Silver 4-Year High!! & EUR/CHF

MARKETS

The euro reached and reversed from fresh 4-month highs on Monday, while the pound bounced back after a rough week. The Japanese yen pulled back following data showing a 26% plunge in Japanese exports in June.

A 7% surge in Amazon shares carried other big US tech stocks as well as the Nasdaq index well into positive territory on Monday. Other US indices were mixed with the S&P 500 positive but the Russell 2000 negative. Positive vaccine news from the UK and Germany carried European shares higher. Chinese shares were back in form, rising 3% after the PBOC left 1yr and 5yr prime rates on hold and regulators allowed China pension funds to allocate more to equities. 

The price of gold reached $1820 per oz, while silver made a 4-year high and came within 10c of $20 per oz.
 

GURU WISDOM

“When in doubt, get out and get a good night’s sleep. I’ve done that lots of times and the next day everything was clear. While you are in, you can’t think. When you get out, then you can think clearly again.”  - Michael Marcus
 

Silver $20

Rich talked about silver this week in his discussion of the gold-silver ratio in the Week Ahead video and as of Monday the precious metal has not disappointed. Silver struck a 4-year high and is challenging the $20 per oz level. A falling dollar and reduced base metal mining, where silver mining also tends to take place has reduced supplies, just when investors are demanding hard assets.
 

EU Leaders 5th Day

Talks resumed Monday evening after an apparent early-morning breakthrough to have €390 billion in grants, down from the original 500 billion suggested by the European Commission. Forex markets are tentatively pricing in a deal with the EUR/USD up at 4-year high and euro crosses like EUR/CHF (see chart below) all pushing higher.
 

RBA Minutes

Minutes and a speech from Governor Lowe could add some colour to the July decision to keep rates steady. The minutes are a little stale so comments from Lowe will offer the best understanding on where the RBA sits given the new virus outbreak in Melbourne. Talk of stepping up asset purchases or anything of the kind might shake AUD/USD off the 0.70 level.