Daily Commentary

Good morning,
We have seen gold take quite a fall in recent hours, this is due to strong YEN data coming out yesterday which may have caused some of the drop, and the fall was boosted by higher than expected Swiss data for the unemployment level coming out in at 4.192m. With more important US data out at 1:30 today, we will be keeping an eye on the price action of gold as the market is expecting 0.3 for durable goods and we could see a further fall considering it has broken out of the wedge on the downside.

EUR has also followed Gold lower against the dollar, we have seen it fall from the recent high of 1.399 consistently all the way down to 1.361. With Mario Draghi talking about inflation and his main emphasis has been on the fall in commodity prices accounting for 80% of the decline in the EUR inflation area since late 2011. Low inflation is expected to be prolonged and Draghi says expect it to gradually return to 2%. With the daily up trends momentum slowing down and with the price breaking support at 1.36 a further fall is be expected.

Dollar Swiss has been surging upwards in recent days on the back of the SNB peg and its inverse correlation with the EURUSD, although when decent Swiss data was released the surge stalled, since then though it has continued to rise, most probably to do with geo-political risk off the escalation of fears in the Ukraine still lingering.

S&P broke through record highs to reach an all time high at 1908.00 on the cash market. The stock market continues to push higher in line with the housing market showing signs of a recovery with new home sales coming in better-than-expected at 6.4% in April. Existing home sales rose 1.3% in April which was the first monthly gain of the year. A holding trend line may have helped to push the S&P on the upside.

Cable has pushed lower today on the back of bad BBA data and lower mortgage approvals then expected, this along with the three previous readings all consistently lower, this has caused cable to push lower as EURGBP buying also weighing on Sterling. A double bottom formed around the 1.681 mark in the short term and this could be seen as a short term base. The UKIP European election results have also weighed on Sterling with the main focus from the UKIP party being to leave the Eurozone.