Silver Surge; Central Banks Meetings
eToro | Jan 30, 2017 11:00
Today's Highlights
Modest Declines
Silver Surge!
Central Banks Meetings (Japan, USA, Russia, UK)
Please note: All data, figures & graphs below are valid as of January 30th. All trading carries risk. Only risk capital you're prepared to lose.
Market Overview
All things considered, the stock markets are holding up quite well. There doesn't seem to be enough volatility at the moment for things to move too fast. So despite the overwhelming amount of shocking headlines breaking across the interwebs, the financial markets, for the time being, don't seem to be in any rush to react.
Of course, the true effect of the Trump travel ban should be better understood once the markets open in New York this afternoon.
With the Lunar New Year celebrations under way in Asia, the only markets that are open are Jpn225 and Aus200, which are both down about 3/4 of a percent.
Markets opening in Europe at the moment are looking pretty red.
The Buck
The US dollar is under understandable pressure after the sloppy implementation of Trump's sudden travel ban on seven Muslim countries. It's just now been clarified that the ban does not apply to green-card holders. So that does lift some of the pressure.
The US dollar index after ending last week in a stronger position opened with a gap down but as I'm writing it does seem to be recovering quite rapidly...
The USD/JPY spent most of Friday in the 115 handle but failed to push much past 115.25. This means that for two weeks, the pair has been building itself into a range from 112.5 to 115.5.
A small anomaly
One thing that caught our attention was the sudden surge in silver on Friday. There doesn't seem to be any specific reason for the spike of about 40 cents an ounce in 30 minutes.
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It seems that once it popped above $16.80 an ounce it must've triggered a few buy orders or sell stop losses and the momentum caught on.
Gold also rose on Friday but much more gradually. Some analysts were pointing to the weaker dollar to explain this move, but that can't be correct. in the following chart, we can see gold (orange) and silver (white) rising against a relatively stable US dollar (Purple).
Big things are coming
This week, we'll get interest rate decisions from no less than 4 major central banks. I'm sure the Donald wouldn't like this very much but Japan will be first.
At the moment, the BoJ is offering -0.1% interest on deposits. This is not expected to change. However, with the BoJ governor Haruhiko Kuroda currently under a lot of pressure and possibly about to end his term, we could easily see him try to throw a surprise at the markets just to try and save his career.
The most likely outcome of this meeting, however, is that Kuroda will simply stress how well the new strategy is going and take no further action. Any shifts in policy, of course, would have a large impact on the Jpn225 and the USDJPY.
Wednesday will be the FOMC in the United States, Thursday is the Bank of England, and the Central Bank of Russia this Friday. We'll of course update in more detail as the dates arrive.
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