Crude oil remains firm after the strong rally yesterday. Currently trading at 77.2, the front-month contract for WTI crude faltered below 78 in European morning. With the lack of industry-specific data, oil prices are boosted by recovery in market sentiment and weakness in USD.
Stock markets also advance. In Asia, the MSCI Asia Pacific Index soared +1.8%, the biggest rise since November 30. Benchmark indices in Japan and Australia rose more than +2%. While China's stock is closed all week due to lunar new year holiday, Hong Kong's Hang Seng Index added +1.8% after a 2-day holiday.
In Europe, equities also rise despite some poor economic data. In the UK, Claimant counts jumped +23.5K to 1.64M in January. The reading does not only caught the market in surprise as consensus forecasts a -10K decline in claims, but was also the highest level since April 1997. The Claimant count rate stayed flat at 5% in January while the ILO unemployment rate was 7.8% in the 3 months through December, also same as a month ago.
Despite the disappointing employment report, stocks and currencies continue to go higher. UK's FTSE 100 Index edges +0.6% higher to 5277 while benchmark indices for German and France shares have gained more than +1% so far.
The pound changes little after the report, staying at a 2-week high against the dollar. For euro, Australian dollar as well as other 'risky' currencies, prices remain firm. In short, the dollar's weakness is broadly based.
Plunge in USD lifts gold. Although EU's pledge last week succeeded in soothing investors' concerns on sovereign crisis in the Eurozone, underlying fundamentals remain unchanged. While Greece stressed that the budget-reduction plan is on track and the EU said it will exert on Greece if it fails to deliver what it ought to, there's lack of detailed plans on EU's assistance and progress of Greece's recovery in its balance sheet. We believe some investors, especially for those who do not invest in USD-denominated assets, probably find gold's appeal as a safe haven attractive.
GOLD
Gold's rise from 1044.5 extends further to as high as 1124.6 so far today. While the rebound is strong, it's still limited below 1126.4. And we'd slightly prefer to case that gold as not bottomed yet. Below 1077.3 minor support will indicate that such rebound have completed and will bring fall resumption for another low below 1044.5. However, note that firm break of 1126.4 resistance will argue that correction from 1227.5 has already completed and will turn focus to 1163 resistance for confirmation.
In the bigger picture, gold has made a medium term top at 1227.5 and correction from there is likely still in progress to 100% projection of 1227.2 to 1075.2 from 1163 at 1010.7, which is close to 1000 psychological level. However, we'd expect such correction to be contained there at around 1000 psychological level and bring resumption of the whole up trend from 2008 low of 681. A break above 1126.4 resistance will indicate that such correction has completed and will turn outlook bullish for another high above 1227.5. However, note that sustained trading below 1000 will dampen our view and put 931.3 key structural support into focus.
Stock markets also advance. In Asia, the MSCI Asia Pacific Index soared +1.8%, the biggest rise since November 30. Benchmark indices in Japan and Australia rose more than +2%. While China's stock is closed all week due to lunar new year holiday, Hong Kong's Hang Seng Index added +1.8% after a 2-day holiday.
In Europe, equities also rise despite some poor economic data. In the UK, Claimant counts jumped +23.5K to 1.64M in January. The reading does not only caught the market in surprise as consensus forecasts a -10K decline in claims, but was also the highest level since April 1997. The Claimant count rate stayed flat at 5% in January while the ILO unemployment rate was 7.8% in the 3 months through December, also same as a month ago.
Despite the disappointing employment report, stocks and currencies continue to go higher. UK's FTSE 100 Index edges +0.6% higher to 5277 while benchmark indices for German and France shares have gained more than +1% so far.
The pound changes little after the report, staying at a 2-week high against the dollar. For euro, Australian dollar as well as other 'risky' currencies, prices remain firm. In short, the dollar's weakness is broadly based.
Plunge in USD lifts gold. Although EU's pledge last week succeeded in soothing investors' concerns on sovereign crisis in the Eurozone, underlying fundamentals remain unchanged. While Greece stressed that the budget-reduction plan is on track and the EU said it will exert on Greece if it fails to deliver what it ought to, there's lack of detailed plans on EU's assistance and progress of Greece's recovery in its balance sheet. We believe some investors, especially for those who do not invest in USD-denominated assets, probably find gold's appeal as a safe haven attractive.
GOLD
Gold's rise from 1044.5 extends further to as high as 1124.6 so far today. While the rebound is strong, it's still limited below 1126.4. And we'd slightly prefer to case that gold as not bottomed yet. Below 1077.3 minor support will indicate that such rebound have completed and will bring fall resumption for another low below 1044.5. However, note that firm break of 1126.4 resistance will argue that correction from 1227.5 has already completed and will turn focus to 1163 resistance for confirmation.
In the bigger picture, gold has made a medium term top at 1227.5 and correction from there is likely still in progress to 100% projection of 1227.2 to 1075.2 from 1163 at 1010.7, which is close to 1000 psychological level. However, we'd expect such correction to be contained there at around 1000 psychological level and bring resumption of the whole up trend from 2008 low of 681. A break above 1126.4 resistance will indicate that such correction has completed and will turn outlook bullish for another high above 1227.5. However, note that sustained trading below 1000 will dampen our view and put 931.3 key structural support into focus.
SILVER
Silver's fall extended further to as high as 16.33 so far and remains firm. Break of 16.015 resistance argues that stronger rebound might be seen. At this point, intraday bias remains on the upside as long as 15.45 holds. Note that break of 16.95 resistance will confirm that recent fall from 18.925 has completed and will bring stronger rise to retest this resistance. On the downside, though, break of 15.45 minor support will suggest that rebound from 14.65 has completed and will flip intraday bias back to the downside for retesting this low.
In the bigger picture, silver's medium term rise from 8.4 has possibly completed at 19.50 already, after just missing mentioned 19.55/21.44 resistance zone. As noted before, such rise is viewed as part of the long term, wide range, consolidation pattern that started at 21.44 back in Mar 08. Fall from 19.50 is possibly the third leg of such consolidation pattern. We'd expect such fall to extend beyond 12.435 support to confirm this case and target a new low below 8.4 eventually. On the upside, above 16.765 support turned resistance is now needed to invalidate this view. Otherwise, outlook will remain bearish even in case of strong rebound.
CRUDE OIL
Crude oil's rebound from 69.50 extended further to as high as 77.56 and remains firm. Break of 78.04 resistance will argue that whole fall from 83.95 has finished and will bring even stronger rally to retest 83.95 high. Nevertheless, before that, there is no confirmation of reversal yet. Below 72.60 will suggest that rebound from 69.50 has completed and fall from 83.95 should then be resuming for 69.50 support and below.
In the bigger picture, prior break of medium term trend line support added some credence to the case of reversal. Medium term rise from 33.2, which is treated as a correction to fall from 147.27, should have completed at 83.95 already, on bearish divergence condition in daily MACD. Current fall from 83.95 should extend through 68.59 support towards next key cluster level at 58.32 (50% retracement of 33.2 to 83.95 at 58.58). Decisive break there will strongly suggest that whole decline from 147.27 is resuming for a new low below 33.2. On the upside, break of 78.04 resistance is needed to confirm that fall from 83.95 has completed. Otherwise, outlook will remain
