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Chinese data and Bernanke cause whipsaw in Gold

Ben Bernanke took centre stage yesterday, as he read a prepared text stating that that he sees no benefit in tapering of QE, pushing Gold up around $30 to over $1400/oz, with the expectation of prolonged money printing. After the prepared text, Ben Bernake held a Q&A session, which he subsequently stated that if employment and US data continued to improve then over the “next few meetings” the Fed could begin to taper. These comments led to a whipsaw in markets, as traders reversed their positions as the Q&A comments gave a potentially different time horizon to the prepared text. This is likely to see increased focus and volatility for the next few US employment reports (NFP) because improvement in the labour market was highlighted by Bernanke as one of the catalysts to taper QE.

During the Asian session, regional indices came off heavily following poor Chinese manufacturing data, following months of slowing growth from the Asian power house. The HSBC flash PMI fell to a 7-month low of 49.6 (a number below 50, signals contraction). The reliability of official Chinese data is regularly called into question, as analysts believe figures are inflated to meet expectations.  The potential end of US easing and Chinese growth concerns has seen a pullback in the from the recent Yen weakness, trading back to 101.50

Headlines

Taiwan said to limit bullish currency bets as Yen hits 2008 low - Bloomberg

IMF calls on chancellor to devise a 'clear strategy' for bailed-out banks and pour more taxpayer funds into them if necessary - The Guardian

The FTSE 100 opened 120 points lower following the moves in Asia

Nikkei closes down 7%

The stock of capital flowing into emerging markets has doubled from $4 trillion to $8 trillion since the Lehman Crisis, chasing a catch-up growth story that looks tired and has largely sputtered out in Brazil, Russia and South Africa - The Telegraph

Japan’s Topix index slid 5%, the most since the aftermath of the March 2011 tsunami and nuclear disaster, as financial companies plunged amid rising bond yields. A gain in the yen triggered a slide in exporters as a Chinese manufacturing index unexpectedly signalled contraction - Bloomberg

A British soldier was brutally murdered near an army barracks in South East London yesterday afternoon. The attack was carried out by 2 assailants who are believed to be British born nationals, in a politically motivated attack. Our thoughts go out to the victim’s family, at this difficult time 

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