- Only 36% of all SWFX positions are long
- A drop below upward-sloping 55-day SMA may diminish outlook, if spot consolidates below it on Monday
- Daily technical indicators are undecided by giving a neutral aggregate signal
- Economic events to watch over the next 24 hours: Swedish Unemployment Rate (Mar); German IFO Business Climate (Apr); US New Home Sales (Mar)
Canada's annual inflation rate slowed in March as lower gasoline prices offset increases in food and shelter costs, while a robust data on retail sales offered a positive sign for first-quarter economic growth. Canada's all-items consumer-price index advanced 1.3% from a year earlier, Statistics Canada said. The March annual core-inflation rate, which strips out volatile components such as some food and energy prices, surged 2.1%. That followed a 1.9% advance the previous month and was ahead of the 1.7% expectations. Measured on a monthly basis, the consumer-price index climbed 0.6%, the highest in almost a year, while core inflation rose 0.7%, compared with the 0.4% forecast. Prices for food jumped 3.6% on an annual basis, following a 3.9% gain the previous month. Prices for food purchased from stores increased 4.0% compared with the same month last year, while prices for shelter rose 1.1%. Offsetting the gains were a 1.0% annual drop in Statistics Canada's transportation index, which includes gasoline. Clothing and footwear prices slid 0.4%. Canadian retail sales had a surprise gain in February with strength in most categories led by motor vehicle dealers. Sales increased 0.4% to C$44.2 billion, Statistics Canada reported. Motor vehicle and parts sales rose 1% to C$11.5 billion on the month, and have soared 15.3% over the last 12 months.
The number of Americans applying for unemployment benefits unexpectedly declined last week, reaching its lowest level since 1973, suggesting a sharp slowdown in economic activity in the first quarter could be temporary. First-quarter gross domestic product growth estimates are currently as low as a 0.2% annualized rate. The economy expanded at a 1.4% rate in the fourth quarter. Initial jobless claims, a proxy for layoffs across the US, dropped by 6,000 to a seasonally adjusted 247,000 in the week ended April 16, according to the Labor Department. That was the lowest level for unemployment claims since the week of November 24, 1973. That also marked the 59th consecutive week that initial jobless claims remained below 300,000, the longest such streak in more than four decades. Employers created 215,000 jobs in March, whereas the unemployment rate edged up to 5%, but the rise partly reflected more workers entering the labour force. Fed officials will likely consider the relative health of the labour market at next week's policy meeting. However recently, policy makers have voiced their concerns about weakness in the global economy and are watching inflation readings and wage gains closely. A large majority of economists expect the Fed to hold its benchmark interest rate steady at the meeting.
Upcoming fundamentals: Mid-term focus on Fed, short-term on housing data
Economic calendar of this week is very rich on central bank events and other fundamentals, especially from the world's largest economy. On Wednesday the US Federal Reserve is going to decide, whether to increase interest rates this time or take a pause again. Janet Yellen, the Chair, had said that every meeting is a "live meeting". However, markets are expecting a zero probability of the move this week, also given that the Fed is not used to change the policy stance at meetings that do not include press conferences in the aftermath. As for the short-term 24-hour perspective, US new home sales are out at 14:00 GMT. Analysts suspect that an increase in the number of new houses sold will be 1.6% in March on a monthly basis after a 2% monthly surge in February. This is projected to bring the total annualized sales figure to 520,000 homes last month, up from 512,000 in February.
Gold closes below 55-day SMA, risks surge
A sharp drop of gold prices on Friday followed its inability to consolidate above the 1,263 resistance one day before. With prices plunging as low as 1,232 on the last day of the previous week, the bullion created a dangerous precedent by closing below the 55-day SMA for the first time since January. In case there is no rebound over the next 24 hours, we are going to shift our attention to the 1,216 mark, namely nearest possible support represented by the lower Bollinger band in cooperation with the weekly S1. Upward risks are dampened, as there are formidable resistances located in the 1,235/43 range.Daily chart
Not only the yellow metal plummeted under the 200-hour SMA, currently at 1,241.33, but it also failed to sustain a drop at the April uptrend that was placed around 1,233. The price is at risk of declining towards the April 14 low at 1,223.75, followed by the current April low at 1,209.02. Both bearish and bullish cases are now being complicated by the fact that the daily technical indicators are broadly neutral.
Hourly chart
Sentiment unable to recover noticeably, adds only two more pp
OANDA's long clients revived further beyond the 60% mark by Monday morning, following major losses the bullion had registered before the weekend. Moreover, SAXO Bank market participants are bullish on gold again. Bulls and bears have completely switched sides since Friday, as now the former are keeping 53.25% of all transactions and the bears are in the minority with just 46.75%.