- 73% of open positions are short
- Up-trend resistance is at 1,235
- Bulls might not have a good opportunity to regain control until 1,223/20
- Economic events: US GDP, Goods Trade Balance (Jan), PCE Price Index (Jan), Personal Spending (Jan), UoM Consumer Sentiment (Feb), Powell and Brainard Speeches
US orders for long-lasting goods advanced by the most in 10 months as demand surged across the board. According to the Commerce Department, orders for durable goods, surged 4.9% in January, after December's revised 4.6% drop. Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, soared 3.9% after plunging by a revised 3.7% in December. The durable goods report was the latest sign that the worst of the manufacturing downturn was likely to be over. Manufacturing production increased solidly last month and factory payrolls that month rose by the most since August 2013. The sector, which makes up 12% of the US economy, is hurt by a strong Dollar, moribund global demand and capital spending cuts by oilfield service firms. Yet core orders are nearly 3% lower now compared with a year ago, reflecting a slowdown in business investment that was a negative contributor to the economy in the second half of 2015.
A separate report showed the number of Americans applying for unemployment benefits increased last week, but remained below levels associated with a tightening labour market. Initial claims for state unemployment benefits surged 10,000 to a seasonally adjusted 272,000 for the week ended February 20, the Labor Department reported.
US GDP growth is feared to decline
Today, all the attention will be on the United States. The market expects that the GDP growth in the last quarter of 2015 slowed down to 0.4 from 0.7%. Additional reasons for the major pairs to be volatile will be the reports on personal spending, goods trade balance, PCE price index. Moreover, later in the day two FOMC members might expand on the Fed's future actions regarding monetary policy normalisation.
Gold to stay above 1,220
Gold is gaining more and more ground. Although two days ago the commodity failed to gain a foothold above 1,250 dollars, the outlook remains bullish, even though the monthly indicators are mostly giving ‘sell' signals. The near-term sell-offs should be limited by the recently established up-trend and the weekly pivot point at 1,220/19, while the February maximum is the closest significant resistance. Beyond 1,264, the price should set its eyes on 1,307, the highest trading point of 2015.Daily chart
At first, we were expecting gold to be guided by the new up-trend that connects current week's lows, and this would imply a rebound from 1,235. However, the price has just closed below the rising trend-line, meaning the bulls might not have a good opportunity to regain control until 1,223/20, where the upper bound of the recently broken triangle meets the 200-hour SMA.
Hourly chart
SWFX sentiment stands strongly bearish
Elsewhere, the traders seem unable to reach a consensus. At the time of writing, 52% of positions open at OANDA are long, which is a four percentage point decline compared to the yesterday's level. A similar situation is observed at Saxo Bank, where the numbers of bulls and bears are perfectly equal.