We are Patiently Waiting

Oil Markets

Oil prices continued to sag plumbing the depths of the recent ranges as the demand outlook remains very soggy, compounded by the worrying read on US manufacturing activity. In a very telling sign, that trade tensions are hurting hard US hard economic data; the Empire State Survey suffered the most significant monthly decline on record and its weakest print since October 2016. The market is in a rut and desperately in need of some robust economic data to get it out of this funk!

Frankly, I’m flabbergasted the data didn’t trigger a more venomous response, but it seems that investors remain bedazzled by the thought of cheap money getting offered up from the Federal Reserve.

Gold Markets

Sure I can weave a convincing tale as to why you should lighten up on gold bars after the big run-up. However, given its “Doves to the rescue ” meaning we are on the cusp of a wave of global central bank easing compounded by the noticeable uptick in trade and geopolitical risk. Gold needs to be an essential part of the portfolio equation, and in my view, investors need to remain long gold as recessionary fears are not even close to a crescendo.

Currency Markets

If I had to characterise overnight price action is It was a tad risk-off with the USD gaining against commonwealth currencies, but the EUR-bloc increasing slightly. Not much of a meal.

Australian Dollar

All eyes are on the Austrian dollar as the minutes to the RBA June meeting are front and centre and the market will be looking for validation of its very dovish view. While the Australian economy is sickly weak and in need of a deluge of stimulus, history tells us, the RBA is a reluctant cutter, so it wouldn’t surprise if they disappointed the market. But from our vantage point, any pullback will be an opportunity to add to Aussie shorts as we continue to position the Aussie dollar for a test of AUD 65.

This article was written by Stephen Innes, Managing Partner at Vanguard Markets LLC

This article was originally posted on FX Empire

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