It seems that the UK Parliament may indeed be coming to a consensus, which is the time-honored EU strategy of kicking the can down the road. A spokesman for the opposition Labour Party indicated that his party could support a proposal by backbench Conservative MPs to seek a delay to Brexit.
The New Zealand CPI figures were the catalyst for some profit-taking on NZD shorts. In fact, inflation came out a bit higher than expected (headline +1.9% yoy vs +1.8% expected, core CPI accelerated to +1.5% yoy from +1.2% yoy). NZD jumped! Early morning in Europe it’s still climbing, although the 0.6788 seems to be a fairly strong resistance point.
Gold and Silver prices lifted during the early European session by +0.30% at $1.284/oz and $15.30/oz respectively after the IMF-International Monetary Fund slashed its forecast for global economic growth, the fading prospects for a deal in USA-China trade talks, the lower US 10 year Yields, the weaker US dollar and the morning losses from the major Asian Equity markets and US futures.
The International Monetary Fund (IMF) cut its global growth forecasts, citing trade tensions as the cause. It’s the second downgrade in three months, which makes one wonder how reliable a year-ahead forecast is if it has to be adjusted in just a few months. The IMF now sees global growth at 3.5% this year, down from 3.7% that it predicted in October.
Gold and Silver prices continue their downtrend path started last Friday, as they trade on Monday’s European session lower by -0.3% at $1.277/oz and -0.5% at $15.22/oz respectively, on stronger US dollar, the rise of the global equity markets and some technical profit taking.
GBP clearly is the big issue for the market today. It looks like people are losing confidence in the likelihood of a successful resolution – or at least a successful extension – of the Brexit process. Headlines like “Theresa May on Brexit collision course with MPs” (FT) or “May Blames Corbyn as Talks Fail” (Times) suggest that today’s presentation of “Plan B” (see below) isn’t going to go much better than “Plan A” did a week ago.
ECB President Draghi said that the economy is slowing but it's not in recession. The Geopolitical uncertainties have a negative impact on the CPI. ECB Lautenschlager said that the inflation rate is expected to fall further. Fed Esther George supports the policy of waiting to see any further interest rate hike.
Both precious metals were under selling pressure during the Friday’s European trading session as the market risk sentiment has improved after the report that the US is considering easing the tariffs on the Chinese products in order to calm the markets, despite that it was later denied.
The US government shutdown is now the longest on record, and there’s no settlement in sight. Nonetheless, the dollar hasn’t suffered as much as one might have expected. I’ve seen this phenomenon before; I remember many years ago watching the Italian Lira rise when the government there fell, on the grounds that Italy probably works better without a government in place than with one.
GBP continues to be the best-performing currency as investors get more confident that a delay in the Article 50 process (withdrawing from the EU) and a second referendum are becoming more likely. This despite the fact that PM May has ruled out both.
China’s Vice Premier Liu said that his nation and Germany are committed to greater Financial Market Connections. Tesla will recall more than 14000 cars in China due to airbag issues. Japan's CPI Excluding Fresh Food and Energy at 0.3% y/y as expected.
Gold and Silver prices had small losses during the Thursday’s Asian session testing the support area of $1.290/oz and $15.50/oz respectively due to stronger US dollar, before recovered to $1.294/oz and $15.57/oz during the mid-European trading session as investors turned to more defence assets on the rising global growth worries.