Time to turn your attention to the GBP.
This week is a monster week for the UK, with several very important reports set to be released. The most important reports to watch out for are the Claimant Count Rate, Gfk’s Consumer Confidence, and Retail Sales. The reports are delivered all throughout the week, so it will be a laborious week for the currency.
The GBP strengthened against the EUR and the USD at the end of last week. Will we see profit-taking before the reports begin dropping?
gold traders be aware: the price of gold is going to be dependent on a few variables over the coming week.
Two significant calendar events out of the US will be firing off the next four days. The first is the Inflation Rate YoY updated for March, due Wednesday 14. The market consensus is that inflation will be up by about a percentage point, somewhere around 2.5% to 2.6%. In February, the inflation rate came in at 1.7%, up .3 percentage points from the previous month.
If inflation comes in as expected, or, higher, we might see 10-Y treasury bond yields retrace their March accent, possibly up to the 1.740% range. In this event, gold may break through the US$1,650 support level it has twice bounced off in the past couple of months. A consolation may occur in between this support level and the historical touchstone in the high US$1,500s.
Market consensus predictions for the inflation rate have overestimated inflation for the past year. Although, typically by only one percentage point. Perhaps the analysts have given more prudent predictions for March and will hit the nail on the head this time.
US Retail Figures for March
The second event to be mindful of this week is US retail sales figure for March. This report is appearing at the end of the week. A historical view shows us that the US retail figures have been relatively flat for the last six months of 2020, never changing by more than 1.7% in either a positive or negative direction. 2021 is a different story, though. Sales lifted to a positive 7.6% in January, which lead into a negative 3% in February. The market consensus is that retail sales will again bounce back to somewhere in a positive 4 – 6% range.
Gold traders should keenly watch the retail sales figures as these are great early indicators of how the economy is performing. The figures can be used to predict GDP and inflation trends. For one, high sales figures could lead to higher expected inflation next month, which flows onto bond yields.
Hello! I hope you guys had a good Christmas and a Happy New Year, refreshed for the trading year. Before your week ahead, here is what you may have missed over the break.
Let's hope this year we can go past the Coronavirus and onto more positive things. Here is your week ahead.
Australia has been able to recover from their second spike of the Coronavirus well. However, they had not entirely eradicated community transmission amid an outbreak in Sydney's northern beaches just before Christmas last year. After a two-week lockdown for New South Wales, citizens anxiously wait on whether they will be released from lockdown. With Australia taking part in one of the longest lockdowns of any nation, many employed citizens during the lockdown have amassed an increase in savings, which "saw a large rise, up 21% as retail stores experienced a full month of trade" in the last quarter. Analysts predict an increase in Retail sales this week ahead.
The United Kingdom has not been able to keep a cap on the Coronavirus. Deaths are set to overwhelm the NHS's hospital beds if the rate of cases continues to rise. At this point, Prime Minister Boris Johnson is betting on the rollout of the vaccine will help dampen the spread of community transmission. Governor Bailey is set to touch on the continued spread and its effect on monetary policy.
A buzzword that I have heard recently – the "reflation" trade. Many analysts predict a strong bounce back in the American economy, enabling the Federal Reserve to kick its foot off the gas a little bit, as the consumer starts to become the backbone of the United States economy once again. The Coronavirus in the United States is in dire shape, with cases touching 300,000 per day, with deaths at 373,000. Analysts predict CPI year over year to stay the same at 1.6%. However, they also expect CPI Month over Month to drop slightly to 0.1%, from 0.2%. Furthermore, Retail Sales is set to rise from -1.1% to -0.2% this week ahead.
With his last speech three weeks citing market-moving comments, it is a reminder that Powell's words still weight it. His market-moving comments about inflation, stating that "you have to be honest with yourself about inflation these days. There are significant disinflationary pressures around the world.." have analysts' eyes on his speech coming later this week ahead.
It is good to be back. Stay safe, and trade safely.