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Gold Rush Settles Down & GBP/JPY

Chart of the Day: GBP/JPY (4hr candlesticks)
Source: GKFX / MT4 (July 9, 2020)

•    Gold rush settles down, spot price falls under $1800 per oz
•    US dollar makes late comeback
•    Wall Street lower amid Supreme Court ruling on Trump finances
•    DAY AHEAD: US PPI, Canadian unemployment
•    CHART: GBP/JPY is at a confluence of technical resistance

MARKETS

Moving into Friday the tone in markets is more ‘risk off’. The US dollar made a late comeback causing gold and major FX pairs to turn lower. The dollar’s haven appeal and a technical rebound from a 4-week low spurred the move higher.

Markets in China continue to lead the gains across Asia while European shares dropped.

Political pressure on US President Trump saw investors shift out of stock markets and oil and into havens like the dollar and the yen. Gold ran into a wall of sellers after touching 9-year highs and dipped back below $1800 per oz.
 
GURU WISDOM

“If you don’t follow the stock market, you are missing some amazing drama.” –Mark Cuban
 

Gold < 1800


$1800 was a psychological resistance and so having passed it, now the level is being tested as support by the market. Renewed strength in the dollar was the principal cause for what is so far just a small pullback in a bull market.
 

USD Comeback


The dollar was a mirror image of gold, pulling back from a monthly low in what was mostly a technical rebound. EUR/USD too dropped back from 4-week highs while AUD/USD and NZD/USD dropped back from recent tops.
 

Trump’s finances

The turning point on Thursday seemed to come from the Supreme Court decision to allow a New York prosecutor access to the US President’s personal financial records. Trump famously never gave over his tax return in the 2016 Presidential election, breaking a longstanding tradition. The court did deny access to Congressional Democrats but details of Trump’s finances looks like they will see the light of day, possibly even before November’s election.
 

China Bull has horns


Better than hoped Chinese inflation data helped Chinese shares to another day of gains. It was a healthy combination of consumer prices falling to bolster consumption and producer prices deflating less, offering more stability for manufacturers. CPI was steady at 2.5% y/y, PPI edged up to-3% y/y.

The Shenzhen Component index was the outperformer, closing over 2%. That was despite a more cautious tone from state media that reminded investors that “Experience suggested that economic fundamentals were always the basis for changes in valuation, and only a long-term bull market could yield sustained profits.”

GBP/JPY has been trending higher in July but today formed a bearish engulfing pattern on the 4hr chart at a confluence of resistance including the 136 round number, the 50% retracement of its June decline and a series of old highs and lows.
 

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