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Gold’s 9th Week of Gains

USD/TRY – Weekly Candlesticks
Source: GKFX / MT4 (August 9, 2020)

USD/TRY broke to a new all-time high and closed the week above the key 7.0 handle for the 2nd time. A continuation of the breakout would target 8.0 where as another pullback could target the rising trendline which meets around 6.0.
 

TAKEAWAYS


•    Dollar bounces back after July NFP tops expectations
•    Gold, silver give back some gains after record run
•    Trump signs executive orders to ban TikTok, extend unemployment benefits
•    DAY AHEAD: China CPI / PPI, Barrick Gold, Novavax earnings
 

MARKETS


The US dollar saw some relief on Friday, lifting off 2-year lows thanks to the better than expected US jobs report. EUR/USD dropped back below 1.18, threatening a possible double top from 1.19. 

The rebounding dollar saw gold and silver prices turn lower for the day on Friday, though still well up on the week. The reversal in silver happened as it came within 15c of the big $30 per oz handle. Rising tensions between the US and China saw the price of copper turn sharply lower to touch a 1-month low.

There was a rare out-performance for the Russell 2000, which finished well into the green while the Nasdaq closed lower after Donald Trump effectively banned China-owned mobile apps TikTok and WeChat in the United States.  Some of the optimism around the EU Recovery fund has ebbed out of European stock markets which closed lower for a second week. Chinese stock markets have been faring better, closing higher for a second week but remain below the 2-year highs made in early July.
 

GURU WISDOM


“You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody.” – Alexander elder
 

Dollar & NFP


The US dollar bounced back with some vigour on Friday. ‘One day doesn’t make a trend’ – as they say but the greenback does look oversold- and gold looks overbought. 

The new dollar-strength came after the nonfarm payrolls print of 1.76million versus the 1.6m expected alleviated some of the fears there had been a big slowdown in rehiring because of rising coronavirus cases. The July jobs growth was a deceleration from the record 4.8m rise in June but given that some economists had expected a jobs contraction, it was relatively good news for the US economy- and thus the dollar. 

US politics


The near-term direction for the dollar and stock markets this week will likely hang on what happens in Washington DC. US President Donald Trump has been busy with executive orders, banning transactions with Chinese mobile applications TikTok and WeChat but also extending US unemployment benefits by $400 after Congress failed to reach agreement on a stimulus bill and the extended benefits ran out a week ago. 

If a new stimulus package is agreed this week, that should be postive for US stock markets while if the dollar behaves as a haven, it could mean more dollar weakness. Should no agreement be found, the dollar could extend its nascent recovery. 
 

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