‘Fat finger’ in silver, gloomy data from Australia

Summary:

• Silver prices surged and fell overnight on a possible ‘fat finger’ trade
• Dismal data from Australia on construction work done
• New Zealand’s trade deficit widens more than expected in January

Silver prices spike

A sudden spike in silver prices was probably the most interesting point during Asian hours trading. The precious metal price surged almost 5% from its daily low to above $16.6 just in a couple of minutes and then crashed to be slightly below the flat line at the time of writing. What did cause such a move? There was no particulator factor standing behind this rally, hence it could have been probably sparked by a so-called ‘fat finger’ trade. This hypothesis seems to be confirmed when we look at other markets like currencies or even gold prices - there were no similar movements overnight. Therefore, we think that there is more the interesting story to look at than a game changer.

Silver prices spiked roughly 5% from their low and crashed thereafter. Source: Bloomberg

As we already wrote above it was quite subdued trading across both developed and emerging market currencies. Focusing on the G10 basket one may notice that the US dollar keeps climbing a bit this morning. In terms of macroeconomic releases we got data from Australian and New Zealand. Australia’s construction work done slumped 3.1% QoQ in the final three months of the past year and missed the expected rise of 0.5% QoQ. Note that the huge decline came after a fall (a 3.6% QoQ decline after being revised down today) in the third quarter alike. The details showed that housing construction dropped 3.6% QoQ, it does not augur well ahead of a GDP release (this series feeds directly into the national accounts). On top of that, engineering construction plunged 5% QoQ, public construction slumped 6% QoQ and private sector construction dropped 2.2% QoQ. Although there was no a notable reaction in the Australian dollar or the country’s stock market the data confirmed fading activity in the sector. Having in mind that the China’s economy keeps shifting the gear to lower one may expect that Australian economic growth momentum will remain under downward pressure.

Australian construction work done disappointed in the last quarter of 2018. Source: Macrobond, XTB Research

Last but not least, the New Zealand’s trade data revealed a higher than expected trade deficit in January (unadjusted). The deficit amounted to 914 million NZD compared to 300 million NZD expected. Exports totalled 4.4 billion NZD against 4.8 billion NZD expected, while imports totalled 5.32 billion NZD against 5 billion NZD expected. Taking the 12-month rolling sum the deficit widened to 6358 million NZD from 6106 million NZD in the prior month. Some details suggest that there was a slow start to the meat processing season which could be blamed for weaker than forecast exports. Apart from this, dairy volumes lifted somewhat, however, the recent uptick in dairy prices has not probably translated into exports values yet. Overall, the data showed that domestic demand remained quite robust at the beginning of the new year. If these trends keep unfolding, the New Zealand’s economy could experience the widening current account in the months to come.

The NZDUSD has almost approached its important resistance (orange line). This level could play a crucial role for bulls in the nearest future. Source: xStation5

In the other news:

• The US House voted to block a Trump’s emergency plan for a wall, the Senate is likely to vote the opposite

• BoJ’s Kataoka said the BoJ should persistnely continue easing monetary policy

• Pakistan informed that it had shot down two Indian aircrafts inside Pakistani airspace, according to a statement from the Pakistan’s foreign ministry