Gold and silver marginally higher ahead of Eu open
London (Feb 3) Gold and silver are trading marginally higher leading into the European open. Silver has now pared most of the move higher after the "Reddit short Squeeze" trade ran out of steam following an increase in margin requirements (18%). Gold fell 1.24% yesterday but is still pretty rangebound at the moment.
Indices in the Asia Pac area were mixed but the ASX (0.92%) and Nikkei 225 (1.00%) both traded well. It was the Shanghai Composite that was the major laggard falling -0.46%. There were some good earnings results from Alphabet and Amazon after the US close that could have boosted sentiment, although Jeff Bezos said he would be stepping down as the Amazon CEO.
In the FX markets, the dollar is slightly lower with the New Zeland dollar once again the outperformer rising 0.30% against the greenback. In terms of base metals, zinc is the only one in the black and copper trades 0.27% lower.
On the coronavirus front, GlaxoSmithKline, CureVac are to develop a number of MRNA COVID-19 vaccines for variants. This is a big boost as there was a big question about the current vaccine effectiveness against the new variants.
On the data side of things, the latest China Caixin/Markit PMIs Services hit 52.0 and the Composite reading came in at 52.2 for January. Importantly like the manufacturing numbers both remain in expansionary territory. Overnight the New Zealand Unemployment rate for Q4 2020 came in at 4.9% beating expectations of 5.6%, this could go some way to explain the strength in the NZD overnight.
We also heard from the RBA overnight, Governor Lowe stated "there was a risk of upward pressure on AUD if did not extend QE". He then added that the bank "need to keep loose monetary policy until people get jobs, higher wages".
Over in the US, 15 US Senators have written to Biden urging him to address the semiconductor shortage. This is said to be having an impact on automakers and South Korea and Taiwan are said to be ramping up production as much as possible.
Sticking with the US administration, US Treasury Secretary Janet Yellen says US economic aid package is desperately needed. Joe Biden still has not managed to pass his bumper bill but talks continue.
Over in Italy, a familiar face may be returning to government. Former ECB President Mario Draghi could become the next PM in the new coalition. The news came yesterday as the Italian expresses his intention.
Looking ahead to the rest of the session highlights include earnings from Glencore, ECB monetary policy statement, services and composite PMI's from the major nations, EU CPI, US ADP NFP, US ISM PMI, weekly DoE's and comments from Fed's Kaplan. Harker, Bullard, Mester, Buba's Buch and Wuermeling.
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