Gold needs bounce off to fuel tank with more bulls

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
The German manufacturing sector is losing ground, showed a factory orders report published on Wednesday. The key figure suddenly fell by 0.7% in July, after rising by 0.9% in June. Weak domestic demand was the main cause of slowdown, while orders of the outside world remained stable. A silver lining in all of this was the note that orders activity reached the pre-crisis highs of 2008. Investors’ take on the weak sector performance could imply temporary and seasonal factors, but for euro doomsayers this may add confidence in playing against the crowd.

Oil prices went into recovery on Tuesday after Motiva Enterprises, the largest US refinery, partially resumed its oil refining operations. The timing of returning to full capacity is still unclear, since flooded areas will likely require repair. The scale of the damage is difficult to assess, but it promises to leave a long trace of interruptions in the work of the oil industry. According to the representative of the company, by the end of the week capacity utilization can reach 40%.

However, the US will not be able to finally part with the natural disasters in the oil refining sector. No less destructive Irma storm can take the course to Florida which can exacerbate the problem of glut of the American oil market. Further dynamics of WTI will depend on figuring out the scale of destruction and the pace of recovery of main refineries near the Gulf of Mexico.

Trade ministers of the US, Canada and Mexico are saving the NAFTA trade agreement, despite Trump's criticism that loose trade connections with partners on the continent are driving the US trade balance into negative territory and robbing the economy of jobs. According to official comments, officials managed to agree on small business, digital commerce, services and the environment with “warp speed”. For the United States, this means a partial failure of Trump's protectionist initiatives, an increase in the peso and the Canadian dollar . Trump's unsuccessful attempt to build a trade barrier between the US and Canada will also have a positive impact on oil prices, given that Canada is one of the main exporters of hydrocarbons in the US. The WTI barrel grew by half a percentage point, being a step from the $ 49 mark.

A number of Federal Reserve officials are growing dissatisfied with their own policies (for obvious reasons) and there are call off the third hike to next year. For the dollar, this is undoubtedly a bearish signal that will get a chance to work off after Draghi's speech on Thursday. After several months of disappointing inflation , the labor market also weakened surprising with a 0.1% rise in wages and 156K new jobs in August. The talks about the normalization of rates in this situation can only lead a very fearless "hawk".
After plunging into the support zone below 92.00 and correction, the dollar index again rolls on an inclined but without sharp plays. A weak attempt to impose a bullish struggle can indicate that in the range of 92-93 there is a gradual consolidation of the bearish forces in order to oust the dollar from the level of 90. The first assault may be timed for the ECB's tomorrow meeting, but a total sweep will likely take place at the Fed meeting in mid-September, which will decide the fate of Fed balance sheet .

Arthur Idiatulin

Sep 11
Trade active: Reaching resistance, bearish trade has been triggered as expected.
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This analysis is provided as general market commentary and does not constitute investment advice.
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