Source

“The latest Commitment of Traders reports covers the week through April 17.  It shows that the net short positions in the euro, yen and sterling futures grew, while the net long Canadian and Australian dollar and Mexican peso futures positions were trimmed.

There does appear to have been a shift in market sentiment as the second quarter gets under way.  The European debt crisis is threatening to re-emerge and Spanish credit default swaps made a new high at the end of last week.  European bank shares appear to be leading the correction of European equities.

While the real test of the underlying improvement in the US labor market is still to come (in the coming months, the seasonal adjustment increasingly becomes a head wind, and weekly initial jobless claims are stabilizing), the US cyclical expansion is continuing and the world’s largest economy is set to post the strongest growth among the high income countries.

The episodic increase in the European crisis and the relative out performance of the US economy underpins dollar sentiment and this has been reflected in the general net short euro positions that have been maintained since last September.   It was essentially cut in half in Feb-March period, but the latest CFTC data may  mark the beginning of the re-building of net short euro positions.

Euro: The net short speculative position swelled to by about 32k contracts to 101.4k.  This is the largest in about a month.  A small number of longs (almost 600 contracts) capitulated, while 21.3k contracts joined the shorts, which now stood at 140.6k as of April 17th.  What the commonly cited net figures do not capture is when the short-covering rally began, the speculator short euro futures position peaked near 203k.
Japanese yen:  The net short yen futures positions increased by 1k contracts to 66.1k. Both longs and shorts among the non-commercial market segment (which is understood to be speculators) were increased: 1.5k and 2.5k respectively.  By looking at the net position, one misses that the absolute short position is the largest in a month.

The yen has appreciated by almost 4.5% against the dollar since mid-March and yet the yen bears have not capitulated.  They may be trying to hold on until the BOJ meeting on April 26-27.  The yen bears may be placing too much significance on the possibility of new asset purchases by the BOJ (QE).  While  the Feb 14 decision to increase asset purchases by JPY10 trillion did help weaken the yen, but thee are other considerations.  Then it was a surprise.  The speculative positioning in the futures market were long yen.  The euro debt crisis was in a low ebb.

British pound:    The net short speculative position rose by about 10k contracts to 18.8k.  Ironically both long and shorts added to positions.  Longs rose by a little more than 500 contracts, while the short positions grew by 10.5k contracts.  At 48.6k short contracts, the speculative short position is the largest in a month.

Swiss franc: The Swiss franc is an exception to the growth of net short foreign currency futures positions among the majors.  The net short franc position was reduced to 9.9k from 14.7k.  Short positions were shaved by less than 100 contracts but now stand at their lowest level in 2 months.  Fewer players want to bet with the SNB apparently.  The long positions fell by 4.8k contracts, which is the smallest since the start of the year.

Canadian dollar:  The net long speculative Canadian dollar position was trimmed to by about 1.5k contracts to 28k.  Both long and short got out by roughly the same amount 9.3k and 7.8 contracts respectively.  The net position does not allow one to appreciate the extent of the decline in participation by speculators recently.  The absolute long positions is the smallest in two months and that absolute short position is the smallest since last August.

Australian dollar:  The net Australian long positions fell by 10k contracts and is the smallest of the year, thus far.  Longs were trimmed by about 6.2k contracts, but at 79.8k is still substantial.  The shorts (top pickers?) grew by 3.7k contracts to 40.4k.

Mexican peso: The net long speculative peso position fell 14.2k to 68.6k contracts.  Some 7.1k long positions were cut, throwing in the towel as the dollar headed to and then beyond the MXN13.00 level in the spot market.  There remained 84.6k contracts long the peso.  Shorts (bottom pickers, maybe momentum players) doubled the absolute short peso position to 16k contracts.  “

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Chinese GDP data has taken some risk premium out of over night trading…..

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Full article

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“U.S. (MXWD) equity futures advanced, commodities climbed for a second day and the yen weakened as central bankers in the U.S. and Japan signaled no end to stimulus measures. Italian bonds rose after a debt sale and Australia’s dollar gained.

Standard & Poor’s 500 Index futures rose 0.2 percent as of 6:04 a.m. in New York, while theStoxx Europe 600 Index (SXXP) slipped 0.2 percent, after earlier rising as much as 0.6 percent. The S&P GSCI Index (SPGSCI) of 24 commodities gained 0.2 percent. The yen weakened against all 16 of its most-traded peers and the so- called Aussie jumped 0.8 percent versus the greenback. Yields on Italian 10-year debt fell six basis points.

Federal Reserve Vice Chairman Janet Yellen endorsed the Fed’s view that borrowing costs are likely to stay low through 2014, while the Bank of Japan will pursue “powerful easing” to overcome deflation, central bank Governor Masaaki Shirakawa said today. Data later today may show claims for U.S. unemployment benefits dropped to 355,000 last week. Italy sold 4.88 billion euros ($6.4 billion) of debt.

“Policy is going to remain loose for an appreciable period of time,” said Eric Wand, a fixed-income strategist at Lloyds Banking Group Plc in London. “If data doesn’t start to pick up, central banks will keep their taps open, which will support risk markets.”

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Source

“Gold’s London AM fix this morning was USD 1,654.00, EUR 1,261.63, and GBP 1,040.25 per ounce. Yesterday’s AM fix was USD 1,643.75, EUR 1,255.92 and GBP 1,037.72 per ounce.

Silver is trading at $31.66/oz, €24.08/oz and £19.87/oz. Platinum is trading at $1,591.50/oz, palladium at $636.30/oz and rhodium at $1,350/oz.

Cross Currency Table – (Bloomberg)

Gold climbed $17.70 or 1.2% in New York yesterday and closed at $1,659.00/oz. Gold gradually ticked lower in Asian trading prior to tentative gains in Europe and is now trading around $1,655/oz.

Gold’s 1.2% gain yesterday was the largest since March 26 and its four sessions of gains is the longest winning streak in two months.

XAU/CNY (Renminbi or Yuan) Monthly Chart – Bloomberg

A positive sign for gold was that US COMEX futures volume was the strongest in a week and gold rose despite a sharp 1.5% drop in the S&P 500 and other equity indices and a large fall in crude oil and grains.

Gold appears to be catching a breather today and is taking a break after the four sessions of consecutive gains driven by safe haven flows on a cloudy global economic outlook.

Gold’s proven safe haven attributes were clearly seen again yesterday as the sharp bout of risk off in international markets saw gold again have an inverse correlation with riskier equity and commodity markets.

SHANGHAI SE A SHARE INDEX – 2002- Today

Markets continue to digest the very poor US employment number which has led investors to again question the rose tinted view of the US economic ‘recovery’.

The Fed’s beige book will be released at 18.00 GMT.  Investors will also watch the European government debt market, after Italian and Spanish debt was met with decreased demand due to shaky euro zone economies and renewed contagion concerns.

Chinese Gold Imports From Hong Kong Rise Nearly 13 Fold – PBOC Likely Buying Dip Again

Chinese gold demand remains very strong as seen in the importation of 40 metric tonnes or nearly 40,000 kilos of gold bullion from Hong Kong alone in February.

Hong Kong’s gold exports to China in February were nearly 13 times higher than the 3,115 kilograms in the same month last year, the data shows.

Shipments were 72,617 kilograms in the first two months, compared with 10,564 kilograms a year ago or nearly a seven fold increase from the record levels seen last year.

China’s appetite for gold remains strong and Chinese demand alone is likely to put a floor under the gold market.

Reuters Global Gold Forum

Mainland China bought 39,668 kilograms (39.668 metric tons), up from 32,948 kilograms in January, according to export data from the Census and Statistics Department of the Hong Kong government.

Demand has picked up again after the Lunar New Year and demand has climbed in China as rising incomes and concerns about inflation lead to store of value buying.

There is also a concern about the Chinese stock market which has gone sideways since 2001 (see chart) and increasing concerns that various property markets in China look like bubbles ready to burst.

Consumer demand for gold beat India for the first time in almost three years in the fourth quarter and China may replace India as the biggest buyer annually this year.

The massive gold purchases may signal the People’s Bank of China is continuing to secretly accumulate gold reserves.

Reuters report that there are suspicions that the number could include purchases from the public sector, as the market was largely quiet during a post-Lunar New Year holiday slump in February. “On the public level, China’s central bank will continue to accumulate gold, which is easier than liberalising their capital account and currency,” said Friesen of SocGen, adding that building gold reserves would help China’s push to turn the renminbi into a global currency.

Accommodative monetary policy will remain an incentive for private investors to buy into gold, he added.

The nation last made its reserves known more than two years ago, stating them to be 1,054 tons.

The PBOC’s gold reserves remain small compared to those of the Federal Reserve and many European nations.  Their gold reserves remain tiny when compared to their massive foreign exchange reserves of $3.2 Trillion.

It is important to note that in past years, Hong Kong gold imports have accounted for about half of China’s total gold imports. China itself doesn’t publish gold import data and the very high and increasing demand from Hong Kong is only a component of overall Chinese demand.

The per capita consumption of 1.3 billion people continues to increase from a near zero base meaning that this is indeed a paradigm shift and not a blip or ‘flash in the pan’.

It means that gold will likely see record nominal highs – possibly before the end of the year.

Prudent western buyers wishing to protect and grow wealth will again buy gold on the dip as the Chinese are doing.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

OTHER NEWS 
(Bloomberg) — China’s Feb. Gold Imports From Hong Kong 39,668 Kilograms
Hong Kong government announced Feb. gold exports data on its website.

(Bloomberg) — Russia’s FinEx Plus Plans Gold Exchange Traded Product This Year
Asset Management Co. FinEx Plus LLC plans to start a gold exchange traded product in Moscow and expand that to other commodities this year.

FinEx is in negotiations with the Micex-RTS exchange in Moscow to list the gold product, said Evgeny Kovalishin, general director. FinEx is partly owned by Andrei Vavilov, Russia’s former first deputy finance minister, according to Kovalishin.

(Bloomberg) — Raw Materials Group Sees Gold Averaging $1,775 an Ounce in 2012
Gold will average $1,775 an ounce this year, 13 percent more than in 2011, Raw Materials Group said in a statement today.

Silver will drop 6.3 percent to an average of $33 an ounce, platinum 1.1 percent less at $1,700 an ounce and palladium 2.9 percent lower at $710 an ounce, RMG said.”

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Risk on ….

 

 

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“European stocks rebounded from a two-month low and U.S. equity futures gained after Alcoa Inc. opened the earnings season with an unexpected profit. Spanish and Italian bonds climbed as governments sell about $50 billion of debt and the euro strengthened.

The Stoxx Europe 600 Index (SXXP) rose 0.9 percent as of 11:57 a.m. in London, while Standard & Poor’s 500 Index futures advanced 0.8 percent, signaling that stocks may gain for the first time in six days. Alcoa rose 6.3 percent in pre-market New York trading as aluminum climbed 0.9 percent from a three-month low. The euro snapped a five-day drop against the yen to strengthen 0.7 percent and Spanish debt risk neared a record.

European Central Bank Executive Board member Benoit Coeure suggested the lender could revive its debt-purchase program to reduce Spain’s borrowing costs after 10-year yields approached 6 percent. Italy and Germany were among six countries in Europe that sold debt today, while in the U.S., theFederal Reserve will release its Beige Book business survey.Alcoa (AA), the country’s largest aluminum producer, reported an unexpected first-quarter profit after orders rose.

“Fundamentally, the equity market offers extreme value and I am very happy to be buying on the dips,” said George Godber, who helps oversee $22 billion as a fund manager at Charles Stanley’s Matterley division in London. His Matterley Undervalued Assets Fund gained 12 percent in 2012. “Equities are the only place to be.”

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The Euro is currently up 0.00009@ 1.3115

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YEN 

AUSSIE

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“The yen rose against all of its major peers as data showing Japan returned to a current-account surplus and tensions over a North Korean rocket launch bolstered the allure of the currency as an investment haven.

 

The euro touched a one-month low versus the Japanese currency before a German report that may show exports declined in February. The dollar weakened against the yen before data this week that may show inflation in the U.S. eased. The Swiss franc strengthened above the 1.20 ceiling against the euro imposed by the nation’s central bank, spurring speculation the country will intervene to weaken the currency….”

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The Euro is up 0.0005 @ 1.3067

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The Euro dropped for the fourth consecutive day as sovereign debt woes have begun to move back into the foreground. These concerns have forced the EURCHF to momentarily breach the 1.2000 floor – will the Swiss National Bank intervene?

Data was sparse in the overnight, with the most prominent event being the Bank of England rate decision. As expected the Monetary Policy Committee held the key rate at 0.50 percent where it has been since March 2009. Further information will be disclosed when the BoE meeting minutes are released on April 18. However, the market is not abuzz over whether or not that BoE will extend or cut short its quantitative easing program (although that is very important); instead the focus is back on the Euro-zone where the secondary bond markets are starting to show stress among the periphery.

After a poor Spanish bond auction yesterday, there was no rest for the weary early this morning as periphery sovereign debt slid. Italian and Spanish debt has been under increasing pressure the past few weeks, with their respective 10-year bond yields rising to 5.422 percent and 5.709 percent. By no means are their respective yield curves inverted yet; but stress is more prevalent on the short-end signaling rising concerns in the near-term.

The Euro, as expected, has taken the brunt of the markets’ distaste for sovereign debt woes, and the EURUSD has now fallen for four consecutive days. But this isn’t the news; the news is that the EURCHF briefly ticked below the 1.2000 currency floor set in place on September 6 by the Swiss National Bank. As I noted weeks ago and as recently as yesterday, not only was the EURCHF likely to test 1.2000, but as the EURCHF approaches 1.2000, the SNB is likely to become more active in the markets. Indeed, with the Euro-zone concerns pushing the EURCHF below 1.2000 if only briefly, the SNB was forced to step in and intervene, pushing the EURCHF back up above 1.2020.

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The Euro is down 0.0069 @ 1.3071

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Gold is down $43 @ $1,628

Oil is down $0.91 @$103.11

The dollar

EUR / USD

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“The dollar approached a one-month low against the euro before a U.S. report that economists said will show factory orders rebounded in February, reducing demand for the relative safety of the world’s reserve currency.

The Dollar Index dropped for a fourth day before the Federal Open Market Committee releases minutes of its March meeting, where policy makers raised their assessment of the economy. The euro rose against most of its major peers after a German parliamentary leader said there’s no need to discuss a bailout for Spain. Australia’s dollar fell after the central bank signaled it may resume cutting interest rates.

“The U.S. economic news, because it has been better, is promoting some risk appetite,” and undermining the dollar, said Michael Derks, chief strategist at FXPro Financial Services Ltd. in London. “For now the market is minded to focus on the more positive developments. The euro is less vulnerable against the dollar than it was a month ago and there’s also a suspicion that the FOMC minutes might show a bias toward further easing.”

The dollar fell 0.2 percent to $1.3342 per euro at 6:33 a.m. New York time after declining to $1.3386 on March 27, the weakest since Feb. 29. The U.S. currency was little changed at 82.04 yen. It earlier dropped to 81.56, the lowest since March 9. The euro gained 0.1 percent to 109.47 yen.

The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. major trading partners, fell 0.1 percent to 78.794….”

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Story

Quote

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A good sign for tomorrow’s open….

Asian markets

S&P futures

Aussie dollar ripping; a sign of risk on…

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The Euro is up 0.005 @ 1.3349

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“South Korea, Asia’s fourth-largest economy, pared the share of dollars in its foreign-exchange reserves to the lowest level since the global financial crisis erupted in 2007.

Dollar holdings dropped to 60.5 percent of foreign- exchange reserves at the end of last year from 63.7 percent in 2010, the central bank said in its annual report for 2011 released today.

The drop underscores a shift among reserve managers to diversify assets, with China’s yuan and Australia’s dollar among the beneficiaries. South Korea’s government earlier this year announced plans to invest in Chinese equities as well as bonds as the yuan’s international role increases.

“The move to diversify reserves away from U.S. dollars and the euro accelerated last year, largely on weaker fiscal fundamentals and subdued economic conditions in developed markets,” Wai Ho Leong, a senior regional economist atBarclays Capital in Singapore, said in an e-mail. “At the same time, it marked a move into gold, and bonds of stable emerging-market economies, particularly those with better longer-term prospects and currency appreciation potential.”

The central bank boosted the proportion of equity investments to 5.4 percent last year from 3.8 percent, it said. Holdings of foreign government bonds rose to 36.8 percent from 35.8 percent in 2010, the BOK said.

Confidence in Dollar

While the proportion of dollar holdings declined to the lowest since 2007, when the central bank began to disclose details about its asset portfolio, the change doesn’t reflect a lack of confidence in the currency, Kang Sung Kyung, a director at the bank’s Reserve Management Group, told reporters in Seoul today…”

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His current target is $2500 over the next 12-18 months…..

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