednesday, data on fourth quarter GDP and the ADP Employment report will be released, as well as the always-critical Federal Reserve’s Federal Open Market Committee (FOMC) meeting and monetary policy decision.  Thursday’s docket includes reports on Weekly Jobless Claims and the Chicago Purchasing Managers’ Index, and the week then concludes on Friday with the Nonfarm Payrolls Report, Unemployment Rate, University of Michigan Consumer Sentiment Index, and the ISM Index.

Commenting on the outlook for gold prices, Frederic Panizzutti stated that “The market is on hold ahead of the U.S. Federal Reserve’s meeting, and expects comments on further quantitative easing measures…Today’s trade should be pretty quiet, with gold players watching euro/dollar movements, looking for any indication of what is going to happen in the next few days.”

Gold Price, Silver Firm after Mixed U.S. Jobs Report

Gold Price, Silver Firm after Mixed U.S. Jobs Report



GOLD PRICE NEWS – The gold price swung between gains and losses on Friday as financial markets weighed the impact of a mixed U.S. employment report and other positive economic data.  The spot price of gold traded in a range between $1,662 and $1,683 per ounce following the January non-farm payrolls report.  This afternoon, the gold price traded higher by $4.15, or 0.3%, at $1,669.28 per ounce.

Gold prices initially reacted in a positive manner to the latest jobs data, jumping from near $1,664 to their intra-day high of $1,683 per ounce.  However, the yellow metal later relinquished the majority of its gains as the U.S. dollar rallied following better than expected reports on the ISM Manufacturing Index and University of Michigan Consumer Sentiment Index..

As for the employment data, non-farm payrolls showed a gain last month of 157,000 – above the 165,000 consensus estimate among economists.  The unemployment rate also ticked up to 7.9%, surpassing the 7.8% level at which economists were expecting it to remain.

While the headline figures were worse than expectations, revisions to the two prior months’ of data was quite encouraging.  Employment gains in December of 2012 were revised upwards from 155,000 to 196,000 an in November of last year from 161,000 to 247,000.

Silver reacted more positively to the jobs report than did the price of gold, as it jumped by $0.47, or 1.5%, to $31.95 per ounce in afternoon trading.  Gold and silver stocks turned higher as well, buoyed by a combination of strength in precious metals and the broader equity markets.

The Philadelphia Gold & Silver Index (XAU) added 1.4% to 151.74 while the S&P 500 Index rose by 1.1% to another new four-year high of 1,514.41.  In addition, the Dow Jones Industrial Average (DJIA) eclipsed the 14,000 level for the first time since October of 2007 and came within 1.3% of its all-time high of 14,198.10.

Among widely-traded gold and silver stocks, notable advancers included XAU components Anglogold Ashanti (AU), Newmont Mining (NEM), and Silver Wheaton (SLW).  Shares of AU climbed by 4.3% to $29.23, NEM by 1.6% to $43.64, and SLW by 1.9% to $35.49.

Gold Prices Hover at $1,600

Gold Prices Hover at $1,600



GOLD PRICE NEWS – The gold price traded near unchanged Tuesday morning at $1,609 per ounce.  Gold prices have moved lower in recent weeks, punctuated by last week’s 3.7% decline.  The sell-off has been driven by heavy selling in the futures markets on the back of the perception that the U.S. economy is healing.  Investors are beginning to price in the end of the Federal Reserve’s quantitative easing program despite the fact that growth remains subdued.  Also helping to fuel selling and drive the price of gold lower is the news that high-profile institutional investors George Soros and Julian Robertson reduced their stake in SPDR Gold Trust (GLD) in the fourth quarter of 2012.

Silver has followed the price of gold lower, sliding 6.1% in the month of February alone.  Despite the recent weakness, there are tentative signs that physical demand is picking up near current levels.  According to TD Securities, “China has returned from its Lunar New Year celebrations with appetite for the precious metals with volumes on the Shanghai Gold Exchange touching new record levels.”  Despite this fact, TD did highlight the technical damage that is plaguing the price of gold, noting, “Gold’s 50-day moving average looks set to cross below the 200 day moving average, which has potential to precipitate a $150 move lower.  This occurred the last time the two moving averages crossed to the downside, in April of last year.  For now, gold support remains at $1600 and silver around $29.50.”

Investors and traders will now focus on Wednesday’s release of minutes from the Federal Reserve’s January 29-30 meeting.  Specifically, they will be looking for clues that the current $85 billion per month quantitative easing program will be terminated.  Any hint that the Fed’s ultra-easy monetary policy is set to end would likely lead to further selling in gold.  However, with much bad news prices into the gold market, the perception that the Fed will continue to keep the monetary spigots open could lead to selling in the U.S. dollar and a rebound in the price of gold.  Volume has been heavy in both gold and gold mining stocks with futures trading volume almost triple the average in the past one hundred days, adjusted for seasonality.

Gold mining stocks have been under heavy selling pressure in 2013.  Friday’s 3.5% drop in the Market Vectors Gold Miners ETF (GDX) comes on the back of weakness that goes all the back to 2011.  JP Morgan noted, “We continue to feel gold equities are in transition from pure growth and are seeking to be quality yield vehicles. Friday’s gold equity weakness probably represented concern that this transition will take a while. Gold equities were the favored way to participate in gold’s bull market that saw the metal outperform the S&P 500 and Dow by ~453% and ~435% respectively since 2000.”  The investment bank’s metals and mining research team sees this outperformance continuing: “Given the policies being followed by central banks to stimulate economic growth, it’s difficult to believe that gold should stop outperforming.”

The earnings calendar is heavy for the gold producers this week with AngloGold Ashanti (AU), Yamana Gold (AUY), and IAMGOLD (IAG) all reporting on Wednesday and industry bellwether Newmont Mining (NEM) set to release on Thursday.

Gold Price Climbs, Miners Follow

Gold Price Climbs, Miners Follow

GOLD PRICE NEWS – The gold price climbed $6.50 to $1,587 per ounce Monday morning, advancing on the back of a flurry of supportive macro-economic news.  Stifel Nicholas highlighted “headlines that Russian and Kazakhstan gold purchases are up, UK debt has been downgraded, Japan goes ahead with “easing” nominee” and “the US Adjusted Monetary base is up…again.”  Silver followed the price of gold higher, rising roughly 1% to $28.95 per ounce.  The U.S. dollar traded weaker against the euro, reversing some of the strong gains witnessed in 2013.

Gold mining stocks rebounded Monday after another steep drop last week, which saw the gold stocks sink 4.9%, as measured by the Market Vectors Gold Miners ETF (GDX) and 5.8%, as measured by the Market Vectors Junior Gold Miners ETF (GDXJ).  Weakness in the gold price, combined with disappointing operating performance by the gold producers, has weighed heavily on the sector’s stock prices in recent months.  The GDX and GDXJ rose 1.7% and 2.4%, respectively, in early trading Monday morning.

Hecla Mining (HL), an industry stalwart, released their fourth quarter earnings this morning.  JP Morgan noted, “Hecla delivered in-line Q4 earnings with higher-than-expected production, albeit at lower realized silver price and higher cash costs due to lower byproduct credits. It announced the reopening of its Lucky Friday mine last week, and this is expected to deliver over 2moz of silver in 2013, although costs are expected to be high as it ramps up. Its 2013 production outlook is in line with our expectations, and the company is expecting to spend 28% more towards capex in 2013. The company also reported a modest 2% increase in its proven and probable reserves and a 33% increase in its mineralized and inferred gold resources.”

Argonaut Gold (AR) announced 2013 guidance this morning of 120,000 – 140,000 ounces at cash costs of between $630 and $660 per ounce.  Scotia noted these numbers were close its analyst’s expectations of “132.3 koz at $613/oz.”  Scotia’s metals and mining team also commentated that “the company now guides to 2013 capex of $57M-$75M vs. expectations of $49M.”

The Global Precious Metals at TD Securities highlighted the surge in short positions on gold, which was revealed in the CFTC’s Commitment of Traders report. TD noted, “Gold (Futures and Options) speculative shorts jumped by 34% while silver shorts more than doubled to add 74% to the speculative position.  The gold net speculative long (futures) position is now at its lowest level since before the Global Financial crisis – June 2007 while speculative shorts (futures and options) are at their highest since April 1999 when the gold price was just $286.00 / Ounce!”

Martin Murenbeeld, Chief Economist at DundeeWealth Economics, noted that gold’s 50-day moving average broke down through its 200-day moving average – the so-called “death cross” – for the sixth time since June 2001.  Murenbeeld urged his clients to focus on Fed Chairman Bernanke’s Humphrey Hawkins Testimony (February 26-27) for clues as to the futures direction of monetary policy. Dundee’s chief economist expects Bernanke to “confirm that QE4 will not be altered much before yearend, and while he is unlikely to say why exactly it will almost certainly be because he fears that US economic data (now that the payroll taxes have been hiked and there is sequestering on March 1) will not be very positive for the first half of 2013.”

Forex: US Dollar Consolidates After GDP, Fed – NFPs Tomorrow

Forex: US Dollar Consolidates After GDP, Fed – NFPs Tomorrow

The majors have consolidated overnight as global investors continue to weigh three very significant US-driven event risks between yesterday and tomorrow: the 4Q’12 GDP reading; the FOMC’s cryptic policy statement; and the January Nonfarm Payrolls release. Accordingly, with equity markets in Europe sliding and US futures pointing lower, the Japanese Yen and the US Dollar have emerged as two top performers.

The GDP figure yesterday was not nearly as bad as the headline of -0.1% (annualized) appeared. Defense spending, the most bloated government subsidized industry in the US, dropped by -22% in the 4Q’12, while the aggregate combination of the trade deficit and weak inventory figures (as a result of Hurricane Sandy) weighed on the headline figure by -2.7%. In other words, consumption and investments – together accounting for approximately 80% of the headline figure, were significantly stronger at +2.6%. The underlying components were promising as well: incomes have risen as inflation has remained tame (thus implying increased purchasing power for US consumers); and the savings rate increased to +4.7% from +3.6%. With the payroll tax hike at the start of the year, consumption figures could be weaker – but the economy is indeed picking back up.

With respect to the Fed and NFPs, they’re nearly one in the same – after all, the Fed has said it will stimulate the economy until the Unemployment Rate falls to 6.5%, on a sustainable basis (accompanied by increased participation rates). But with the labor market improving – the six month average of jobs gain is +159.67K, the highest rate since May, at +175.83K – and the US consumer strengthening, there has been little reason for the Fed to alter its path. In fact, it deemed the slowdown in growth the past few months as “transitory” – they too are anticipating a stronger economy. A strong NFP figure tomorrow could stoke further gains in the US Dollar as Treasury yields rise; a weak figure at this point isn’t priced it.

Taking a look at European credit, peripheral yields have increased slightly, perhaps hurting the Euro today. The Italian 2-year note yield has decreased to 1.627% (-2.0-bps) while the Spanish 2-year note yield has increased to 2.565% (+5.8-bps). Similarly, the Italian 10-year note yield has increased to 4.324% (+1.7-bps) while the Spanish 10-year note yield has increased to 5.227% (+3.3-bps); higher yields imply yields prices.

RELATIVE PERFORMANCE (versus USD): 11:50 GMT

NZD: +0.17%

JPY: +0.05%

AUD: -0.02%

CHF:-0.09%

GBP:-0.11%

CAD:-0.12%

EUR:-0.14%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.06% (-0.09% past 5-days)

ECONOMIC CALENDAR

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

TECHNICAL ANALYSIS OUTLOOK

EURUSD: No change: “The Bull Flag breakout has begun after cracking 1.3485, “with a final measured move pointing towards 1.3635.” Support comes in at 1.3470/3500, 1.3380/85 (mid-March swing high, Bull Flag resistance), and 1.3280/3310. Resistance is 1.3545/50 (price is here now), and 1.3635.”

USDJPY: No change: “The USDJPY rally is back on the up and up, with price breaking above 91.00 (perhaps a Bull Flag on the hourly chart had developed, hindsight being 20/20). I maintain: “The focus remains on buying dips, and generally speaking, selling Yen strength (EURJPY, USDJPY preferred for gains; CADJPY, GBPJPY preferred for loses).” Resistance comes in at 92.00/05 (weekly R1), 93.15/20 (weekly R2), and 93.45/50 (monthly R3). Support comes in at 91.00 and 90.00/10 (weekly pivot, monthly R2).”

GBPUSD: No change: “The pair has rallied off of the 61.8% Fibonacci retracement from the June low to January high, but I maintain: as long as the daily RSI downtrend holds, it is possible for a move lower.” This may break today, signaling an end to the bearish bias for the near-term, and wouldn’t rule out a rally back towards the 50-EMA and significant psychological resistance at 1.5990/6000. Support is 1.5700 and 1.5675/80.”

AUDUSD:No change: “The pair continues to range although it has showed signs of cracking, with both the ascending trendline off of the June low and the October low having been breached, as well as the ascending TL off of the June low and the December low. Accordingly, a weekly close below 1.0460 could signal a deeper retracement towards 1.0350/400, before a greater breakdown towards parity. Support comes in at 1.03800/400 (weekly low), 1.0340/50 (December low), and 1.0140/50 (October low). Resistance is 1.0460/70 (ascending TL off of the June and December lows, 50-EMA) and 1.0500/15.” Note: the Morning Star candlestick cluster isn’t seeing any follow through today, as the daily RSI downtrend has persisted.

S&P 500: Tuesday I said: “as indicated on the charts the past weeks, noting “nearing the top 1505/1512” – the top was 1504.6. If this breaks, 1520 is in sight.” Indeed, the irrational exuberance has continued, bringing topline Bearish Rising Wedge resistance in focus at 1512/15; the December 2007 highs of 1520/24 could be reached on an overshoot. Bottom line: I’m expecting a crash in the S&P 500 unless volumes accelerate rapidly, given the disconnect from reality.

GOLD: The past few weeks I’ve maintained: “When considering the move off of the September highs, a measured A-B=C-D (as expressed on the Daily) suggests that a bottom could be in place at [1630/40].” The rebound has ensued, with the alternative safe haven rallying up to 1690 today. A daily close above 1700 points towards 1722/25 and 1755. Support is 1663 (200-EMA) and 1640/45.

— Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Learn forex trading with a free practice account and trading charts from FXCM.

Trading Currencies Against the Crowd – Real Forex Strategies

Trading Currencies Against the Crowd – Real Forex Strategies

Our proprietary forex sentiment and positioning data shows that the majority of traders often buy and sell at all of the wrong times. Here are some trading strategies we use to trade against the forex trading crowd. 

In our Traits of Successful Traders series, we studied the results of 12 million real forex trades placed by FXCM clients and the findings were significant. Our data showed that retail traders were profitable on 59 percent of all EURUSD trades placed, but further analysis showed an important statistic—most ultimately lost money trading the Euro/US Dollar.

Profitable Trades by Currency Pair

Source: The data is derived from Forex Capital Markets LLC accounts–excluding managed and Eligible Contract Participant accounts–from 10/01/2009 to 9/30/2010. All data is rounded to the nearest whole number.

The winning percentage only tells part of the story. Traders lost money trading the Euro/US Dollar because their losses were nearly twice as large as their winners.

Average Trader Profit or Loss in Pips

Source: Ibid

We dedicated a Forex Education piece to why many traders lose money, and the takeaways are important. Just as significant, we want to know how we can use this information to our advantage in real trading. This is the major motivation behind our use of the FXCM Speculative Sentiment Index (SSI): our measure of retail trader FX positioning.

View a video on the Speculative Sentiment Index from the FXCM Trading Expo

The SSI is simple: we look at how many traders hold open long positions versus those short and is expressed in a ratio. If the ratio is positive, it shows how many open orders are long for each one short. If it is negative, it shows the number of orders short for every one that is long.

For example: A EURUSD SSI ratio of 3.0 tells us that there are 3.0 open orders long for every 1 that is short. An AUDUSD SSI ratio of -2.0 tells us that there are 2.0 open orders short for every 1 long.

How Can We Trade Using Retail Forex Sentiment Data?

In order to understand our SSI-based trading strategies, it is important to recognize a key characteristic of crowd behavior: most will buy when a currency is falling and sell when it is rallying. As our data on real trade information suggests, the crowd is more often profitable as most trades are closed out at a gain. Yet when these trades don’t work, most traders expose themselves to outsized losses.

What does this mean? We most often go against what most traders are doing. If everyone is buying, we like to sell. If most are going short, we like to buy.

Forex Trading Crowds Buy Weakness, Sell Strength

Source: FXCM Speculative Sentiment Index

Our knowledge of crowd behavior and trade results underlines that this is a low-probability strategy: we will probably be wrong more often than right. But appropriate reward to risk on trades likewise suggests we may ultimately be successful.

There are many different ways to do that, and the below strategies use the Speculative Sentiment Index as the ‘heart’ of their trading logic.

Sentiment-Based Forex Trading Strategies Available on Tradestation Desktop:

Automate the Breakout2 trading system via the FXCM Apps store

Automate the Momentum2 trading system via the FXCM Apps Store

Automate the Momentum1 trading system via the FXCM Apps Store

Automate the Range2 trading system via the FXCM Apps Store

— Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link.

Contact David via

Twitter at http://www.twitter.com/DRodriguezFXFacebook at http://www.Facebook.com/DRodriguezFX

New to forex? Sign up for our DailyFX Forex Education Series

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Learn forex trading with a free practice account and trading charts from FXCM.

Forex: Commentary from Japanese Officials Adds Fuel to Technical Turn in Yen

Forex: Commentary from Japanese Officials Adds Fuel to Technical Turn in Yen

With the Euro pulling back significantly yesterday, and the commodity currencies in general signaling broader risk-aversion for the past few weeks, a bit of interesting commentary from a key Japanese official has provoked a sharp pullback in the Yen-crosses (AUDJPY, EURJPY, USDJPY, etc. lower). Japanese Finance Minister Taro Aso said in parliament today that “the yen’s sudden move from ¥78 or ¥79 to ¥90 [versus the US Dollar) was not something we anticipated.”

As Senior Technical Strategist Jamie Saettele made note of in the DailyFX Real Time News feed this morning, a number of ‘bells’ are going off suggesting that we may have arrived at a turning point in the Yen-crosses. Specifically, our attention is on EURJPY; earlier this week, taking a fundamental perspective, I suggested that the Euro may have topped. If the technical conditions are in place to see the Yen bottom and the Euro top, the fundamentals are certainly there as well. According to the CFTC’s COT report, net non-commercial futures positioning remains near its shortest level in the Yen since July 2007. Meanwhile, Euro long positioning has surged. In Japan, Bank of Japan Governor Masaaki Shirakawa announced that he would step down on March 19 earlier this week, but this does not present a material change to the view that further dovish policies will be in place until the new BoJ Governor takes the reins.

Europe is a trickier situation, but one that is starting to look rather fragile. Political concerns in both Italy and Spain are heating up, with the former on the verge of tight elections, while the latter is seeing corruption charges and general disintegrating sentiment towards the government build. On the monetary front, with European Central Bank President Mario Draghi emphatically underscoring the softening inflation and growth outlooks, rate expectations have turned south, sending the EURJPY has towards ¥123.50.

Taking a look at European credit, peripheral yields have eased, but the hangover of the ECB press conference yesterday has held back the Euro from rallying. The Italian 2-year note yield has decreased to 1.594% (-6.5-bps) while the Spanish 2-year note yield has decreased to 2.671% (-8.1-bps). Similarly, the Italian 10-year note yield has decreased to 4.519% (-5.6-bps) while the Spanish 10-year note yield has decreased to 5.294% (-9.4-bps); lower yields imply higher prices.

RELATIVE PERFORMANCE (versus USD): 11:30 GMT

JPY: +1.15%

AUD: +0.53%

NZD: +0.50%

GBP:+0.20%

CHF:+0.15%

EUR:+0.06%

CAD:+0.02%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.48% (+0.53 % past 5-days)

ECONOMIC CALENDAR

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

TECHNICAL ANALYSIS OUTLOOK

EURUSD: No change: “Consolidation occurring after overshoot towards 1.3700; with the daily RSI uptrend breaking, a pullback towards 1.3500 should not be ruled out. I maintain: with the daily RSI well into overbought territory, a pullback would be deemed healthy. Dips into 1.3500 are deemed constructive. Support is 1.3615/20 (weekly R2), 1.3540 (weekly R1), and 1.3500. Resistance is 1.3635/60 and 1.3755/85 (weekly R3, monthly R1).”

USDJPY: No change: “Further bullish price action as US Treasury yields strengthen and speculation over BoJ policy arises again. Resistance comes in at 92.00/05 (breaking now) (weekly R1), 93.15/20 (weekly R2), and 93.45/50 (monthly R3). Support comes in at 91.00 and 90.00/10 (weekly pivot, monthly R2).”

GBPUSD: The pair is holding below the 61.8% Fibonacci retracement from the June low to January high, vindicating the “cover on dips, sell rallies” perspective. I continue to look to sell rallies in the pair as significant RSI divergence exists. A hold below 1.5675 eyes a move towards 1.5500, and ultimately, 1.5265/70, the June low. Resistance comes in at 1.5825 and 1.5885/90. Support is 1.5675 and 1.5580 (monthly S1).

AUDUSD:A break below 1.0360 has given way to a move into the November swing low and 200-DMA at 1.0285/310, which could prove to be an area to look for a bounce. However, the daily RSI support dating back to June 2012 is breaking, suggesting that further downside should be sought. Resistance comes in at 1.0360 and 1.0425. Support is 1.0290 and 1.0150.

S&P 500: Tuesday I said: “as indicated on the charts the past weeks, noting “nearing the top 1505/1512” – the top was 1504.6. If this breaks, 1520 is in sight.” Indeed, the irrational exuberance has continued, bringing topline Bearish Rising Wedge resistance in focus at 1512/15; the December 2007 highs of 1520/24 could be reached on an overshoot. Bottom line: I’m expecting a crash in the S&P 500 unless volumes accelerate rapidly, given the disconnect from reality.

GOLD: The past few weeks I’ve maintained: "When considering the move off of the September highs, a measured A-B=C-D (as expressed on the Daily) suggests that a bottom could be in place at [1630/40].” The rebound has ensued, with the alternative safe haven rallying up to 1690 today. A daily close above 1700 points towards 1722/25 and 1755. Support is 1663 (200-EMA) and 1640/45.

— Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Learn forex trading with a free practice account and trading charts from FXCM

Euro Plummets as Growth Across Continent Contracts to Crisis Levels

Euro Plummets as Growth Across Continent Contracts to Crisis Levels

Yesterday, it was the British Pound’s turn to take a nose dive, falling apart after the dovish Bank of England Quarterly Inflation Report. Today, feeling left out in the race to the bottom, the Euro decided to join the ‘party,’ sliding by nearly a full percentage point against the US Dollar and to under 1.3350 – well-off its February 8 high of 1.3710 – as a bevy of important Euro-zone growth data disappointed across the board.
Not one single aspect of any 4Q’12 GDP data this morning – not on a quarterly or yearly basis, not from France, Italy, Germany, or the broader Euro-zone itself – beat consensus expectations provided by Bloomberg News. And yet what do European officials have to say? “We are aware the economic activity remains weak,” but, the data “are broadly in line with our expectations,” said Simon O’Connor, a spokesman for the European Union Economic and Monetary Commissioner Olli Rehn. Maybe this is the confirmation that the EUR/USD top is in place, something I conjectured on February 4.
This political complacency towards the weak growth situation across the continent is troublesome, because it not only confirms that the attitude of ‘just doing enough to satiate markets’ is persisting, but it means that the impetus to save the Euro-zone remains in the European Central Bank’s hands. While this is a burden that they undertook by promising to do “whatever it takes” to save the Euro, it now means that calls for an interest rate cut are likely to increase in the coming week. Until there is further policy clarification from President Mario Draghi, there will be an inherent underlying dovish push against the Euro in this regard. This should at least counterbalance any upside afforded by the LTRO repayments coming in. Focus is now on the Italian elections on February 24 and 25, which offers further downside in the Euro should Silvio Berlusconi win (polls currently have him trailing by -3.7%, within the +/-4% error margin).
Taking a look at European credit, peripheral yields have compressed despite the weak data, though the Euro has seemingly disconnected. The Italian 2-year note yield has fallen to 1.543% (-2.3-bps) while the Spanish 2-year note yield has decreased to 2.471% (-1.3-bps). Likewise, the Italian 10-year note yield has decreased to 4.383% (-0.4-bps) while the Spanish 10-year note yield has increased to 5.186% (+0.6-bps); lower yields imply higher prices.
RELATIVE PERFORMANCE (versus USD): 11:55 GMT
NZD: +0.27%
JPY: +0.16%
CAD: -0.03%
GBP:-0.17%
AUD:-0.31%
CHF:-0.62%
EUR:-0.91%
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.17% (+0.28 % past 5-days)
ECONOMIC CALENDAR

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.
TECHNICAL ANALYSIS OUTLOOK

EURUSD: Maintaining the same bias as the move to 1.3280/300 has yet to be completed: “Price has steadied below 1.3400, entering the Bull Flag range set in mid-January, from 1.3280 to 1.3390. On lower-term timeframes, a Bear Flag may have formed, with the measured move pointing to 1.3280/300. A break lower can’t be ruled out, but as long as the ascending trendline off of the mid-December and early-January lows holds at 1.3215/35, any setbacks are seen as near-term corrections.”

USDJPY: No change: “Further bullish price action as US Treasury yields strengthen and speculation over BoJ policy arises again.” Resistance comes in at 93.40/45 (monthly R1), 93.85 (weekly R1) and 94.00/10. Support comes in at 92.90/95 (weekly pivot), and 91.75/95 (weekly S1).

GBPUSD: The pair is reaching overextended levels to the downside on the 4H timeframe, as the GBPUSD slid to under 1.5500 today for the first time since August. With the pair now having fallen by over -800-pips since the first trading day of the year, it could be time to take profit.A rally back into 1.5750/800 shouldn’t be ruled out before a move towards 1.5265/70, the June low. Resistance comes in at 1.5570/80 (monthly S1) and 1.5675. Support is 1.5480/500 and 1.5380.

AUDUSD:Tuesday I said: “The bounce from the 1.0265/90 area may have completed, with the rally halted at the 200-DMA at 1.0305/10. The pair is sitting at the 100% extension at 1.0265 now, and a break implies a deeper setback towards 1.0135/75, early-September and –October swing lows, as well as the 161.8% extension.” Although there was an overshoot into 1.0360, former support, failure has occurred, signaling further downside is possible. Price has struggled further to overcome this level. I’m still looking for a move into 1.0135/75.

S&P 500: Tuesday I said: “as indicated on the charts the past weeks, noting “nearing the top 1505/1512” – the top was 1504.6. If this breaks, 1520 is in sight.” Indeed, the irrational exuberance has continued, bringing topline Bearish Rising Wedge resistance in focus at 1520; the December 2007 highs of 1520/24 could be reached on an overshoot. The 100% Fibonacci extension on the fiscal cliff rally and flag comes in at 1530. Bottom line: I’m expecting a significant setback (-10%) in the S&P 500 unless volumes accelerate rapidly, given the disconnect from reality.

GOLD: The past few weeks I’ve maintained: “When considering the move off of the September highs, a measured A-B=C-D (as expressed on the Daily) suggests that a bottom could be in place at [1630/40].” A daily close above 1700 points towards 1722/25 and 1755. Support is 1640/45 and 1625/35.
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
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Forex: USD Steady Even as 4Q GDP Contracts, FOMC Meeting in Focus

Forex: USD Steady Even as 4Q GDP Contracts, FOMC Meeting in Focus

 

U.S. Dollar: 4Q GDP Contracts, Private Consumption Remains Resilient

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) pared the advance to 10,174 as the advanced 4Q GDP report showed the growth rate contracting 0.1% versus forecast for a 1.1% rise, but we’re seeing a fairly muted reaction to the development as market participants turn their attention to the Federal Open Market Committee (FOMC) interest rate decision scheduled for 19:15 GMT.

Although the headline GDP reading casts a dour outlook for the world’s largest economy, a deeper look at the report showed personal consumption increased 2.2% amid projections for a 2.1% print, while disposable income was the largest since 2Q 2008 even as the savings rate increased to 4.7% from 3.6% during the three-months through September.

As the data raise the outlook for private sector consumption – one of the leading drivers of growth – we should see the economic recovery gradually gather pace in 2013, and we may see the FOMC interest rate decision have a larger impact on the major currencies as a growing number of central bank officials take note of the more broad-based recovery.

Euro: ECB Three-Month Lending Declines, Credit Conditions Tightened in 4Q

The Euro rallied to a fresh yearly high of 1.3561 as a report by the European Central Bank (ECB) showed commercial banks took up EUR 3.7B in three-month loans, which compares to the EUR 6.2B offered at the last refinancing operation, while Governing Council member Ewald Nowotny argued that the single currency ‘is still moving within the usual, the long-term band’ as European policy makers increase their effort to address the risks surrounding the region.

However, the ECB saw tightening credit conditions in the four quarter amid a ‘pronounced net decline’ in demands, while European Union President Herman Van Rompuy warned that ‘there is still a long, long way to go’ amid record-high unemployment along with the persistent slack in the real economy. As the euro-area struggles to return to growth, we should see the central bank continue to embark on its easing cycle in 2013, and we may see the Governing Council target the benchmark interest rate as the economic downturn threatens price stability.

As European commercial banks prepare to repay the borrowed funds from the Long-Term Refinancing Operation, positive headlines coming out of the region may prop up the single currency over the near-term, but the Euro remains poised to face additional headwinds throughout 2013 as the debt crisis continues to drag on the real economy.

As the relative strength index on the EURUSD pushes into overbought territory, we should see a near-term correction once the oscillator falls back below 70, and we may see the single currency struggle to hold its ground ahead of the next ECB interest rate decision on February 7 as the governments operating under the monetary union continue to call upon the central bank to encourage a sustainable recovery.

British Pound: U.K. Mortgage Applications, Consumer Credit Tops Forecast

The British Pound extended the advance from earlier this week and rallied to an overnight high of 1.5783 amid the slew of positive developments coming out of the U.K.

Mortgage Approvals increased an annualized 55.8K in December amid forecasts for a 54.5K print, while Net Consumer Credit expanded another 0.6B during the same period to mark the largest advance since December 2010.

As the Funding for Lending scheme continues to feed through the real economy, the non-standard measure should help to produce a more meaningful recovery in 2013, and we should see the Bank of England (BoE) move away from its easing cycle as growth and inflation picks up.

Indeed, the rebound off of the 38.2% Fibonacci retracement from the 2009 low to high around 1.5680 should gather pace as the relative strength index bounces back from oversold territory, but risk trends may drive the sterling in the days ahead as the economic docket for the U.K. remains fairly light for the remainder of the week. Nevertheless, as the GBPUSD preserves the multi-year upward trend, we anticipate a more meaningful move to the upside, and the sterling may continue to gain ground ahead of the next BoE meeting on February 7 as market participants scale back bets for more quantitative easing.

Apple cuts prices on MacBooks

Apple cuts prices on MacBooks

 

(CNN) -- Apple on Wednesday said it would cut the price of its 13-inch MacBook Pro with Retina Display while simultaneously updating it with faster processors.

The 15-inch model is also getting improved specs, although its price remains the same.

The 13-inch Retina MacBook Pro now starts at $1,499 for 128GB of solid-state flash storage, and $1,699 for 256GB of storage. The higher-end model also includes a more robust 2.6GHz Intel Core i5 processor.

The 15-inch model still starts at $2,199, but now that gets you a quad-core 2.4GHz Core i7 processor. If you want the best of the best, you can now get a 15-inch Retina MacBook Pro with a quad-core 2.7GHz Core i7 processor with 16GB of RAM for $2,799.

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In addition to the adjustments to the Retina MacBook Pro line, Apple also took the price of its 13-inch MacBook Air down a notch: The 13-inch model with 256GB of flash storage now costs $1,399.

The new prices and specs are effective today, both online and in Apple Stores.

The price cuts and speed bumps of the 13-inch Retina MacBook Pro make a lot of sense in the light of reviews, which praised the laptop's high-resolution 2,560 x 1,600 display, but lamented that it didn't have the same kind of power to drive those pixels as its larger 15-inch sibling.

"What's inescapable is that this first version of the 13-inch Retina MacBook Pro isn't a winner when it comes to price and performance," wrote Mashable senior tech analyst Christina Warren in her review. "It's just a bit too expensive."

Will the price cuts and improved specs make you more inclined to buy a MacBook in the next few weeks? Let us know in the comments.