February 2, 2018
* Ruble continues to get more attention!
* Could the A$ Bears be right?
Good Day… And a Happy Friday to one and all! It’s Groundhog Day! I know that on the East side of the country, they are very interested in what Puxatony Phil has to tell us about the next 6 weeks of winter! Groundhog Day is also the title of one my fave movies, starring Bill Murray, and Andie McDowell. When I first bought the DVD, years ago, I watched it over and over again and I don’t think it was to see Bill Murray! HA! Our Blues hope that last night’s loss in Boston isn’t repeated! Emerson, Lake and Palmer greet me this morning with their iconic rock song: Lucky Man…
I told you on our Tom Terrific Tuesday this week that the dollar buying would be short-lived and that by the end of the week, the dollar would be posting its 8th consecutive week of losses… And unless the Bureau of Labor Statistics (BLS) pull a rabbit out of their hat, ala Bullwinkle, that’s exactly what we’ll end of seeing today, the dollar posting its 8th consecutive week of losses.
This week’s loss by the dollar will most likely not end up being as impressive as previous week’s losses, but keeping the streak going is what maters! You can look at the loss this week by either comparing last Friday’s Dollar Index (89.12) or comparing the euro’s price today to last Friday (1.3445). As we start the day the Dollar Index is 88.87, and the euro is 1.2488..
But all that could change as today is a Jobs Jamboree Friday. Right now the forecast is for an increase of 185,000 jobs in January. But recall I told you yesterday that the ADP report showed 234,000 jobs created in January… So, what’s it gonna be BLS? I get this spider sense tingle that something is wrong… And most likely it’s telling me to beware the BLS and their hedonic adjustments… I guess we’ll have to wait-n-see, but it won’t be too long of a wait, the jobs numbers will print at 8:30 EST.
The currencies stopped their messing around yesterday and got back on the rally tracks, for the most part that is. Gold gained $3.30 on the day, and the price of Oil soared 1.7% to nearly 66-cents (65.92). The price of Oil got a boost yesterday when Lola issued a statement that said that Lola believed the price of Oil would reach $80 by year-end. And we all know from past experience that whatever Lola wants, Lola gets! For any new readers, first, welcome to daily discussion, and second, Lola is what I call Goldman Sachs… Hey! it’s better than what Rolling Stone’s Matt Tiabbi calls them, which is the giant vampire squid! OUCH! That’s going to leave a mark!
With Oil having such a spectacular day yesterday, the Petrol Currencies joined the party, with the Russian ruble leading the way, more on Russia in a minute) followed by the Norwegian krone, Canadian dollar/ loonie and Brazilian real. The moves in the Petrol Currencies weren’t as spectacular as the move in the price of Oil, but the moves were positive, and positive moves are good!
OK, moving on… I was ready to raise the white flag on Palladium, which had booked losses almost daily now for two weeks, and yesterday morning it fell dramatically below $1,000… Good thing I waited, as Palladium saw a turnaround Thursday and booked a nice $22 gain, and in the early trading today is up $17… Whew! that was a close one…
I gave you some interesting data on Russia earlier this week, and that’s to dear longtime reader Bob, I have something additional to add to that data review of Russia a couple of days ago… In the Eurasian region (EEU), the ruble has replaced the dollar as the number one currency used in International Trade… For instance, Ruble transactions in the EEU are currently worth the equivalent of US$69 Billion, compared to US$18 Billion… Pretty amazing don’t you agree?
The Aussie dollar bears that I told you about earlier this week are still weighing heavily on the Aussie dollar (A$), and the fact that their December QTR consumer inflation was weaker than the previous QTR… But now we have some analysts giving the A$ bears more fodder. For instance the FX strategy team at ANZ Bank believe that rate differentials will doom the A$ going forward, as the U.S., in their mind, continues to hike rates, and the Reserve Bank of Australia (RBA) drags their feet to start a rate hike cycle!
Keep in mind there are two main ingredients of this thought… 1. that the RBA drags their feet to start a rate hike cycle, well that’s not that difficult of call to make, as I believe they’ve been dragging their feet for the last 6 months! And 2. That the U.S. is going to continue to hike rates… I think the jury is still out on that one, folks… And any stumble, bumble, fumble by the Fed will not allow this thought to come to fruition.
But, chances are cause I wear a silly grin… No Wait! Chances are the thought by the FX Strategy team above will get very close to coming to fruition, and that’s going to weigh heavily on the A$ going forward…
I’ve grown tired of shaking my head in disbelief over the strength that pound sterling is displaying each day. I’ll just point out that the U.K. debt picture isn’t getting any better, and any BREXIT agreement is going to add to that debt, and the fact that Bank of England Gov. Mark Carney, who got this pound sterling rally started with talk of a rate hike, still hasn’t gotten his interest rate powder wet… But my dad used to have saying that he used all the time… He would say, Chuck, you can’t fight City Hall…
And I take that and shift it to: you can’t fight the markets.. If they are in the mood to make pound sterling their belle of the ball, even though at midnight she might turn into an ogre, you don’t stand in their way..
The U.S. Data Cupboard today, is dominated by the Jobs Jamboree, but will also have the Factory Orders print for December.. Come on Factory Orders play some catch up and get your data more fresh!
Gold, as I mentioned above gained $3.30 yesterday to close at $1,348.30, and it pretty flat so far this morning, as Gold traders wait to see what’s in the Jobs data (Avg. Hourly earnings and Avg. workweek hours) I have an article about China and Gold for you in the FWIW section today, so stay tuned for that!
To Recap… It’s a Jobs Jamboree Friday and it’s Groundhog Day! I’m more interested in what Puxatony Phil had to say, and Oh! there it is! Phil tells us we’ll have 6 more weeks of winter! the currencies are back on the rally tracks, for the most part this morning, but we don’t know what hocus pocus the BLS is going to perform with the Jobs report for January, so that rally might be short-lived today if the BLS decides to go rogue on us!
For What It’s Worth… Remember when I used to give you the totals of Gold accumulation all the time? I don’t know what happened there but when I saw this article I knew it was time to catch up… So, as I said above this article is about China and Gold, and can be found here: http://www.scmp.com/business/companies/article/2131562/chinese-gold-demand-returns-growth-appetite-jewellery-soars
Or, here’s your snippet: “Consumption of the precious metal climbed 9.4 per cent to 1,089 tonnes, according to data from the China Gold Association, released on Thursday. That represents a big turnaround from a 6.7 per cent slump in demand in 2016, and means China maintains its crown as the world’s largest gold market for a fifth consecutive year.
India, in second place, probably saw its gold consumption drop to an eight-year low of 650 tonnes, according to the latest estimate from the World Gold Council in November.
Demand for jewelry in China was especially strong, rising 10.4 per cent to 696.5 tonnes, a dramatic recovery from the 19 per cent drop seen a year earlier, said the Beijing-based association. Jewelry demand is the largest contributor to the total appetite for the yellow metal in the mainland.”
Chuck Again… This is a good sign for Gold, as physical demand would need to outstrip the short paper traders to finally put the kyboshes on the short paper trades…
Currencies today 2/2/18… American Style: A$ .7990, kiwi .7355, C$ .8127, euro 1.2488, sterling 1.4222, Swiss $1.0755, … European Style: rand 11.9685, krone 7.6677, SEK 7.8658, forint 247.74, zloty 3.3286, koruna 20.1566, RUB 56.11, yen 109.86, sing 1.3132, HKD 7.82, INR 64.10, China 6.2944, peso 18.45, BRL 3.1765, Dollar Index 88.87, Oil $65.91, 10-year 2.79%, Silver $17.14, Platinum $999.11, Palladium $1,046.80, and Gold… $1,348.20
That’s it for today… Well, it’s also Super Bowl Sunday this weekend… I doubt I pay much attention to it since I’m here by myself, I’ll probably need to do some dusting or something like that! Here’s the script for the game, the Eagles look good and get out to a good lead, but the Patriots rally to win the game.. Sound familiar? This allergic reaction to something on the left side of my face seems to be getting better, albeit slowly, and you know me, I’m not a patient man when it comes to this stuff! I had better live it up the next couple of days, and then clean up, as Kathy returns next week! HA! I’m sure I’ll hear about it from her when she returns that I mentioned her in the Pfennig. Recall I promised her I wouldn’t talk about her any longer, and whenever I do I ask her friends that do read the Pfennig to not mention it, but she always seems to know… So, who among you is the snitch? HA! Ok, got to get this out the door quickly now… Van Morrison takes up the finish line with his song: Into The Mystic… (love that song!) Now go make this a Fantastico Friday/ Groundhog Day! It looks like a good day to have a good day, and remember to Be Good To Yourself, always! Chuck Butler