Commodity Currencies Falling On China’s Weakened Demands

Gold slumped $10 in the Asian Monday morning session to below $1210 as the dollar’s rally dampened demand for the precious metals as alternate investments. It fell to its lowest in eight months and silver extended a slump to the cheapest in four years.

Last week, the Federal Reserve raised U.S. interest-rate projections for 2015 while affirming a pledge to keep borrowing costs low for a considerable time. However, hedge funds lowered bullish holdings in gold for the fifth straight week, the longest run this year, as equities surged and inflation remained muted. This though, left a doji in the daily chart increasing the possibility of a rebound.


ECB president Mario Draghi inferred to the economic recovery in the Eurozone as “losing momentum” in his speech yesterday. The speech raised expectations of heightened stimulus measures. The euro again refreshed recent lows against the dollar. Relatively though, the euro performed stronger than the commodity currencies.


Australian dollar has dropped to a seven-month low as a slump in prices for raw materials has curbed demand for the currencies of commodity-producing nations. Yesterday, it broke the 0.89 level against the dollar, where we mentioned before was our first target of bears. The next target will be the year’s low of 0.8650.


The Asian stock markets were a sea of red on Monday. The Shanghai Composite plummeted 1.70% to 2290. The Nikkei Stock Average fell 0.71% being dragged down by Softbank (TOKYO:9984), as Alibaba's (NYSE:BABA) largest shareholder, slumping 2%. The S&P/ASX All Australian 200 lost 1.29% to 5363. In the European stock markets, the UK FTSE 100 was down 0.94%, the German DAX lost 0.51% and the French CAC 40 Index fell 0.42%. U.S. stocks retreated after last week’s rally. The S&P 500 fell 0.8% to 1994. The Dow 30 edged down 0.62% to 17173, while the NASDAQ Composite Index slumped 1.14 % to 4528.

On the data front, China HSBC Flash Manufacturing PMI will be at 11:45 am AEST. Eurozone Flash PMIs will also be released successively at the beginning of the European session. Canada Retail Sales is at 22:30 AEST.

Have a great trading day!
Anthony