The prices of gold and silver started off the week slightly rising. Will this trend continue? Yesterday, China’s trade balance report came out and revealed China’s exports rose by a much lower pace than many had anticipated. This news, however, didn’t seem to affect much the financial markets. Today will start a two day meeting of the FOMC that will conclude tomorrow with a statement and a press conference. Will the Fed introduce additional monetary steps to help jump-start the U.S economy? On today’s agenda: German ZEW economic sentiment, Canadian Trade Balance and American Trade Balance.
Currencies / Bullion Market – December Update
The Euro/ USD edged up on Monday by 0.08% to 1.2937. During the month, the Euro/USD slipped by 0.38%. Moreover, some currencies such as Canadian dollar appreciated yesterday against the USD by 0.21%. This low movement may have contributed to the low volatility of bullion prices. The correlations among gold, silver Euro and Aussie weakened in recent days: during November/December, the linear correlation between gold and Euro /USD reached 0.317 (daily percent changes); the linear correlation between the gold and AUD /USD reached 0.36 (daily percent changes). Thus, if the Euro and other risk currencies will change direction and edge down against the USD, they are likely to pull down gold and silver.
On Today’s Agenda
American Trade Balance: This report regarding October will show the recent developments in imports and exports of goods and services to and from the U.S, including commodities such as oil and natural gas; according to the previous American trade balance report regarding September the goods and services deficit declined during the month to $41.5 billion; if the trade balance will rise on account of an increase in imports of goods, this could suggest a rise in demand for commodities in the U.S;
German ZEW economic sentiment: According to the previous report regarding November, the ZEW indicator for Germany declined by 4.2 points to -15.7 points; if Germany’s economic sentiment will further dwindle, the Euro will plausibly remain weak against leading currencies;
Canadian Trade Balance: In the previous report regarding September, exports rose by 1.9% and imports were unchanged as a result, the trade deficit contracted from a $1.5 billion deficit in August to $0.8 billion deficit in September; this report may affect the Canadian dollar, which tends to be strongly correlated with prices of commoditiesץ
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