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Fundamentals, Gold and FX Movements, Week October 7 to Oct. 12

Our weekly summary of fundamental news on FX that aims to explains price movements, with particular emphasis on the possibly biggest mysteries: the gold price (GLD) and the Swiss franc (FXF) .

 

Weekly Overview

Hopes on a compromise between Obama and republicans on the U.S. debt ceiling and high U.S. initial unemployment claims  sustained risk-on currencies that depend on foreign/U.S. funding like MXN, AUD, ZAR and (the not listed) BRL. The safe-havens  gold, silver, the yen and to a certain extend also the dollar depreciated.

Weekly movers and shakers October 7 to October 11




Remark:

This post is an extract of daily posts on our CHF and Gold News Bar on our home page or at this address in a post format.

It explains daily gold price and CHF movements based on the most important fundamental indicators in a few sentences.

We continuously observe that in particular U.S. and Chinese fundamental data cause large FX fluctuations, that get reflected in all currencies. So the pound improves with good US data, or AUD with Chinese news, but this rule applies also for many other. Only in the case of political turbulence or expectations on changes in interest rates, data from other countries is able to move their currencies.

The only Swiss fundamental data that is able to move the CHF must come from the SNB and from Swiss inflation data – from 1% y/y CPI the SNB should remove the CHF cap. The other data is global macro: mostly US and German data, some European and Chinese/Japanese news publications determine CHF behaviour. CHF is positively correlated to data from Germany and to some extent China and Japan. Good data from the United States lets CHF fall against both USD and EUR; it is hence negatively correlated to good US news. As for EUR/CHF, the Swissie is negatively correlated to good Southern European and French data.
Understand the terms “American bloc” and “Asian bloc” (read here).  Remember also that the currency movement over months is a combination of the daily movements explained here.

 

George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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