- Bulls have a sluggish majority of 52% of all trades
- 1,156 to be targeted next, after crossing the 100-day SMA on Tuesday
- Daily indicators changed their expectations from positive to neutral
- Economic events to watch in the next 24 hours: German Industrial Production (Aug), Trade Balance (Aug) and 10-y Bond Auction; French Trade Balance (Aug); ECB Non-Monetary Policy Meeting; US Crude Oil Inventories (Oct 2); Swiss Foreign Currency Reserves (Sep); UK Manufacturing and Industrial Production (Aug); UK NIESR GDP Estimate (3M-Sep); Japanese Core Machinery Orders (Aug) and Current Account Balance (Aug)
Canada's trade balance with the rest of the world deteriorated in August, as a decline in commodity prices fuelled a steep drop in exports. The official report revealed the gap of C$2.53 billion in the reported period, while market consensus bet on C$1.17 billion trade deficit. July's trade data was revised, and now it indicates the trade deficit in the month was C$817 million. The larger gap was mainly caused by a drop in Canadian exports, which declined 3.6% to C$43.95 in August, indicating the largest one-month fall in over three years. In the meantime, imports rose 0.2% to C$46.49 billion, as prices rose 0.3% and volumes fell 0.1%.
Meanwhile, The Reserve Bank of Australia kept the official cash rate unchanged at a record low for a fifth month in a row, pointing to increased uncertainty surrounding the global economic outlook due to slowdown in China and east Asia. The Board decided to leave the cash rate at 2.0%. The central bank said that a moderate expansion continued in Australia, even though growth had been somewhat below longer-term averages for some time. Yet, economic expansion was accompanied with stronger growth of employment and a stable rate of joblessness over the past year. The RBA admitted that the nation's economy was set to operate with a degree of spare capacity for some time yet, with domestic inflationary pressures subdued. Inflation was estimated to remain consistent with the target over the next one to two years, even with a lower exchange rate.
Upcoming fundamentals: UK industrial sector expected to have weak pace of rebound
The first bunch of data from Britain will include manufacturing and industrial production numbers for the month of August at 8:30 GMT on Wednesday. Despite a forecasted monthly increase of 0.3% for both indicators, this data will not offset a considerable -0.8% drop registered one month before. Moreover, analysts project a 0.1% fall on the annual basis, up from -0.5% in July. Later today we also expect to see the UK NIESR GDP Estimate (14:00 GMT) for the three months through September, which fits the time frame for the third quarter of the year. Last projection showed a 0.5% quarterly economic growth in June-August.
XAU/USD reaches bearish pattern's upper boundary again
As expected the precious metal surged above the 100-day SMA and 61.8% Fibonacci retracement of the Aug-Sep downtrend on Tuesday. It was actively supported by the 50% retracement and was therefore able to register substantial positive change in value. While bulls are set to aim at the monthly R1 (1,147) next, the cross has again touched the upper boundary of the channel down pattern. Thus, bearish pressure is likely to increase in the short term, while daily technical indicators changed from bullish to neutral in the past 24 hours. However, a close above 1,156 (Sep 24 high) would reopen the 1,170 mark for bulls.Daily chart
Gold's rally is receiving strong support from the 200-hour SMA at the moment. This line is currently placed around the 2014 low at 1,131. We also see the metal being backed by both 50% and 61.8% Fibonacci retracements at 1,134 and 1,142, accordingly.
Hourly chart
SWFX bullish share unchanged at 52%
Speaking about sentiment of other market players, OANDA's bullish share tanked from 63% to 57.71% by Wednesday morning. Alongside, SAXO Bank long traders lost just two percentage points yesterday to see a drop from 63% to 61%.