Stocks prices consolidated globally overnight despite of Republicans’ sweeping victory to pass the biggest tax overhaul bill in nearly three decades.
This is a much-anticipated event therefore market participants tend to ‘buy on expectations, sell on the facts’ before the holiday season kicks in.
The US dollar index slid for a third day to the 92.9 area largely due to the strengthening of euro and yen. EUR/USD fell to 1.187 area this morning after attempting its immediate resistance level of 1.190 (61.8% Fibonacci Extension). Technically its near term trend has turned bullish as both of its 10-Day SMA and SuperTrend (10, 1.5) have flipped upwards. Breaking above key level of 1.190 will open room for more upsides towards the next resistances at 1.195 (78.6%) and 1.201 (100%) respectively.
Soft dollar led to a strong rebound in precious metal prices. As mentioned in my earlier note, the gold and silverratio is getting close to historical extreme of 80, which suggests that the silver price is oversold relatively to gold, and this situation is not sustainable. Notably, the momentum indicator DMI has signalled a rebound of their prices.
Technically, gold price has entered into a short-term bull trend with its 10-Day SMA and SuperTrend (10,2) both flipped upside. Momentum indicator MACD has formed a golden cross, which suggests more upside in the days to come. Separately, a fairly large correction in Bitcoin price this week may have some positive influence to precious metal prices as investors regain their appetite for traditional safe-havens.
Gold – Cash
Crude oil prices advanced for a third day as the DoE US commercial crude inventory data showed unexpected ease in oil stockpiles last night. The inventory dropped by 6.49 million barrels, larger than Reuters’s earlier forecast of 3.8 million drop. As shown in the graph below, the inventory has declined for five consecutive weeks to 436.5 million barrels, which helped to ease concerns over the US share production.
Crude Oil Stocks (Net Change)
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