Duncan Donald

Fri, Aug 7

Gold and Silver maintain the momentum breaking significant levels

In the US the economy is becoming more about politics than economic and physical health and wellbeing, as the Trump administration fixates on the stock market to capitalize on its strength as we head into the election. After another poor public appearance this week where the President underperformed whilst interviewed by Jonathan Swan on HBO, as he wrestled with his charts, and failed to make his case that America's infection rate was “better than the worlds''. Trump decided to pull some outlandish and, in some cases, illogical tricks stirring up past trade agreements and placing sanctions on tech from China and aluminum from Canada.  The latter of which makes little more sense than the fact he simply wants Americans to believe he has American interest at the forefront of his mind, however transparent and self serving his actions look from the outset.


Despite the obvious nature of his actions, the markets buoyed by participation of Retail Investors who now contribute between 20-25% of daily volume, are certainly buying both the President's actions and stocks. Whilst cases continue to rise across areas of the US and globally stocks continue to surge. Whilst data has been better of late in the US, both rising cases and the cross-party friction caused by the argument over the passing of the latest government aid package. Yesterday, Nancy Pelosi spoke out that the Republicans and the Democrats were a long way apart in agreeing the Bill, and with the August shut down looming it's even thought Trump could step out with procedure in order to get aid to those who need it. If agreement isn’t made and virus cases keep rising, there will certainly be a souring of macro-economic data moving forward.


The main mover in the market this week has been Gold and Silver and the precious metals march on. Gold looks to be closing the week as strongly as it began, having sustained through the $2000 level with forecasters talking about $2500 and $3000 into year end. Like the stock markets for now the weaker US Dollar is fueling the move with notable rises for both the Pound and Euro against the Greenback this week. Only the Canadian Dollar really gave weight this week after a progressive start to the week lifted the Oil dependant Canadian Dollar as Oil targeted a break $43 per barrel news of Trump's sanction on Canada brought a sharp reversal to the 1.3400 area. 


In the UK it was a big week for the Bank of England with their Monetary Policy Meeting on Thursday, and whilst there was no headline movement on rates, the market awaited a guide on their outlook on the bounce back from the virus. Rather unusually, after seeing very conservative forecasts from the leading UK banks in HSBC, Barclays and RBS(Natwest) over the last month the Bank of England was somewhat more optimistic on employment and economic growth. It is certainly unusual to see a disparity between the banking sector and central bank, and it's been mentioned that this could be Andrew Bailey stepping just a bit too far towards optimism. In the UK we continue to see pockets of outbreak resurgence, particularly in Northern England, with Manchester being locked down, even Scotland, which to date had come through the virus relatively well the city of Aberdeen was placed in lockdown as of midweek. One positive, is these micro lockdowns are yielding success as we have seen with Leicester infections now normalising. Brexit and trade deals have been off of the headlines, with little occurring when so much needs to be done.  Coming into the summer month progress could well become more challenging. 


The Week Ahead:


Monday: First up for the week is Chinese GDP and Australian Consumer Confidence before a quiet European and US session. 


Tuesday: UK Unemployment and Average Earnings data comes first. Midmorning we get the German Zew data. In the US session we get core and non-core PPI data. 


Wednesday: Early in the Asian session we get the interest rate decision from the Reserve Bank of New Zealand. From the UK we get GDP data as well as Industrial Production and Manufacturing data. In the US session the main data is core and non-core CPI Inflation data. 


Thursday: Japanese PPI comes first before Australian Employment and Unemployment data. In the European session we get German CPI. In the afternoon its US Import prices and Weekly Unemployment numbers. 


Friday: Reserve Bank of Australia Governor Lowe speaks early in the Asian session before Chinese Industrial Production, Retail Sales and Unemployment. In the European session we get French CPI and Eurozone Flash GDP and Trade Balance. In the US its Retail Sales and Consumer Sentiment in the afternoon.