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Keep An Eye On Gold And EUR Now

Published 09/01/2021, 12:23 AM
Updated 07/09/2023, 06:31 AM
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by Adam Button

The London holiday led to a sluggish start to the week in FX as equities and bonds continued on their post-Powell paths. Since the close of NY trade yesterday, NZD and CHF were the strongest with kiwi powered by a gradual reopening outside Aukland. CAD and JPY were the weakest.

Gold was showing higher lows, ensuring to remain above the 100 and 200 DMAs. EUR/USD was eyeing 1.1895 as long as it sustains the break above 55-DMA. Tuesday's consumer confidence report offered a compelling opportunity.

Monday's trade mostly featured consolidation with most currencies largely unchanged. A large and persistent bid entered into EUR/CHF at the start of European trading in what was likely the SNB taking advantage of less liquidity to push the price higher.

Fundamentally, the US pending home sales and Dallas Fed manufacturing reports both missed estimates. The comments in the Dallas report were notable for a shift away from labor shortages and towards more worry about supply chain bottlenecks and raw materials shortages.

In the bigger picture, there's a growing pattern of soft US economic data that the market is reluctant to recognize. 

While the Fed is focused on inflation and jobs, it's the consumer that drives the US economy and recent indications show softness. Moreover, mobility data and airline bookings are showing stalled pandemic progress or weakness. With the eviction moratorium over and jobless benefits expiring this week, is the market and Fed focused on the wrong thing?

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