The first half of the North American trading session has been lacking major market moving developments as US data took turns missing and beating expectations this morning. While Building Permits, Housing Starts, and Initial Jobless Claims missed consensus, Continuing Jobless Claims, Philly Fed Manufacturing, and natural gas Storage beat consensus. The result of all this flip flopping of data results has engendered mostly sideways action in equities and currencies, but gold has taken a major trip down below the psychologically gripping $1200 level.
The progenitor of the gold move could be attributed to Federal Reserve Vice Chairman Stanley Fischer who hit the wires this morning with a comment about the Fed not keeping rates low forever. The hawkish comment on monetary policy from Fischer caught the market by surprise since he is usually classified as slightly dovish. Another Fed voter, Dennis Lockhart, a centrist, will be speaking a little later on today, and if he gives a more dovish view, the tide could be turned quickly back above the $1200 level in kind. However, if Lockhart also sounds hawkish, the view of the Fed raising interest rates sooner than the consensus expects could get some traction.
As for US equities, the Dow Jones Industrial Average has been trending higher for the bulk of April thus far, and it has carved out an impressive looking bullish channel in the process. Due to the increase in US data misses that my colleague Matt Weller so eloquently characterized as “Death of a Thousand Cuts” earlier this morning, the general market feel is that interest rate increases won’t be coming for a while from the Fed. That means cheap money to spend on stocks for longer than we anticipated merely a couple months ago, plus the overflow of capital from Quantitative Easing (Q€) European style may continue to make money easy to come by. Even if a pullback occurs in stocks, this channel has the potential to keep it locked moving forward.
Source: www.forex.com
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