The EURUSD has remained range bound between 1.2900-1.2950, ahead of key economic data today. First up are Italian Industrial Production figures followed by EU wide Industrial Production numbers. At 12:30 GMT US Retail Sales are released and will be reported and this will prove further insight into the strength of the US economic recovery. Consumer spending is said to account for 2/3 of US economic activity or GDP and thus this release usually impacts the markets, esp bond markets, stock markets, fx and commodities. Earlier this morning German WPI (Wholesale Price Index) plunged to -0.2% vs expectations of positive 0.2%. This indicates that deflation or undesirably low inflation may be a risk in the Eurozone's largest economy. Also keep your eye on several key Chinese economic data points released on Saturday which could affect the opening price action for next week. Notably Industrial Production y/y, Fixed Asset Investment ytd/y and Retail Sales y/y in China. The Chinese economy is world's second largest economy and as such can affect all the rest. Yesterday Stock Indexes were almost unchanged in Europe and the US. EURUSD Support areas include 1.2867, 1.2800, 1.2745 followed by a key support at 1.2550. Resistance levels above are at 1.2959, 1.30 figure level, followed by 1.3165.
The cable has recovered from the strong 1.60 support area as noted in our analysis earlier in the week. The pair has reached 1.6275 and is now trading at 1.6258. All eyes remain on the Scottish Independence issue and the implications that this may have. Generally the US Dollar rally has paused and there has been a correction across currencies. This has been seen more acutely in the Pound as the GBP had declined more dramatically than other currencies. We are awaiting further news on the UK economy with today economic releases including Construction Output and CB Leading Index (CB - Central Bank). The London property market has been booming this year, up over 25% year to date and this has bolstered the UK economy. It will be interesting to see if such wild moves can be maintained or if this will create unexpected consequences. GBPUSD support areas include 1.6200, 1.6100, 1.6000, 1.5900, and 1.5850. Resistance levels and upside targets at 1.6250, 1.6365 and 1.6500.
Gold has continued to slide going into Friday's session, down from yesterday’s $1245 level falling below $1235 and hitting a low of $1233. The price has rebounded back as high as $1240 and is now at $1238. The Gold price is being driven by Dollar strength and the volatility and uncertainty in fx markets and asset markets generally. For example the interest rate outlook and market affect Gold. Here is why: When interest rates were and are around 0% in the US, EU, UK and other countries, you have a choice: Shall I hold my money in cash in the bank with virtually no interest/yield or should I convert to Gold which is considered safer than paper/fiat money. Now if deposit accounts begin to offer better rates of interest and government bonds start to pay higher yields, money will flow out of Gold into these assets and money that would have flowed into Gold no longer will, and may move into other asset classes. Support levels for Gold can be seen at $1215, $1185, $1150, $1050 and lower at $1000 and ounce. Resistance to the upside at $1250, $1275, $1300, $1350, $1400.