How Gold Links Treasuries & the Dollar

HAMISH, here's the easier answer for cable: 1.4380-1.4400 trend line resistance remains a big barrier to overcome, while 1.4070 remains foundation. The rest is noise.

ROB, that's a very good question. By the way risk aversion has been taking place, USD and JPY are to be the winners in terms of a very dismal number. But JUST IN CASE, I would go with the BUY YEN trade against GBP, NZD and CAD if GDP comes in worse than 5.0% decline. And yes, considering CAD GDP will also be released at same time as US GDP (8.30 am EST), we could see RISING USDCAD back towards 1.2550. CAD GDP expected -0.5% m/m from -0.1%.

Ashraf

Hi Rob,

Thanks for your review on Amazon (I assume that was you). At the December meeting, the FOMC said it was evaluating the potential benefits of purchasing longer-term Treasury securities in addition to purchasing large quantities of agency debt and mortgage backed securities. I think the Fed is more likely to communicate its willingness to buy lt treasuries only as a defensive plan of action i.e. in the event of renewed deterioration in financial markets. The more likely course of action is for the Fed to shed fresh light on its intention to start the Term Asset-Backed Securities Loan Facility (TALF), which includes supporting the issuance of securities backed by various commercial loans (auto, student, credit card and small business loans). FX markets may curtail some of the dollars recent losses as a knee-jerk reaction to finding out that the Fed would not start purchasing long term treasuries (but still considering doing so). But the Feds measure to maintain interest rates exceptionally lowfor some time remains a fundamental reminder for the market to sell the US currency at each bout of improved risk appetite as zero interest rates serve as a reliable foundation for carry trades.