No one would expect that there would be such huge V-shape reverse on commodities yesterday. Gold rocketed 3.6% to $1212 per ounce on a one month high while it hit a day low at $1147 in the Asian session as Swiss gold vote was rejected. The maximum rally was $75 from the day low to high. The reason of rocketing gold price may be attributed to Japan’s credit rating cut by Moody’s. Investors are turning to the yellow metal for safe-haven needs as the risk of Yen assets increased. The buying triggered a stop loss of bears on several critical resistance levels. Now that the large bullish bar is on the daily chart, we should no longer keep the bearishness of precious metals for the rest of this year.
After the credit rating was cut by Moody’s to A1, Yen depreciated to a new low 119.14 Yen against Dollar. However, Dollar Yen did not stay at that level for long and a reverse happened shortly. It once broke the 118 level and reached the day low of 117.86, leading all majors to rally against the Dollar. The short term prospect of Yen is still unclear as the re-election is closing.
PMIs of major economies were released yesterday, but attracted little attention. Euro area manufacturing PMI dropped as German data fell into contraction area at 49.5. China’s PMI were also at 50. UK’s data was better than expected and US PMI was generally in line with the forecast.
Back to the stock market, Chinese market finally ended the 7-day surge. The Shanghai Composite was down 0.1% to 2680. ASX 200 slumped 1.98% to 5207. The Nikkei Stock Average was up 0.75%. In the European stock markets, the UK FTSE lost 1%., the German DAX was down 0.17% and the French CAC Index lost 0.29%. We finally see a fall in the US market. The S&P 500 lost 0.68% to 2053. The Dow closed flat at 17777, and the Nasdaq Composite Index plummeted 1.34% to 4727.
On the data front, Australia Building Approvals and Current Account will be released at 11:30 AEDST, last RBA rate decision of this year is today at 14:30 AEDST. UK will be released at 20:30 ASDST. And Fed chairwoman Yellen will speak at midnight.
Have a great trading day!
Anthony
NB: Please note all references to rates above are approximate
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