BBH: Dollar, Treasury Yields Back Off; Data Undershooting Expectations
The U.S. dollar has given up some of its recent gains andTreasury yields have fallen back, with some apparent cooling of the U.S.economy, although expectations remain for another Federal Reserve rate hike inSeptember, says Brown Brothers Harriman. “The forces that had pushed the U.S.10-year Treasury yield to 3% and the dollar above JPY113 at the start of themonth, and the euro to $1.13 a couple of weeks ago, have dissipated,” BBH says.“The 10-year yield is near2.80%. The dollar was near two-month lows against the yen a week ago, and theeuro was back toward the middle of its previous $1.15-1.18 trading range.” U.S.economic data has been undershooting expectations lately, BBH says. The marketwill monitor trade, income and personal spending, and revisedgross-domestic-product data this week. “Thetrade deficit narrowed in Q2 but the effort to beat the sanctions appears tohave faded,” BBH says. “The risk is that the combination of growthdifferentials and the dollar's recovery spurs deterioration in Q3. Consumption rose at a 4% clip in Q2, according to the preliminary GDPestimate. It is unsustainable. A slowdown should be evident in the monthlypersonal consumption data....Growth seemsto be moderating toward a more sustainable pace, still juiced by fiscalstimulus and deregulation.” Still, BBH adds, neither U.S. PresidentTrump's criticism of Federal Reserve policy nor Fed Chair Jerome Powell'sFriday speech has altered investors' view that a September rate hike is nearlya “foregone conclusion,” with 90%-plus odds.
By Allen Sykoraof Kitco News; asykora@kitco.com
MKS: $1,200 Key Technical Level For Gold Prices
Monday August 227, 2018 08:31
The $1,200-an-ounce level is a key chart point for gold,says MKS (Switzerland) S.A. The metal has traded on both sides of this in thelast week and was up 20 cents for the day to $1,205.50 an ounce shortly before8 a.m. EDT. “The metal will look to hold the $1,200 figure to entice interestfor a leg higher, while support underneath the psychological level will beevident toward $1,185-$1,190,” MKS says. One positive for gold is the recent reductionin global exchange-traded-fund selling, with outflows of only 10,000 ouncesrecorded on Friday, MKS adds.
By Allen Sykoraof Kitco News; asykora@kitco.com
John Gross: Last Week's Bounce In Metals Due To Softer Dollar, Technicals
Monday August 227, 2018 08:31
A number of precious and base metals likely rose last weekdue to a combination of a softer U.S. dollar and technical considerations, withmetals viewed as “oversold,” says John Gross, president of the managementconsulting firm J.E. Gross & Co. He notes that silver postedits first weekly gain following 10 consecutive weekly losses, gold had itsfirst weekly advance after six weekly losses, and copper has scored just twoweekly gains over the past 11 weeks. Most will say the bounces were due to aweaker dollar, Gross says. “But there is another element, a bit more esoteric,that also contributed to metal prices moving up,” he explains. “Over the pastseveral weeks, or in some cases, months, metal prices fell sharply, puttingthem deep into ‘oversold territory’ on a technical basis. Whether one measuresoversold by the Relative Strength Index, by Stochastics, or just by visualobservation, a correction could be expected, and it finally came. So, was itthe dollar influence that moved the markets, or was it due to technicalconsiderations? We suspect it was a bit of both, but we will learn more in thecoming weeks.”
By Allen SykoraFor Kitco News
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