The American market looked slightly more upbeat today as core CPI data came in slightly more positive than expected at 0.2% m/m. US employment claims were also much better anticipated at 255k; so overall positive news for the US domestic economy. However, the market is still stuck in a lurch here as recent FED comments have cast a shadow of doubt on the possibility of any future rate rises at all. It seems that many in the FED still see global threats and the domestic economy in general as to weak to lift rates in the current situation at present. I am inclined to agree to a certain extent as inflation levels are still far too low to even consider really pushing up interest rates at home in the US, where the FED has taken up an active mandate for controlling inflation. With the drop off in energy costs leading the charge for low inflation it is likely we will actually see a push higher for inflation in the next year as energy prices are restored to previous levels.
As a result of the recent US problems, gold has certainly come back into fashion and the recent trend is starting to look quite bullish. I feel that there is some traders out there who are bullish, but I do feel that any gold bulls over the last few years have certainly never been long term, and the long term prospect for the precious metal is bearish over all. Either way the charts show strong resistance at 1215 and I would not be surprised to see further pushes higher look to test these levels. Support on the other hand is looking very strong at 1178 if gold can maintain this key level and continue its trend.
If you're looking for more medium term plays for gold, there is a strong bullish trend line on the charts that is easily visible on the D1. The market will be looking at this closely as gold will look to touch and go as it climbs on the charts. Long term the outlook is bearish, but for now the bulls have something to trade technically off and it is worth watching.
Across the seas in Australia we saw a mixed bag when it comes to Australian economic data as the unemployment rate came in at 6.2%, an improvement over all and a surprise drop. While at the same time the net amount of jobs added to the economy for the previous month was -5.1k which in turn played down the possibility of really having a large effect on the thinking of the Reserve Bank of Australia (RBA). This in turn, has led to many to regard the recent employment data as noise and lead to scepticism over it. Despite this, I would expect the RBA to still look to cut rates in the long run as the economic situation continues to suffer under the global fall in commodity prices.
Traders have so far tried to use the weak US dollar as a catalyst for continue a bullish run, but resistance at 0.7361 has stopped many in their tracks. For the most part this is no surprise based on the thoughts I have penned above. Long term it's certain that the bears will look to push the AUDUSD lower.
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