Spot gold surpassed $4,000 today, hitting a day high of $4,059.31. Buyers remain in firm control (see article here for clues that the trend may be over).
Spot silver also extended higher, falling just short of my target of $40.83 in April 2011.
The US dollar mainly rose against major currencies. The exception was the AUD, where the greenback recorded a decline of -0.11%. It also remained virtually unchanged against the Canadian dollar.
The biggest factor was a 0.51% rise against the JPY as buying continued in USDJPY. USDCHF also gained 0.46%.
Below are the USD exchange changes against major currencies:
- EUR +0.24%
- JPY +0.54%
- GBP +0.17%
- CHF +0.46%
- CAD +0.03%
- AUD -0.10%
- NZD +0.22%
The NZDUSD hit its lowest level since April 11 after the RBNZ cut rates by 50 basis points. Expectations were about 50-50 for a 25 basis point cut.
EURUSD hit its lowest level since August 27: testing the 61.8% retracement of the rise from the August 1 low at 1.1592. The day’s low was 1.15977: just above this level.
GBPUSD hit its lowest level since September 26, testing a descending trendline and a corrective high from the same date at 1.33695. The price has balanced higher towards the 1.3400 level currently.
No economic data was released today. The US government shutdown is in its eighth day and no solution is in sight. The US Treasury auctioned 10-year bonds, which was met with average demand. Yields in the United States ended the day higher after being lower at the start of the American session.
- 2-year yield 3.588%, +1.6 basis points
- 5-year yield 3.722%, +1.6 basis points.
- 10-year yield 4.130%, +0.4 basis point
- Yield at 30 years 4.721%, -0.5 basis point
US stocks continue to shrug off problems in Washington with the shutdown now on day eight. The S&P and NASDAQ indexes both closed at record highs. The Dow Jones industrial average closed unchanged.
- The S&P index rose 39.13 points or 0.58%
- The NASDAQ index rose by 255.02.01.12 percent
The FOMC minutes showed that most participants agreed that it would likely be appropriate to further ease monetary policy over the rest of the year. Nearly all members supported cutting rates by 25 basis points in September, although a few saw value in leaving rates unchanged, and one argued for a 50 basis point cut.
Some noted that financial conditions might not be particularly restrictive, suggesting that a cautious approach was still warranted.
Regarding the economic outlook, most participants believed that downside risks to employment had increased, while upside risks to inflation had decreased. Fed staff revised upwards GDP growth projections for 2025-2028, although risks remain balanced. Finally, some participants stressed that the permanent repo facility would help maintain the funds rate within its target range and ensure the smooth functioning of the market without disrupting quantitative tightening.
Oil inventory data was mixed with crude oil inventories rising, while gasoline and distillates posted declines. Crude oil price is trading up $0.68 at $62.41.
