Suffered the euro once again hot in the currency markets, with the resistance test of the euro against the U.S. dollar in the earlier $ 1.30. Any fall below this level support an important role promoting the sale of more than EUR and buy USD.
This force is still the dollar to increase the downward pressure on precious metals, with the sale of severe late yesterday afternoon with the price of gold below $ 1630 for a brief period and silver close to the barrier of $ 30. As Dan Norcini's comments in his blog, can gold and silver markets experience increased volatility during the festivity of birth, and more futures traders offset positions before the holidays. This can decrease in liquidity to highlight the sharp movements in the price - both up and down.
Furthermore, James Turk discusses in his latest King World News Blog interview how the fallout from the MF Global debacle is draining yet more liquidity from markets. The serious implications of this scandal as far as trust in clearinghouses and brokers are concerned is only just being recognised by the great mass of ordinary investors in America and elsewhere in the world. This loss of confidence in “the system” is causing many investors to withdraw completely from futures trading in gold and silver – which will only accentuate the volatility affecting these markets as a result of reduced volume over the Christmas period and the still uncertain situation in Europe.
Currency traders quoted in The Wall Street Journal say that it’s only a matter of time until the EURUSD falls through the $1.30 mark – and that the next target could be at $1.2860, the year-low from early January. German opposition to raising the €500 billion-euro lending limit on the European Financial Stability Facility encouraged euro-selling. Furthermore, the US Federal Reserve’s Open Market Committee confirmed that it would not be initiating another round of asset purchases – or “QE3” – yesterday, though as commented on in Monday’s News article, if the dollar continues to strengthen against other major currencies (notably, the euro and the Chinese yaun) then the likelihood of more QE from the Fed increases significantly.
However, it should be remembered that the Fed has already promised to keep rates pinned at close to 0% until at least mid-2013, and is also in the process of greatly increasing the amount of dollars held outside of the US – owing to its increasing dollar swap arrangements with other central banks.
The comments Sinclair Jim at his website, commenting on the language of the resolution yesterday FOMC: "The Fed made by just swapping the main available to the European Central Bank, and today promised to keep rates near zero until at least mid-2013 and also said they do not do nothing to further stimulate the economy. this is the full double talk. "
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