Money, XAG / USD, Australian GDP – Talking Points
- Silver price exploded today as hopes of a revival reappeared in the United States.
- US dollar hit new lows for several years as sentiment improves
- Australia’s GDP takes center stage in Asia-Pacific trading session
Hopes for a revival are fueling market sentiment again. The month of December starts with an inclination of risk. On Tuesday, a bipartisan group of US lawmakers presented a $ 908 billion Covid relief plan. The recent package has yet to gain broad support but is nonetheless a positive sign of the bipartisan deal in Congress.
The greenback abruptly broke amid renewed stimulus hopes, with the DXY index falling by nearly a percentage point. In turn, precious metals gained against the weaker US dollar. Money, in particular, has risen sharply, exceeding gold. XAG /USD gained nearly 6%, recouping some of November’s losses.
Earlier today, Federal Reserve Chairman Jerome Powell and Treasury Secretary Mnuchin discussed their views on economic recovery in the Senate. The two policymakers had divergent views on the way forward for the economy, but agreed that Congress should take further steps to support the economy from a fiscal standpoint.
Additionally, to boost the economic outlook, President-elect Biden’s office has announced that former Fed Chairman Janet Yellen will head the Treasury Department. In favor of continued economic support, his appointment appears to strengthen market sentiment.
US dollar, gold, silver – 1 hour price chart
Chart created with TradingView
Wednesday’s Asia-Pacific Outlook
Tuesday’s slant in risk following the US session is expected to spill over into Asia-Pacific trade on Wednesday. Growing cases of Covid continue to warn economists as the United States and Europe head into winter. Still, the vaccine headlines appear to be a lasting positive wind in sentiment. Following today’s stimulus news, a better-than-expected outlook for 2021 appears to be changing the mood of the market. It also appears to stimulate inflationary pressures.
According to DailyFX Economic Calendar, a major risk for the coming session is Australia’s third quarter GDP report. The forecast figure for Q3 growth stands at 2.6% on a quarterly basis. A better-than-expected impression can boost risk-sensitive assets like Aussie-Higher dollar. In addition, Japan is expected to release figures on consumer confidence.
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Silver prices could climb further on the basis of still bullish economic data including the Australian GDP report. However, XAG / USD is currently up from its 100-day moving average which appears to offer some resistance. After the recent upward movement traders may need some time for prices to find their breath for the next upward rally. Additionally, the upward price channel from the March lows appears to be playing the role of a new area of resistance.
XAG / USD Daily Price Chart
Chart created with TradingView
XAG / USD TRADING RESOURCES
— Written by Thomas Westwater, Analyst for DailyFX.com