Great change overnight! The dollar’s rally came to an abrupt end, and the gold rage took another battle. The 1480 night’s “small non-agricultural” drive
2019-10-02


24K99 News On the occasion of the US dollar bulls rushing to the 100 mark, an economic data on Tuesday brought it back to its original shape. In September, the US manufacturing activity index fell to its lowest level in 10 years, and the market suddenly changed face, the US dollar. The high platform diving once approached the 99 mark, and the spot gold counterattack broke through the 1480 mark. From the perspective of this trading day, the market pays attention to the US ADP employment data, which is known as “small non-agricultural”. In addition, the Federal Reserve’s "No. 2" Williams will also speak.
 
Great change overnight! The dollar was suddenly crit, and the gold was counterattacked
 
At the beginning of the week, the US dollar bulls continued to counterattack and continued to refresh their two-year highs. However, the good times did not last long. On Tuesday, an economic data “bad news” came, and the dollar’s ​​gains came to an abrupt end.
 
The Institute for Supply Management (ISM) said on Tuesday that the September ISM manufacturing index fell to 47.8, the lowest since June 2009, and further fell further than the sharp contraction in August. A index below 50 indicates a contraction in manufacturing.
 
Earlier, the ISM's August report showed that manufacturing activity contracted for the first time in three and a half years. What is even more worrying is that the export order index hit a 10-year low. Manufacturing accounts for about 12% of the US economy.
 
Not only the United States, the survey released earlier that day showed that the euro zone's manufacturing activity contracted in September was the fastest in seven years.
 
Hubert de Barochez, a macro market economist at Kayin, said that given the recent weak economic data in the euro zone, US manufacturing data has made investors more disappointed because the market originally predicted that the US economy will rebound.
 
After the data was released, the US dollar fell sharply from the multi-year high of 99.68 hit in the day, once fell to 99.05 level, and constantly approached the key 99 mark. In early trading in Sanya, the US dollar index continued to be under pressure and the rebound momentum was obviously insufficient.
 
 
 
 
 
(Dollar Index Daily Chart Source: 24K99)
 
At the same time, spot gold continued to rise, the last day from the low point of 1460 under the Jedi counterattack, rose more than 20 US dollars, rose through the 1480 mark in one fell swoop, Wednesday morning Asian market, gold prices continue to hover around 1480.
 
 
 
 
 
(Golden Day Map Source: 24K99)
 
The data shows that COMEX's most active gold futures contract has a volume of 38,260 lots in 9 minutes from 22:00-22:08 Beijing time, and the total value of the trading contract is more than 5.6 billion US dollars.
 
Phillip Streible, senior commodities strategist at RJO Futures, said, “This shows that there may be major corrections in the economy, and traders are now returning to the safe haven market. The weaker manufacturing data may support the Fed to cut interest rates again, so metals may be boosted. ”
 
A weaker manufacturing data supported the Fed to cut interest rates again, triggering safe-haven buying and re-pricing of doves on US dollar and federal funds rate futures.
 
Paul Ashworth, chief US analyst at Kay's Macro Toronto, said: "Our speculation is that the September data weakness was at least partly due to the GM strike that began in mid-September."
 
The American Auto Workers Union first covered a company-wide strike for the first time in 12 years at GM.
 
Paul Ashworth said: "However, it reinforces our view that despite some hawkish speeches by Fed officials in recent days, the Fed will further cut interest rates by 25 basis points at the Federal Open Market Committee meeting in December."
 
According to the latest CME FedWatch data, the market expects the Fed's interest rate cut of 25 basis points in October to rise sharply to 64.7%, and the rate of interest rate cuts by 25 basis points in December is as high as 79.3%.
 
Jim Bianco, head of Bianco Research in Chicago, said of the ISM report: "This is a bad data, consistent with the global manufacturing recession. I think market concerns are correct, but we must look at other US manufacturing data. Whether this is confirmed, not just the manufacturing employment data on Friday."
 
Stan Shipley, macro research analyst at Evercore ISI, said: "The data increases the likelihood that economic growth will remain below trend levels for a long time. (US economy) is not in recession, but it is definitely moving in that direction."
 
Poor economic data also led to a new round of "attacks" by US President Trump.
 
Trump pushed the "fighting" of the Federal Reserve on Tuesday, he pointed out, "As I expected, Powell and the Fed allowed the dollar to become so strong, especially with respect to all other currencies, and our manufacturers were seriously affected. ”
 
Small non-agricultural strikes tonight
 
After the bad ISM manufacturing data triggered market turmoil, the employment report to be released this Friday is expected to provide further clues to the US economic power.
 
Prior to this, the market will welcome the US ADP employment data known as “small non-agricultural” tonight, which will be announced on Wednesday at 20:15 Beijing time. The survey shows that the number of ADP jobs in the United States is expected to increase by 138,000 in September, with a previous value of 195,000.
 
Ian Lyngen, head of US interest rate strategy at BMO Capital Markets, wrote: "If the job market begins to see a bigger crack, it is expected that the 10-year bond yield will be retested 1.50% in the short term. If the bond continues to expand after hitting this level, then The next target for (yield) is the 12-month low of 1.43%."
 
Kathy Lien, managing director of BK Asset Management, wrote that although manufacturing employment is a separate project in the employment report on Friday, the employment index fell to its lowest level since 2016, which is a danger to the economy and employment. signal. We'll learn more about the service industry report released on Thursday, but for now, today's report has changed the dollar's movements, making the market expect data to be weak.
 
Lien said that in addition to the dollar's correction, US Treasury yields turned negative, and the Dow Jones index fell more than 300 points. If the ADP report on Wednesday does not meet expectations, we may see a more serious sell-off, which may push the USD/JPY down to below 107.50.
 
In addition, at 22:50 tonight, the US FOMC Permanent Vote Committee and New York Fed President John Williams attended a seminar before the 2019 UCD Economics Roundtable series of lectures. If you talk about monetary policy, pay attention to it. Policy position.
 
Gold outlook
 
A recent UBS report said that the agency now believes that gold prices may hit a maximum of $1,730 next year, which is $50 higher than the August forecast. Last month's report pointed out that in the same period of time, the price of gold may reach 1,680 US dollars.
 
Michael McCarthy, chief market strategist at CMC Markets, said the dollar could rise further, which would put pressure on gold. “In addition, the support zone that falls below $1,480 to $1,490 per ounce will itself drive more selling.”
 
Midas Touch Consulting gold market analyst Florian Grummes said that investors will pay attention to the level of $ 1,450 / ounce, once it falls below this level, then it may fall further to 1380 level.