- Buy everything mode continues on Thursday
- Solid US data supports the greenback
- Gold and OIL/OIL.WTI soar higher
Buy everything mode generally continued on Thursday as the U500 tested all-time highs, gold surged past $1620, bonds and OIL rallied while the yen suffered. Mixed news on the virus front (less official cases in China but more outside and deaths in Japan and Korea) and on the company front (solid Fresenius earnings but another sales warning, this time on Apple products) seemed not to be too relevant as traders just flocked to everything inspired by continuously inflating central bank balance sheets. German DE30 reversed a bit from the all-time highs set in the early trading but in general bulls seem to be in a full control.
The US dollar remains the king on the FX market. Although the euro managed to halt the losses, the USD was making major gains against Asian currencies, including JPY, AUD and AUD. AUDUSD slid to the lowest point since early 2009 when the global economy was in the crisis (and US500 some 80% lower than today…) and the second day of the USDJPY rally seemed to contradict high US Treasury prices. The greenback was also gaining mightily against all the EMs, especially the Mexican peso that tumbled 1.2%. At least the USD strength seems to be supported by the recent data flow – following strong housing numbers yesterday, Thursday saw a big spike in Philly Fed activity index. Looking just at a combination of these indices from NY and Philly it looks like the US economy is booming. We will see if this is confirmed by the ISM prints in early March but even if it suggests some improvement, the change is welcome.
Miraculous recovery? The East Coast activity data does look very good. Source: Macrobond, XTB Research
One would think that record Wall Street and strong dollar would generally be very bad for gold but since it’s not so much fundamentals but more aggressive central bank policies playing a role here, precious metals seem to be increasingly treated as a hedge against these reckless actions. Gold prices soared for the third day and are up $160 since mid-December!
OIL.WTI is doing very well too. The stock market sentiment has been boosting oil since the start of the week and the bulls got an additional support from the inventory data. Oil inventories increased by 0.4mb, far less than expected (2.49) and gasoline inventories actually declined, sending OIL.WTI above $54.50 for the first time in nearly a month!
Support defended? OIL.WTI is rebounding strongly with no near-term resistance. Source: xStation5
Friday will be very interesting as we’ll get flash PMI indices from Japan, EMU, UK and US. We will see if these reports show any impact of the Chinese virus.
