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Market news: The Israeli rear is back to normal, lifting all restrictions.UOB Singapore: EUR/USD is expected to trade in a range of 1.01-1.03 in the next few weeks. On Friday, we emphasized that "the possibility of EUR/USD breaking above 1.0260 increases". However, the euro failed to break 1.0260 and fell to 1.0139 in the US session before rebounding to 1.0181 (-0.61%). The decline appears to be larger than expected, but the pair is not expected to move further lower. For today, the EUR exchange rate is likely to consolidate between 1.0135 and 1.0205. EUR would have to break 1.03 for further upside to be possible, with the upside momentum quickly dissipating as the pair fell to a low of 1.0139. Overall, the EUR does not appear to be ready to break out of the 1.01/1.03 range at this point and will need to trade within this range for a while longer.Association of Mutual Funds of India (AMFI): India saw inflows of INR 89 billion in equity funds and INR 49.3 billion in bond funds in July.[Market] The price of electricity delivered in Germany in the next year rose 1.8% year-on-year to a record 414 euros/MWh.ING: Further bearish on EUR/USD We are now downgrading our EUR/USD forecast, which will be more in line with our rate strategy teams view of the EUR/US 2-year swap spread. The negative impact of the Eurozone/U.S. two-year maturity spread on EUR/USD is expected to continue into the end of the year, as the Fed is expected to start easing policy only in the first quarter of 2023. From a combination of macro levels, monetary policy, valuations and geopolitics, now seems like an opportune time to lower the EUR/USD forecast curve by 4-5%.

Forecast for the price of gold: Pre-NFP trade slowdown around $1,790 according to XAU/USD

Alina Haynes

Aug 05, 2022 15:08

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As traders exhibit the normal concern ahead of the important US employment data on Friday, the price of gold (XAU/USD) seesaws near the monthly peak. Despite this, the price of yellow metal fluctuates between $1,788 and $1,791 as of the morning of the press in Europe.


The market's conflicting fears about the global recession and the most recent geopolitical stories affecting Taiwan, in addition to the pre-NFP caution, further contribute to the XAU/USD's movement. It's important to note that the options market sends conflicting signals and presents difficulties for gold purchasers.


The recent increase in US Treasury rates has helped to strengthen the US currency and put downward pressure on the price of gold, but it also seems to have lessened concerns about a global economic downturn.


The US Dollar Index (DXY) reverses a two-day slump and registers modest gains at 106.00. The dollar index declined during the previous two days before consolidating recent losses by monitoring the yields. It's important to note that after falling during the previous two days, the US 10-year Treasury rates have stabilized at roughly 2.069 percent. The disparity between the coupons for 10-year and 2-year bonds is still the largest it has been since 2000, yet US Treasury rates have continued to show the possibility of a recession.


Geopolitical issues from the Taiwan Strait are also a problem for gold purchasers elsewhere, as China expresses its displeasure with Nancy Pelosi, the speaker of the US House of Representatives, visiting Taipei. According to West Official, US Secretary of State Antony Blinken recently stated at an East Asia meeting that China's response to US House Speaker Nancy Pelosi's visit to Taiwan had been "flagrantly aggressive."


In terms of the options market's attitude, a one-month risk reversal (RR) of gold prices ends a three-week downturn when seen weekly, but if observed daily, it causes a third straight day of decline. It should be mentioned that the risk reversal term refers to the spread between bullish and bearish bets, namely the call options and put options (RR).


In conclusion, gold prices are still stable, but the bad news outweighs the good news, therefore today's US employment data for July will be important for the short-term outlook. The US dollar's recovery may continue and impact on gold prices if the employment numbers look to be higher than expected.