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Weekly Market Wrap: Gold Edging Closer To Its All-Time High In September 2001

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XAU & DXY

Gold has extended its real yield rally against the Buck beyond the psychological Usd 1900/oz level for a net gain of around Usd 100 this week and in tandem with other precious metals, but the Greenback has depreciated broadly on a combination of bearish factors and to the extent that it lost safe-haven value in the process.

The ongoing rise and spread of COVID-19 hitting new heights in some US states remains a persistent if not always primary concern, while the latest weekly jobless claims data undermined economic recovery prospects with a rise to interrupt the declining trend, but the major catalyst for further Dollar weakness came via a new spat between Washington and Beijing over potential IP theft.

In short, the US ordered the closure of China’s consulate in Houston and the latter duly responded in kind by shutting the former’s office in Chengdu, raising more doubt about diplomatic relations and commitments to the Phase 1 trade pact.

EURO & GBP

The Euro and Pound are both benefiting at the Greenback’s expense, as Eur/Usd extends towards 1.1640 having almost lost grip of 1.1400 at the other extreme and Cable approaches 1.2800 from the low 1.2500 area.


Next up for the single currency, 1.1650, though largely symbolical compared to 1.2813 for Sterling that is deemed to be a strong upside level and the June 10 high. Moreover, Eur/Gbp is holding nearer the top of a 0.9138-0.9002 band on what looks like the brink of a complete breakdown in Brexit trade talks after the latest round of intensive negotiations without resolution on key UK-EU divergences.


Conversely, EU leaders eventually got over differences on the Rescue Fund and Budget, albeit subject to EP approval, and this rather than encouraging Eurozone preliminary PM’s has underpinned the Euro.


On that note, UK flash PM’s were arguably even better, but came with caveats, and retail sales data beat consensus, but neither really boosted the Pound.

AUD , NZD & CAD

All ending the week somewhat flat and caught between contrasting impulses given the Usd’s ongoing slide and detachment from overall risk that is also negative.


Nevertheless, the Aussie remains close to 0.7100, Kiwi comfortably above 0.6000 and Loonie around 1.3400 following upbeat RBA minutes, back to back increases in retail sales, favourable cross flows and firmer than forecast CPI respectively.


On the flipside, Canadian retail sales missed consensus and Australia’s revised budget revealed a ballooning deficit as the state of Victoria battles to contain the virus outbreak and hotspots emerge in NSW.

JPY

Friday’s major darling and heading for at least a big figure rise against the Buck on the 2nd of 2 consecutive Japanese market holidays. This, after pretty rangebound trade from Monday through Wednesday when mood swings were more 2-way and indecisive, but also with local participation and containing flows from exporters and corporates.

CHF

Although weekly Swiss sight deposit balances continue to infer heavy official intervention, the Franc appreciated vs the Usd to around 0.9225 compared to 0.9410, while also catching up with the Euro to sit close to the 200 DMA (1.0729) and the lower end of 1.0794-13 confines.


Hence, it will be very interesting to see what Monday’s bank accounts reveal and whether the SNB is compelled to enhance actions with more words at some stage.

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