The Dow hit an all-time high yesterday, and the dollar remains strong with the DXY still above 82, but precious metals are still trading in a narrow range despite these headwinds. This may be a sign that a firm bottom is building.
Asian markets were up overnight, with the Nikkei hitting a 4.5 year high and Chinese, Hong Kong and Australian stock indexes all advancing. In Europe, EU aggregate exports dropped 0.9% in the fourth quarter of 2012, the steepest decline in four years. Euro stock indexes still trended higher, but German 10-year bonds saw their lowest yields yet this year on safe haven flight over economic concerns and fears over what will happen with Italy. Both the euro and Swiss franc (CHF) were down overnight. The franc, usually a safe haven currency, has had that aspect of its appeal tarnished with the Swiss central bank’s determination to target a fixed exchange rate versus the euro. As the euro drops, the central bank will take action to weaken the CHF.
The European Central Bank meets tomorrow, amid speculation of what actions it will take in the face of a continuing recession in France and the southern members of the alliance. Instead of an actual rate cut, we’re more likely to hear ECB chairman Mario Draghi try to use his press conference to affect the markets rather than overt policy changes.
In the U.S., Wall St. is ready to continue the party. Stocks opened higher, with the Dow forging ahead into record territory. The dollar is higher after a drop overnight, and oil is steady after giving up some of yesterday’s gains. The ADP private payroll report for February was released this morning, showing a drop in new hires from January, but still coming in above analysts’ expectations. Other reports due today include the Mortgage Bankers Assoc mortgage application report, and the Fed “Beige Book” of current economic conditions.
It’s being reported that the central bank of South Korea has taken advantage of low gold prices to boost their gold reserves by 25%, buying 20 tonnes of gold in February. They purchased a total of 30 tonnes last year, buying on two dips.