U.S. Markets Rally, Safe Havens Show Weakness

Posted Tuesday, August 11, 2020 by
Shain Vernier • 1 min read

It’s been an interesting day on Wall Street, headlined by a nearly $100 per ounce drop in GOLD. Risk assets are holding their own, with the DJIA DOW (+310), S&P 500 SPX (+18), and NASDAQ (-5) firm. As we roll toward mid-week trade, it looks like investors are content with taking a risk-on approach to the markets.

By far, bullion has been one of the summer’s biggest winners. Prices have repeatedly hit all-time highs as institutional players stockpile the yellow metal as a hedge against uncertainty. Now, it looks like there is some profit-taking, with gold futures falling beneath the key $2000.00 psyche level.

On the currency front, the USD is hanging in there vs the majors. Rates have found an area of relative fair value to open August, giving dollar bulls a much-needed reprieve from bearish price action. At least for the moment, the world’s currency markets are taking a break from slamming the Greenback.

Stock Markets Up, USD Flat 

Earlier today, we talked about rising inflation becoming a reality due to this morning’s PPI release. Wednesday brings yet another metric, with the Consumer Price Index (CPI) scheduled to hit newswires during the pre-market hours. The markets are expecting a bump in CPI; if the figures disappoint, the USD will be in a position to fall dramatically ahead of late-week trade.

USD/CHF, Weekly Chart

Overview: As you can see from the chart above, the Swissy has found a temporary home near 0.9150. However, the trend remains bearish, with the psyche level of 0.9000 being the key technical area to be aware of. If we see sellers take this level out in the coming days, a steep downtrend is likely to develop ahead of the September FED meeting. At this point, most in the currency markets are taking a wait-and-see approach to tomorrow’s CPI figures.

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