Another volatile session is expected today
Another volatile session is expected today, with the market quick to react to headline comments as monetary affairs indicate significant differences over how to maximise firepower of the bailout fund.
Gold prices ended lower again yesterday, falling quickly in the Asian session. An article in the Financial Times pointed out that the drive by French banks to reduce the size of their balance sheets was exacerbating the adverse impact on commodities trade finance under the new Basel III rules. EU indecision over the EFSF leveraging led stocks and the euro lower with the dollar Index benefitting ahead of this weekend’s summit. Gold fell sharply from highs in Asia of 1,645 to 1,607.75 in early Europe but then rallied back to 1,630 only to get hit again in the New York session to 1,604. A late rally saw a close of 1,620.70. Asia markets this morning saw an early dip to 1,611.85 before picking up again towards 1,629.80. Today’s resistance is seen at 1,630 and 1,645 with support at 1,597 and 1,583
Euro-dollar closed in New York at 1.3785, having seen a volatile session through Thursday which had seen the rate driven to highs of 1.3843 in the late European morning session before dropping back to 1.3656 in the New York afternoon. Moves were mostly driven by headlines ahead of this weekend’s EU Summit. The rate opened in Asia around 1.3780 before meeting strong Swiss name demand. This lifted the rate to an early high of 1.3790. The rate then spiked to session highs of 1.3807, dropping back to mark lows at 1.3764 before settling between 1.3770/1.3800 ahead of the European open. Offers seen between 1.3805-1.3815, with a break of 1.3820 to open a move to 1.3843, with offers seen at 1.3850. Above here, the rate can extend the move towards 1.3870-1.3875 ahead of 1.3915. Support at 1.3760-1.3750.
Cable closed in New York at 1.5800, with the rate easing off a late rally high of 1.5804. The rate in Asia extended the move in initial trade to 1.5785. It then settled between 1.5780/1.5800 in early Asia, dipping to mark lows at 1.5774 before spiking back through1.5804 to 1.5825 mainly on euro-dollar led trade. The rate settled between 1.5790/1.5810 ahead of the European open. Cable is seen edging higher as Europe gets under way, with initial offers seen around the overnight high at 1.5825. Above here, the recent high at 1.5848 moves into view with offers seen in a 1.5845-1.5855 range with stops placed on a break of 1.5860. Above here further offers are noted around 1.5870. Support at 1.5780-1.5770 ahead of 1.5750 and stronger interest at 1.5725-1.5720.
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