- SWFX bulls are quickly losing ground to bears, as their market share plummeted to 30% from 38%
- XAU/USD's short-term outlook is positive and it is expected to move into 1,285/90 area soon
- Updated weekly technical indicators are giving an aggregate bullish signal; only Stochastic indicates down
- Economic events to watch over the next 24 hours: German PPI (Feb); US University of Michigan/Reuters Preliminary Consumer Confidence Index (Mar); FOMC Members Dudley, Rosengren and Bullard Speak; Canadian Retail Sales (Jan) and CPI (Feb)
Gold rose on Friday with the precious metal set for weekly gain as the US Dollar hovered near its five-month low, pressured by the Fed's decision to make fewer-than-expected interest rate hikes. Expectations the US central bank would raise rates steadily this year waned since the bank's hike in December, as worries over global growth disturbed financial markets. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported its holdings increased 1.50% to 807.09 tonnes on Thursday from 795.20 tonnes on Wednesday.
The number of Americans applying for unemployment benefits increased from the lowest level in five months hit last week, but remained below a level associated with an improving labour market. Initial claims for jobless benefits rose 7,000 to a seasonally adjusted 265,000 for the week ended March 12, according to the Labor Department. However, the previous week was revised to show 1,000 fewer applications received than reported earlier. Claims have been below 300,000, a threshold associated with strong labour market conditions, for 54 weeks in a row, the longest run since 1973. The four-week moving average of claims, a better gauge of labour market trends as it strips out week-to-week volatility, rose 750 to 268,000 last week. Moreover, job openings rose to a six-month peak in January, while gauge of future economic activity climbed in February after two consecutive months of drops. The data should further fan fears of a looming recession and could keep the Fed on track to gradually hike interest rates this year. Job openings advanced by 260,000 to a six-month high of 5.5 million in January. While hiring declined in January, as employers are facing troubles finding qualified workers for open positions. A separate report showed the current account deficit declined 3.6% to $125.3 billion in the fourth quarter. For 2015, the current account shortfall totalled $484.1 billion, the largest since 2008.
The Swiss National Bank kept interest rates unchanged at a record low and reiterated its pledge to intervene in currency markets to weaken the Franc, which remains significantly overvalued. The SNB held a key deposit rate at –0.75% despite the expanded stimulus programme from the European Central Bank, which may eventually put upward pressure on the Swiss currency versus the Euro. The central bank also kept its target range for the three month London interbank offered rate at –1.25% to –0.25%. Negative interest rates are intended to weaken demand for the Swiss Franc by making it less attractive for investors from overseas, who turn to the currency for a haven in times of shaky global markets. Moreover, negative rates are also intended to support economic growth by encouraging banks to lend more to consumers and businesses. The SNB also revised downwards its forecast for the Swiss economy to expand this year of between 1% and 1.5%, compared with its December's estimate of a 1.5% growth rate. In addition, the central bank said that while it predicts consumer prices to decline again this year by 0.8%, The Swiss economy should emerge from several years of deflation in 2017. The SNB anticipates consumer price inflation to climb 0.1% next year and 0.9% in 2018.
Upcoming fundamentals: Canada's statistics expected to show positive numbers today
Friday trading is going to be focused on North American sessions, being that European fundamental calendar is going to deliver almost nothing in terms of important data. During the day three FOMC members from the Fed are going to speak, while the consumer sentiment index for March is out at 14:00 GMT. At 12:30 GMT a bunch of Canadian data is estimated to be published. Among indicators to have a look at, the consumer price index will be published for February. Both headline and core readings are forecasted to grow by 0.3% and 0.5%, respectively. This is going to be the second consecutive month of CPI gains, in case the data matches economists' projections. In the meantime, retail sales are likely to rebound in January from a considerable drop posted in the last month of 2015. Analysts' average forecast calls for a 0.7% increase on a headline basis and 0.6% on a core basis. Core retail sales in Canada exclude automobiles.
Gold in limbo between Feb high and weekly PP
Gold's intraday gains were extending beyond the 1,270 mark on Thursday, but the bears consolidated their power and made prices suffer. Ultimately, the bullion was down to the weekly pivot point near 1,257. Given important uptrend line (1,240), which has not given up to bearish pressure on Tuesday-Wednesday, our short-term outlook is positive and a recovery is highly likely. The key watch is on another upward-sloping trend-line at 1,287. This is the level where the bullion is forecasted to fail eventually, provided it is now developing inside the rising wedge pattern.Daily chart
Bullish bets are strengthened by the one-hour chart, as here the precious metal managed to fix gains above the two-month uptrend and 200-hour SMA. The base scenario implies a climb in the direction of the 2015 high at 1,307. At the same time, there are various intermediate obstacles that may complicate the rally, especially the current March maximum at 1,284.35.
Hourly chart