Summary
US equity markets moved higher earlier in the session, but 170 point Dow advance was erased as the trading session wore on. The S&P 500 Index settled up 5 points on the day.
Tomorrow's Events
EUR
9:00
EMU GDP
Q1
.2%
.1%
10:00
German Factory Orders
May
.3%
2.8%
CAD
14:00
Canada PMI
June
64.2
62.7
JPY
23:50
Japan Machinery Orders
-2.9%
4%
Trading Opportunities
EUR/JPY
The Nikkei reported that China dramatically expanded its JGB holdings in recent months. Last year China appears to have sold a net JPY80 billion of Japanese government bonds. In the first four months of this year, China appears to have bought JPY541 billion of JGBS, of which JPY200 billion appears to have been purchased in the month of April alone. The PBOC was quick to respond that this was not a sign of it divesting Euros. The 20-day moving average continues to be solid resistance for the EUR/JPY.
Gold
Gold prices came under pressure again today as investors fled dollar-based assets and moved out of gold. The market’s focus has shifted away from the European debt crisis, where the news stream seems largely benign (for the moment), and toward the more negative growth impulses coming from the US. Even though the weakness in the June US jobs report appears largely concentrated in manufacturing, the recent string of economic data has shown a loss of momentum. This coupled with the safe haven demand have depressed US yields. Gold prices pushed through trend line support near 1200 and quickly moved lower to support near the 1188 level. The 50-day moving average proved to be solid resistance, and gold is likely to press lower to support near 1180. As the 20-day moving average of gold moves closer to the 50-day moving average, the technical pressure on gold prices will increase.