Best of the Week
Most Popular
1.BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - Nadeem_Walayat
7.Gold And Silver – Insanity Is World “Norm.” Keep Stacking! - Michael_Noonan
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.Gold And Silver: Security, And BREXIT - Michael_Noonan
10.BrExit Vote - "The Trend is Set" -- And What You Should Pay Attention to Next - EWI
Free Silver
Last 7 days
Stock Market Meltdown Likely to Drive Gold Towards $1,500 - 28th June 16
Brexit Victory over the EU Globalists - 28th June 16
Brexit Psyop: Greenspan Falsely Blames the Brits for the Crash and Chaos to Follow - 28th June 16
Greenspan Calls Brexit a ‘Terrible Outcome’ as Euro Area Tested - 27th June 16
Stock Market SPX Below Mid-Cycle Support - 27th June 16
Best Holidays for Summer 2016 - 27th June 16
Another Stocks Bear Market? - 27th June 16
BBC EU Referendum Result Highlights - YouGov, Markets, Bookmakers, Pollsters ALL WRONG! - 26th June 16
Investors Map Post-Brexit Strategies Amid Global Market Upheaval - 26th June 16
Gold Price Weekly COT Update - 26th June 16
First the UK, then Scotland ... then Texas? - 26th June 16
Stocks Bear Market Resumes or Just More Noise - 26th June 16
Gold And Silver: Security, And BREXIT - 25th June 16
Dow, Euro & Brexit Recap - 25th June 16
Resistance Holding Gold Stocks after Brexit - 25th June 16
Venezuela vs. Ecuador (Chavismo vs. Chavismo Dollarized) - 25th June 16
Gold, Silver And PM Stocks Summer Doldrums Risk - 24th June 16
Here’s Why China “Economic Hard-Landing” Worries Are Overblown - 24th June 16
Jubilee Jolt: Markets Crash, Gold Skyrockets as Britain Takes Brexit - 24th June 16
BrExit Morning - New Dawn for Britain, Independence Day! - 24th June 16
LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - 24th June 16
Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - 24th June 16
EU Referendum Shock Results Putting BrExit LEAVE in the Lead Hitting Sterling Hard - 24th June 16
Final Opinion Poll Gives REMAIN 52% Lead, Bookmakers, Markets and Pollsters ALL Back REMAIN Win - 23rd June 16
Does BREXIT Matter? Outlook for Sterling - 23rd June 16
Keep Calm and Vote BrExit - Last Chance to Break Free of EU Superstate - 23rd June 16
Here’s the Foreign Policy Trump and Clinton Really Want - 23rd June 16
Details Behind Semiconductor Stocks Leadership - 23rd June 16
Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - 23rd June 16
BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - 22nd June 16
Proof that the Gold Bears are Wrong - 22nd June 16
Here’s a Trillion-Dollar Investment Opportunity for Those Few with No Debt - 22nd June 16
BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - 22nd June 16
Increase In U.S. Rig Count Will Not Cap Oil Prices - 22nd June 16
Are Copper and China Stocks Set to Rally? - 22nd June 16
SPX May Break Its Trendline - 22nd June 16
Believe it or Not: More Kids Live At Home Now than Since The Great Depression - 21st June 16
EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - 21st June 16
British Pound Outlook - BREXIT, Europe and You - Does your vote matter? - 21st June 16
Fascist Victory Behind the European Union - 21st June 16
EU Referendum Opinion Polls Analysis Shows Strong Momentum in REMAINs Favour - 21st June 16
Is It Time to Dump Gold and Buy Platinum? - 21st June 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Market Volaility

FOMC Bring on the Clowns, Dollar, Gold and Bonds

Stock-Markets / Financial Markets 2016 Mar 17, 2016 - 12:14 PM GMT

By: Dan_Norcini

Stock-Markets

Honestly, more and more that seems to be the best phrase to describe when waiting for these FOMC statements to be revealed.

If we are not seeing a case of deliberate attempts to break the back of their own currencies among these Central Bankers, then "Scotty, beam me up!"

With the Fed Fund futures showing sharp increases AHEAD of the FOMC statement of rate hike probabilities, today's ultra dovish statement had everyone positioned on the wrong side of the currency markets yet once again. The result was yet another unleashed chaos courtesy of our Central Bankers.


The Dollar collapse, combined with the production cut numbers in oil from the EIA this morning, lit a fire under the energy markets. The fire also spread to the mining shares and into gold.

Here is a two hour chart of gold. Look at the surge in volume again. After being range bound between $1237-$1225 ahead of the report, the metal blew through the top of the range in short order and basically went vertical with barely a pause until it hit $1260 where it took a bit of a breather.

2-Hour Gold Chart

This thing now looks like it is going to try to test $1270 once more. It has garnered willing sellers above $1275 and has not been able to spend much time above that level before moving lower but that was before we knew how dovish the FOMC was. Whether or not that is a game changer is unclear but the Fed certainly did take one of the factors that would have been considered a negative away from gold with their statement today.

Two other factors remaining are currency debasement and risk.

Look at the Dollar chart.

US Dollar Index Daily Chart

Apparently 98.50 basis the USDX is too high for this Fed so out comes a dovish statement. The question is how do Draghi and company, not to mention Kuroda and company answer this??? I honestly don't know. What I do know however is that the ECB in particular must be fuming this afternoon. They just unleashed their big bazooka last week and for what? The Euro is climbing back up again.

Euro Daily Chart

Japanese Yen Daily Chart

The sharp selloff in the Dollar took gold mining stocks sharply higher with the HUI gaining a huge 6.6% today.

HUI Daily Chart

It closed through an area marked "light resistance" on the chart shown posting its highest CLOSE since May of last year. Pretty impressive stuff! The question is now, that it has managed to put itself in a realistic position to challenge heavy resistance at the April/May 2015 double top, can it finally take that out?

If it can, we should see the index at the March 2015 high near 195.

The falling HUI/Gold ratio spun on a dime and reversed higher today providing some good news for gold bulls. Notice how the ratio is moving towards that May 2015 peak as well.

HUI/Gold Ratio Daily Chart

There was another addition in the reported holdings of GLD this afternoon as well, further fodder for gold bulls.

This time it was 3 tons. Between yesterday's addition of 2 tons and today's 3, it has helped offset that very large 8.6 ton drop, the largest of the year, that took place on Monday. Amazing what a few words in an FOMC statement can do to flip sentiment!

Speaking of changing sentiment - there was a huge spike in the yield curve today after this FOMC statement. The spread between the Ten Year and the Two Year STEEPENED an astonishing 8 basis points in a single day! The bond markets were completely caught off guard by this dovish statement.

Two Year - 10-Year Spread

Now we need to see whether this is a one day wonder and the spread begins to flatten some more or if the bond players think that the dovish Fed policy will start stimulating growth and ushering in some inflation concerns.

It makes sense for the curve to steepen on the heels of a sharp selloff in the Dollar since commodities overall moved higher today ( see copper, silver, platinum, gold, energy, cattle, etc.). Everyone keeps wondering, each and every time we get something like this, whether or not, this is going to be the beginning of the long awaited drive into inflation displacing deflation concerns or whether it is yet another head fake caused by massive short covering across the commodity sector.

If it is inflationary, the long bond seemed not to know it as it barely budged today.

US Long Bond Daily Chart

It's chart pattern, while having deteriorated as it is below the 50 day moving average, still remains unclear. A fall through 160 would suggest that bond traders are beginning to move further away from deflation fears but as you can see by the falling lines on the ADX/DMI indicator, convictions are not very deep-seated either way right now.

We are back to waiting for the outcome of this grand experiment in monetary policy between low to negative interest rates and the forces of deflation and no one knows for sure what to think. Everything is SHORT TERM ORIENTED as far as these markets go with price moving in the path of least resistance on any given day. Until we see some sort of solid evidence that the Central Banks are winning, I expect this uncertainty to remain. I for one would dearly love to see a solid trend.

Dan Norcini

http://traderdan.com

Dan Norcini is a professional off-the-floor commodities trader bringing more than 25 years experience in the markets to provide a trader's insight and commentary on the day's price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world including the grain and livestock markets. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal's commodities section. Trader Dan has also been a regular contributor in the past at Jim Sinclair's JS Mineset and King News World as well as may other Precious Metals oriented websites.

Copyright © 2016 Dan Norcini - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.

Dan Norcini Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife