Issue 25 – The week of August 1st, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• USA ISM PMI (Purchasing Managers Index) The Institute for Supply Management (ISM) Manufacturing Index shows business conditions in the US manufacturing sector. It is a significant indicator of the overall economic condition in the US. A result above 50 is seen as positive (or bullish) for the USD, whereas a result below 50 is seen as negative (or bearish).

Tuesday

• CAD S&P Global PMI (Purchasing Managers Index) Markit Manufacturing PMI, is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies. An index reading above 50.0 indicates an overall increase in that variable, below 50.0 an overall decrease. All data are seasonally adjusted.
• USA Weekly Crude Oil Stocks. API’s Weekly Statistical Bulletin (WSB) has reported total U.S. and regional data relating to refinery operations and the production of the four major petroleum products: motor gasoline, kerosene jet fuel, distillate (by sulphur content), and residual fuel oil. These products represent more than 85% of the total petroleum industry.

Wednesday

• USA ADP Employment Change. The Employment Change released by the Automatic Data Processing, Inc, Inc is a measure of the change in the number of employed people in the US. A rise in this indicator has positive implications for consumer spending, stimulating economic growth. So, a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish.

Thursday

• CAD International Merchandise Trade. The International Merchandise Trade released by Statistics Canada is the difference in the value (in Canadian dollar terms) of its imports and exports of Canadian goods excluding intangibles like services. Export data can give an important reflection of Canadian growth as tangible goods like oil, gold and manufacturing dominate a large part of Canada’s GDP. If a steady demand in exchange for Canadian exports is seen, that would turn into growth in the trade balance, and that should be positive for the CAD.

Friday

• USA Nonfarm Payrolls. The nonfarm payrolls released by the US Bureau of Labor Statistics presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to their high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. A high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months’ reviews ​and the unemployment rate are as relevant as the headline figure, and therefore market’s reaction depends on how the market assets them all.
• CAD Net Change in Employment. The employment Change released by Statistics Canada is a measure of the change in the number of employed people in Canada. A rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive, or bullish for the CAD, while a low reading is seen as negative or bearish.
• CAD Unemployment Rate. The Unemployment Rate released by Statistics Canada is the number of unemployed workers divided by the total civilian labour force. It is a leading indicator for the Canadian Economy. If the rate is up, it indicates a lack of expansion within the Canadian labour market. As a result, a rise leads to a weakening of the Canadian economy. Normally, a decrease in the figure is seen as positive (or bullish) for the CAD, while an increase is seen as negative or bearish.
• USA CFTC Net Gold Positions. The weekly Commitments of Traders (COT) report provides information on the size and the direction of the positions taken, across all maturities, with participants primarily based in Chicago and New York futures markets. Forex trades focus on “non-commercial” or speculative positions, to determine whether a trend remains healthy or not, and market sentiment towards a certain asset.

Geopolitics

The big news from last week was of course the US Federal Reserve interest rate hike of ¾% or 75 basis points.  Many analysts were calling for a bigger rate hike of 1%, or 100 basis points. This lower-than-expected rate hike gave precious metals the needed fuel to rip higher.

Even though a deal, brokered by Turkey, to allow for grain to be shipped from the Black Sea port of Odesa has been agreed to Russia has stepped up attacks on shipping infrastructure in that region. Over the weekend one of Ukraine’s richest grain oligarchs and his wife were killed by a Russian missile strike sparking speculation that it was a targeted attack.

Grain prices sold off on news of the agreement to allow the resumption of grain shipments. Yet after a weekend of assaults on the area around Odesa markets will probably be second-guessing the Russians’ true intentions even though the first ship carrying grain left the port of Odesa on Monday.

The Call

Precious metals are poised to capitalize on gains made last week. Friday could see some enhanced volatility as both US and Canadian employment reports are released. Grain prices could rally back this week which would give further impetus for gold and silver to move higher. It’s a new day, a new week and a new month. Only one more month of summer doldrum trading to go then markets will return to full liquidity levels.

Last Week in Review

• Precious metals had a very strong week after the US Federal Reserve hiked rates at a lower-than-expected amount.
• Russia announced that gas shipments to Europe would be reduced to approximately 22% of possible daily capacity
• China’s net gold imports via Hong Kong increased almost fivefold in June as banks accelerated their purchases
• Zimbabwe launched gold coins to help tackle soaring inflation pressures
• US Federal Reserve raised interest rates by 75 basis points or 0.75%
• Grain shipments were being loaded in Odessa in anticipation of shipments resuming this week.
• A million people were put into lockdown in Wuhan, China as four cases of Covid were discovered
• Russia suspended gas shipments to Latvia as they refused to comply with demands that gas shipments be paid for in Russian roubles

	Gold	Silver
Open	1728	18.57
High	1767	20.35
Low	1711	18.30
Close	1765	20.32