May To Address Parliament | Gold Defends Its 1300 Mark

Fundamental analysis of Forex market

The possibility of another US government at the end of this week is keeping many risk lover investors at the bay. No one wants to see another government shutdown, especially after a historic one which wasn’t too long ago. These government shutdowns adversely impact the economic health of the country. Although there are some reports that perhaps some sort of deal is actually shaping up behind the closed doors.

Resolving trade war issues can really improve the sentiment in the markets. It is in the US’s best interest to put an end to this sadness so that the economic growth can blossom again. We trust solving this matter can push the dollar index higher which already has touched its best level in six weeks. In addition to this, it will also aid the general sentiment among equity traders.

The equity markets over in the states are still robust. The S&P 500 is up 8.10% year-to-date, the NASDAQ index is up 10.14% YTD and the Dow Jones is up 7.40% YTD. The 10-day volatility for the S&P500 is less than the 30-day volatility and the theme is the same for the Nasdaq and Dow Jones indices as well and this indicates there isn’t much panic in the markets. But the fact that the Dow Jones index had 15 stocks closing on the upside yesterday and 15 stocks closing to the downside, this indicates that the current momentum isn’t strong.

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Back in the U.K., after the most sub-standard manufacturing and GDP reading yesterday, the investor focus is more on today’s parliamentary address by Theresa May to MPs. This was supposed to be tomorrow but the prime minister brought it forward given the time sensitivity issue the country is facing. In her speech today, she is going to ask the MPs to give her more time so that she can bring a better deal by February 27th back to them. Although many MPs aren’t going to be very delighted with the situation, but they have limited options in front of them.

In the commodity space, the gold price has defended its support level of 1300 and it appears that the bears do not have any permission to drive the price lower. The fact that central banks are increasing their foreign reserves of gold is also helping the price. Malaysia foreign reserves increased to $422.3 billion, and as long as these numbers keep on rising, it shows that the gold demand is robust and it is only going to get better with time.

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