Issue 32 – The week of September 19, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• CAD Industrial Product Price Index. The Industrial Product Price released by Statistics Canada measures price changes for major commodities sold by Canadian manufacturers. Changes in the IPP are widely followed as an indicator of commodity inflation. A high reading is seen as positive (or bullish) for the CAD, whereas a low reading is seen as negative (or bearish).

Tuesday

• CAD Consumer Price Index. The Consumer Price Index (CPI) released by Statistics Canada is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of CAD is dragged down by inflation. The Bank of Canada aims at an inflation range (of 1%-3%). Generally speaking, a high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the CAD.
• 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. Stocks down are good for precious metals.

Wednesday

• USA Federal Reserve Interest Rate Decision. With a pre-set regularity, a nation’s Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks. In the US, the board of Governors of the Federal Reserve meets​ at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency. If rates remain unchanged, attention turns to the tone of the FOMC statement, and whether the tone is hawkish, or dovish over future developments of inflation.

Thursday

• UK Bank of England Interest Rate Decision. With a pre-set regularity, a nation’s Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks. A rate hike tends to boost the local currency, as it is understood as a sign of healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency. If rates remain unchanged, attention turns to the tone of the BOE statement, and whether the tone is hawkish, or dovish over future developments of inflation.

Friday

• CAD Retail Sales. The Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, positive economic growth anticipates bullish movements for the CAD.

• 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 also market sentiment towards a certain asset.

Geopolitics

With the funeral of Queen Elizabeth II, this week generations of people have been used this constant in their lives where the only constant since her reign began has been changed marking a significant collectively recognized moment of a sea change.

The global economies continue to suffer from the same factors dragging down production of supply chain shortages, artificial inflationary pressures and a rapidly shifting global economic landscape. There is a whole generation of people that are experiencing interest rate hikes for the first time in their lives. The pendulum is swinging to the other side.

The Call

Markets continue to act in an erratic and non-colliery manner. These kinds of markets tend to be very difficult to trade as previous trading patterns move out of sync with each other. About the only sure bet right now is that the US dollar continues to gain strength relentlessly.

All eyes will turn to this week’s US Federal Reserve interest rate decision. After last week’s reports showed that inflation is still rising market analysts are now expecting a 75 basis point rate hike to be announced.

Both gold and silver are starting the week off on the back foot in Asian trading. London will be closed today in recognition of Queen Elizabeth II’s funeral.  The question to start the week off is how much has the market priced in a 75 basis point hike by the Fed? If the hike comes in at 75 points precious metals will probably rally. A 50 basis point hike and they will scream to the upside. A 100 basis point hike and prices will test areas not seen for several years, which it already is.

Definitely not an environment to be speculating in unless you have a high pain threshold. The call this week is for a 75 basis point hike and a modest rally from precious metals with early in the week pressures on prices. Technically speaking there is a lot of open-air lower with intermittent support areas.

Last Week in Review

• Precious metals were mixed as silver managed good gains but gold had a rough going last week spending most of the week taking losses

	Gold	Silver
Open	1718	18.91
High	1735	20.00
Low	1654	18.76
Close	1677	19.60