DAILY REPORT : Thursday 12 Apr 2018

MACRO: The FOMC minutes released overnight showed members now have greater confidence in reaching the 2% inflation target and affirmed plans to increase short-term interest rates gradually. The minutes also showed officials raised concerns over the implications of retaliatory trade actions on the U.S. economy, with particular focus on the agricultural industry. CPI in the U.S. declined -0.1% MoM during March (exp: 0.0%), the first negative result since May 2017. The soft headline figure was weighed down by gasoline prices as they fell -4.9% during March, while ‘core’ CPI, which excludes food and energy, added +0.2% MoM to be in-line with expectations. On an annualised basis CPI increased +2.4% YoY from +2.2% previously, while core CPI ticked higher to +2.1% YoY from +1.8% previously. Equity markets in the U.S tracked lower on Wednesday, under-pressure following a heightening of geopolitical tensions after a number of tweets from President Trump suggesting the U.S. was preparing for a military strike in Syria. The DJIA declined -0.9% to 24,189.45 points, while the S&P 500 dipped -0.55% to 2,642.19 points as telecoms (-1.49%) led nine of eleven sectors lower. The greenback ended trade modestly lower on Wednesday, however was able to pare declines late in trade to limit the fall of the DXY index to just -0.1%.

PRECIOUS: The heightened geopolitical tensions underpinned a leg higher to bullion on Wednesday, with large volumes registered through Comex as Gold ended over +1% higher. Comments regarding strikes on Syria from President Trump initiated the risk-off tone to send equities sharply lower and buoy bullion. Strength leading into the New York open took gold through USD $1,350, while further support on the back of the U.S. CPI print saw the metal through the figure to touch a session high of USD $1,365.45. Solid offers above USD $1,360 weighed upon the metal late in trade following the FOMC minutes release to restrict further gains and keeping the metal still within the recent range (Jan high was USD $1,366). Silver took out both the 100 DMA (USD $16.63) and the 200 DMA (16.79) on the way to a USD $16.88 session high, however pared gains late in trade to end +0.7% higher around USD $16.65.

Asian trade today saw reasonably tepid price action amid solid volumes, with early session offers seeing bullion test underneath USD $1,350, however interest around the figure restricted any further weakness. Expectations are that USD $1,350 will act as an initial pivot point for near-term pricing, however more importantly key down-side support around USD $1,335 - $1,340 should provide a base for a further test through the Jan high of USD $1,366. Silver's overnight move above the 200 DMA was an important print for the metal, however disappointedly was unable to close above the figure. The 100 DMA at USD $16.63 will form the next level of support and below this the 50 DMA around USD $16.50. With regards to the white metals, palladium was a major mover overnight as tensions with Russia increase, testing toward the 200 DMA at USD $975 to end +1.5% higher. Data today includes Eurozone industrial production, U.S. initial jobless claims and U.S. import prices.


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