European Open: Boris Clings on, gold buckles under its own weight
Matt Simpson July 7, 2022 1:49 AM
Boris Johnson has vowed to fight on despite 44 government officials now resigning over his refusal to resign. Gold breaks another key level and continues to appear weak.
- Australia's ASX 200 index rose by 42.5 points (0.64%) and currently trades at 6,637.00
- Japan's Nikkei 225 index has risen by 381.43 points (1.46%) and currently trades at 26,489.08
- Hong Kong's Hang Seng index has risen by 15.21 points (0.07%) and currently trades at 21,601.87
- China's A50 Index has risen by 82.08 points (0.56%) and currently trades at 14,782.03
UK and Europe:
- UK's FTSE 100 futures are currently up 90.5 points (1.28%), the cash market is currently estimated to open at 7,198.27
- Euro STOXX 50 futures are currently up 46 points (1.35%), the cash market is currently estimated to open at 3,467.84
- Germany's DAX futures are currently up 158 points (1.26%), the cash market is currently estimated to open at 12,752.52
- DJI futures are currently up 110 points (0.35%)
- S&P 500 futures are currently up 59 points (0.5%)
- Nasdaq 100 futures are currently up 14.75 points (0.38%)
Boris clings on despite 44 resignations
Despite growing excitement from his foes, Boris Johnson will not face a new confidence vote this week. Instead, the Conservative Party Committee decided to elect a new executive before considering such a move, and the election for said member is on Monday. Therefore, a new vote of confidence would be next week at the earliest assuming there is one at all.
- 44 members of government have now resigned from the government in protest of Boris Johnson not stepping down as PM.
- Johnson maintains his defiance and vow not to design despite growing
- Johnson has fired Michael Gove, after Gove threatened to quit of Johnson did not resign.
AUD and NZD rally in Asia
AUD and NZD are the strongest currency after Australia reported a record trade surplus, thanks to the energy boom. Strong domestic demand coupled with rising coal and LNG exports saw the trade balance rise to $15.9 million and exports rise 9% in May.
The US dollar index has pulled back from its 1-year high, allowing commodity FX pairs to lift further from their lows. At some point the dollar’s rally will falter, but there are no obvious immediate signs. The closest clue we have to a loss in momentum on DXY (dollar index) is that yesterday’s bullish range was around half compared to Tuesday’s.
Gold 4-hour chart:
Clearly, a strong US dollar has been a key driver for the selloff seen on gold. But it is not the only reason, as capitulation appears to be a driver for gold right now. It cut through 1800 and 1750 like a hot knife through butter – but I’d usually expect some sort of support at such big levels. And as gold spent an extended period in choppy trading conditions above 1800, a break beneath it was a game-changer for many and likely triggered large stops and a rush for the exit.
Whilst prices remain below 1850 then the 1821 support level / September low could appeal to bears.
FTSE 350 – Market Internals:
FTSE 350: 3943.39 (1.17%) 06 July 2022
- 293 (83.48%) stocks advanced and 55 (15.67%) declined
- 4 stocks rose to a new 52-week high, 27 fell to new lows
- 16.24% of stocks closed above their 200-day average
- 28.49% of stocks closed above their 50-day average
- 5.98% of stocks closed above their 20-day average
- +9.43% - Trainline PLC (TRNT.L)
- +3.96% - Scottish Mortgage Investment Trust PLC (SMT.L)
- +3.05% - Chrysalis Investments Ltd (CHRY.L)
- ·-15.04% - Fresnillo PLC (FRES.L)
- ·-8.64% - Harbour Energy PLC (HBR.L)
- ·-5.62% - Energean PLC (ENOG.L)
Economic events up next (Times in BST)
- BOE MPC member Catherine Mann speaks at 09:00 on “the rise of inflation and global monetary policy issues.
- BOE Chief Economist Huw Pill speaks at 17:05 on the economy.
- Canada release trade data at 13:30 and they’re going in from a position of strength, with exports having risen 28.4% y/y in April and a trade surplus of CA$1.5 billion.
- The Fed’s Waller and James Bullard speak at 18:00 speaks on the economy and monetary policy.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.