Dollar Weakness Short-Lived

Any hopes that the U.S. dollar would continue to trade lower after yesterday’s weakness was short-lived. In fact, all of yesterday’s price decline eroded in early evening trading as the dollar not only recouped but closed above yesterday’s opening price.

Currently the dollar is up almost a half a percent, a 46-point gain, and fixed at 96.970. Although both yesterday and today contained equal lows, today the index closed a few ticks off of the intraday high of 96.99.

Of course, dollar strength eroded any gains witnessed in gold pricing today.  In fact, gold futures, basis the most active April contract actually traded to a high of $1321.70 after opening in New York at $1314.30. Within two hours of trading moved to the daily highs before beginning a slow and methodical move to lower pricing. The last hour of futures trading contained the largest selloff as gold pricing moved from $1314 per ounce to the low today of $1308.10. As of 5:15 PM Eastern standard time, gold futures are $.70 off of today’s lows and currently fixed at $1308.90. The April contract lost approximately $5.10 in trading today.

Spot gold declined approximately the same amount as gold futures losing $5.20 on the day. Currently physical gold is fixed at $1305.20. The entire decline today is a direct result of dollar strength which contributed selling pressure resulting in a loss of $5.90. In fact, gold was alone in the precious metals showing positive gains in terms of market sentiment. Traders actually bid the precious yellow metal up by $.70 today, and at the same time bid silver, platinum, and palladium lower.

It seems logical that the’ risk on’ market sentiment resulted in the Dow, S&P 500, and the NASDAQ composite all showing moderate gains on the day. With the Dow gaining almost a half a percent, and fractional gains in both the S&P 500 and the NASDAQ composite.

It is still widely anticipated that the potential shutdown most likely will be avoided on Friday. What remains to be seen is President trump’s signature with the deadline of midnight on Friday the 15^th. However, he has not been given the legislation which is reported to be a 700-page document containing the necessary steps to fund the federal government.

It also appears that there is extreme optimism in regards to a resolution over the U.S. and China trade dispute. Currently the United States and China are active in negotiations and there is a moderate to high level of confidence that a trade deal will be reached before another round of tariffs take effect on March 1^st. Lastly President Trump raised the proposal of extending the March 2^nd deadline.

Wishing you as always, good trading,