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(Wallace Refiners) – Leading into the EU session gold is heading lower toward the next support area at $1741.10/oz. At the moment the yellow metal trades 0.70% in the red at $1757/oz. The resilient silver has finally given in to the selling pressure and dropped around 2.21%.
US equities closed lower yesterday after some very strong selling pressure halfway through the session. The Nikkei 225 (-3.99%), Shanghai Composite (-2.21%) and the ASX (-2.35%) all capitulated overnight as bond yields continue to rise.
In the FX space, the US dollar has been the biggest beneficiary of these moves and the DXY has moved around 0.34% higher. The worst performing currency is AUD as it has fallen 0.60% against the greenback.
One of the key headlines late in the US session was (USTR) Office of the United States Trade Representative nominee Tai said the US need to explore all options on engaging China on the phase 1 trade agreement. Analysts may have been pricing in the fact that Biden could have a softer stance on China and this could have thrown a spanner in the works.
There have been lots of central bank comments to digest. ECB’s Lane stated we (ECB) are carefully monitoring the rise in yields. BOJ’s Kuroda stated the BoJ has no intention of pushing 10-year JGB yield target from around 0%, he added he expects the CPI to rise gradually towards the target.
RBNZ Governor Orr stated negative rates are an option and then reiterated NZD is near fair value. He also said the bank is still commitmented to the prolonged stimulus plan.
BOE’s Bailey said we do expect a negative quarter in Q1 and the impact of the virus crisis has been very unevenly felt across the economy.
Over to the US and House Speaker Pelosi says the $15 minimum wage proposal will remain in House bill. There was a separate headline that contradicted this saying $15 minimum wage not allowed in Biden’s covid relief bill, senate official.
On the data front, Japanese retail sales for January -0.5% m/m (vs. expected -1.2%), Tokyo inflation data for February, headline -0.3% y/y (vs. -0.4% expected). New Zealand trade balance for January: -626m NZD (expected -627m NZD).
On the international trade front, China’s Foreign Ministry has said the situation with India has eased significantly.
Sticking with China, a PBOC Policy Adviser has stated China’s economy could grow 8-9% in 2021 under usual circumstances.
Looking ahead to the rest of the session there is no real tier-one data. There is US PCE data, Canadian raw materials price index and we could get comments from BoE’s Haldane and Ramsden.
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