The recent monetary policy meetings of Bank of Canada and Bank of Japan didn’t lead to any big changes as both banks left their respective policy unchanged. Bank of Japan members voted against stepping up the asset purchase program. Bank of Canada left its cash rate unchanged at 1%. This news may have slightly affected the Canadian dollar. According to ADP, it estimates the U.S employment added 198k jobs during February. If this figure will be lower in tomorrow’s non-farm payroll report, it could pull down the commodities and stock markets. Gold and silver remained virtually unchanged yesterday. Will gold and silver pick up today? Currently, gold and silver are rising. On today’s agenda: BOE Rate Decision, ECB rate decision, American and Canadian Trade Balance reports, U.S. Jobless Claims, Swiss National Bank Foreign Currency Reserve, Spanish and French 10 Year Bond Auction, SNB Chairman Jordan’s Speech, Japan’s GDP Fourth Quarter 2012, and Japan Current Account .
Here is a short outlook for precious metals for Thursday, March 7th:
Precious Metals – March Update
On Wednesday, the price of gold remained unchanged at $1,574.9; Silver rose by 0.7% to $28.78. During the month, gold slipped by 0.18%; silver rose by 1.35%.
In the chart below are the normalized rates of gold and silver during February-March (normalized to 100 as of February 18th). The prices of gold and silver didn’t have a clear trend in recent weeks.
The gold and silver futures volumes of trade have risen on Wednesday to 189 thousand and 42 thousand, respectively. These numbers are lower than the volume traded last week. If the volume will remain low today, this might lower the odds of high volatility in precious metals. The chart below presents the volume of trading gold and silver futures in the CME during February and early March.
The Euro/ USD declined on Wednesday by 0.65% to 1.2967. During the month, the Euro/USD fell by 0.77%. The Japanese yen increased by 0.84% against the USD. Conversely, The Aussie dollar depreciated yesterday against the USD by 0.25%. The correlations among gold, Japanese yen and Aussie dollar remained weak in recent weeks: during February/March, the linear correlation between gold and AUD/USD declined to 0.1 (daily percent changes); the linear correlation between the gold and USD/Yen declined to -0.26 (daily percent changes). These mid-weak correlations might imply the recent developments in gold and silver rates had less to do with the daily changes in the foreign exchange markets. Nonetheless, if major currencies will strengthen against the USD, they might pull up gold and silver.
Current Gold and Silver Rates as of March 7th
Gold (short term delivery) is traded at $1,583 per t oz. an $8.2 or 0.52% increase as of 09:15*.
Silver (short term delivery) is at $28.99 per t oz – a $0.18 or 0.63% increase as of 09:15*.
On Today’s Agenda
BOE Asset Purchase Plan: Bank of England will announce its basic rate as of March 2013 and of any changes to its asset purchase pogrom; as of February BOE left rate flat at 0.5% and the asset purchase plan s at £375 billion;
ECB Rate Decision: The last time ECB lowered its cash rate was back in July 2012 – by 0.25pp to 0.75%. The economic slowdown in Europe including the drop in inflation and rise in unemployment is likely to raise chances of ECB lowering the rate again in the near future. Nonetheless, the current expectations are that ECB won’t change the rate today. If, however, Mario Draghi will hint of a potential future cut, this could cause a reaction in the forex markets;
Swiss National Bank Foreign Currency Reserve: The Bank will come out its current Foreign Currency Reserve; based on the previous update, the forex reserves rose compared to the previous week;
French 10 Year Bond Auction: the French government will have monthly bond auction; in the recent bond auction, which was held during the first week of February, the average rate reached 2.3% – the highest rate in months;
SNB Chairman Jordan’s Speech: the Swiss National Bank Chairman will publicly speak regarding the 2012 Annual Result of the Swiss National Bank, in Zurich; if he will announce or imply of any change to the monetary policy of the SNB it could affect the Swiss Franc;
American Trade Balance: This monthly update for January will show the recent developments in imports and exports of goods and services to and from the U.S, including commodities such as oil and natural gas; based on the recent American trade balance report regarding December the goods and services deficit declined during the month to $38.5 billion;
Canadian Trade Balance: In the latest report regarding December 2012, exports declined by 0.9% and imports also fell by 2.8%; as a result, the trade deficit contracted from a $1.7 billion deficit in November to $901 million deficit in December; this report may affect the Canadian dollar which tends to be strongly linked with rates of commodities;
U.S. Jobless Claims Weekly Report: in the recent report the jobless claims fell by 22k to reach 344k; this upcoming weekly report may affect the U.S dollar and consequently bullion;
Japan’s GDP Fourth Quarter 2012: This quarterly report will pertain to the Japan’s GDP growth rate for Q4 2012. In Q3 2012, the GDP contracted by 0.9%; if the GDP growth rate will decline again, it could affect the direction of Japanese yen;
Japan Current Account: this report will present the changes in the difference between exports and imports for Japan during last month; this news may affect the strength of the Yen;
China’s Trade Balance: as of the previous monthly update, China’s trade balance fell to a $29.2 billion surplus; if the surplus will further dwindle, it could indicate that China’s economic growth is slowing down and thus may adversely affect prices of commodities.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
08:00 – Swiss National Bank Foreign Currency Reserve
Tentative – Spanish 10 Year Bond Auction
Tentative – French 10 Year Bond Auction
09:00 – SNB Chairman Jordan’s Speech
12:00 –BOE Rate Decision
12:45 – ECB Rate Decision
13:30 –American Trade Balance
13:30 – Canadian Trade Balance
13:30 – U.S. Jobless Claims
00:50 – Japan’s GDP Fourth Quarter 2012
00:50 – Japan Current Account
08:15 – Swiss Inflation
13:30 – Canada’s Employment Report
13:30 – China’s CPI
13:30 – U.S. Non-Farm Payroll Report
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