- Share of long open trades retreated further from 55 to 53%
- Bullish traders to set eyes on 100-day SMA and 61.8% retracement
- Bearish case to be complicated by dense demand zone at 1,134/24
- Economic events to watch in the next 24 hours: German IFO Business Climate (Sep); Italian Retail Sales (Jul); ECB Targeted LTRO; US Durable Goods Orders (Aug), Unemployment Claims (Sep 18) and New Home Sales (Aug); Fed Chair Yellen Speaks; UK BBA Mortgage Approvals (Aug); Japanese CPI (Aug)
Among global fundamentals, Canada's retail sales fell short of estimates, as they rose less than expected in July, mainly driven by consumers buying new clothing and cars. Receipts increased 0.5% to a record C$43.3 billion in July, after a downward revised gain of 0.4% in the previous month, while markets expected to see a rise of 0.7%. Sales advanced in six of 11 sectors in the reported month, representing 55% of retail trade and marking the third consecutive monthly increase. In volume terms, retail sales edged up 0.2%. Concerning the major contributors of the monthly gain, car sales jumped 2.7%, while clothing sales surged 2.5%. On annual terms, sales in July were 1.8% higher.
At the same time, China's manufacturing activity declined at its fastest pace since the peak of the global financial crisis, fuelling concerns over the world's second biggest economy's health. The preliminary Caixin China Manufacturing Purchasing Managers' Index dropped to 47.0 in September, the lowest level in more than six years, below the median forecast of 47.5. This compared with a final reading of 47.3 in August, the lowest since March 2009. New orders and new export orders both fell at a quicker pace in September, while factory output overall also dropped faster. The new orders sub-index declined 0.6 percentage points to 46.0 in September, while the new export orders sub-index slipped 0.8 percentage points to 45.8. It is the seventh straight month that conditions in Chinese manufacturing have deteriorated and is in line with other recent weak data of the domestic economy.
Upcoming fundamentals: Japan's prices to enter deflation for the first time since May 2013
Analysts project the national inflation reading in Japan to decline below zero for the first time in more than two years. Prices are dragged lower by falling oil prices and sluggish economic growth in the world's third biggest economy. The annual consumer price index for August, to be published at 23:30 GMT, will follow a zero price growth in July. In the meantime, US durable goods orders (12:30 GMT) are estimated to plunge by 2% on a headline basis in August, after the same positive change a month before. On the core basis orders have probably continued to increase by 0.1% month-on-month, following a negatively revised 0.4% growth in July.
Gold resumes positive trend by testing 1,130/35
It seems that 20-day SMA managed to provide the bullion with enough bullish momentum on Wednesday. Gold was sent back into the dense area of technical levels including weekly/monthly pivot points and the 2014 low at 1,127/31. Despite bearish risks, the price is moving further upwards in the morning on Thursday. In case it consolidates above 1,135 (50% retracement of Aug-Sep downtrend) and 1,141 (recent highs), then we would allow for a continuous recovery up to the 1,150 region, where upper Bollinger band merges with the 100-day SMA.Daily chart
In the one-hour chart the yellow metal is forming a triangle pattern. This figure implies a short term decline back to the 1,125 mark, in case the 50% retracement manages to withhold bullish pressure today. Judging from the pattern's boundaries, a break-out is possible at any time until Tuesday of next week. Additional signals are needed to determine direction of the break-out, while statistically they occur to the upside in 54% of all cases.
Hourly chart
SWFX share of bulls is down to 53%
Meanwhile, OANDA share of bulls decreased to 61.44% of all positions, while SAXO Bank traders are keeping 61% (-3%) of bullish trades.