Intraday Market Thoughts

Fed's Jobs Shift Hits USD, Boosts Metals

by Adam Button
Sep 16, 2012 20:38

QE3 battered the US dollar last week as the Fed shifted towards reducing unemployment as its principal priority over containing any future inflation. On Friday, commodity currencies eased late in the day on signs of softness in US demand. The calendar is light to start Asia-Pacific trading. 4 of last weeks Pre-Fed Premium Insights hit all targets. Find out which of the 3 remain in progress and the technical and fundamental rationale laid out for them below.

The euro rose as high as 1.3169 on Friday but slipped back to a close at 1.3127 on late position squaring. It was the fifth consecutive week of euro gains and marked the first weekly close above the 200-week moving average in nearly a year.

The launch of QE3 makes trading somewhat more straightforward. Poor economic US data will now spark a classic risk aversion trade, hurting risk-sensitive currencies. An example was Friday, as a soft US retail sales report weighed on commodity currencies.

But BOTH GOLD & SILVER gold and silver have made major headway, with GOLD +13% and SILVER +25% YTD, showing signs of 2010 when the cheaper metal doubled over its yellow counterpart.

Better sentiment about China could help the Australian dollar as markets open for the week. The chief economist at Chinas statistical agency forecast GDP growth this year at 7.7-7.8%, higher than the recently-rumoured 7.5%. Chinese President-in-waiting, Xi Jinping also made a public appearance, putting to rest speculation about a dire illness.

GEOPOLITICAL TENSIONS are rising. Persistent rumours of an Israeli strike on Iran have been accompanied by a new buildup of Western naval strength in the Straight of Hormuz. Relations between China and Japan are simmering over disputed island territories. Anti-Japan protestors burned a Toyota dealership and Panasonic factory. Anti-US protests in the Middle East eased on the weekend after a series of mob assaults on embassies Friday.

In Europe, large anti-austerity protests erupted in Spain and Portugal.

The Asia-Pacific calendar doesnt contain any notable releases.

From our Pre-Fed Premium Insights, 1 EURUSD hit all targets and the other unfilled. 1 GBPUSD hot all targets, the other in progress. CADJPY hit all targets, 1 gold all done, the other in progress. Both USDJPY positions in progress. Neither US crude not AUDUSD long were filled. Click here to find out the extent to those trades currently in progress and the rational to placing them last week: Non Subscribers please click here:



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