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FTX bankruptcy creates fund flows into gold

Gold chart 11 14

FTX filed for bankruptcy on Friday creating outflows from the crypto markets and inflows in traditional safe-haven assets like gold. The company has over 100,000 creditors and billions of dollars in liabilities making the bankruptcy the largest crypto bankruptcy this far. Gold has rallied strongly ever since the FTX mess started to unravel.

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Gold trends higher in the 8h chart but has lost some momentum after EURUSD rallied to major resistance. The market stays bullish above 1755 but if the level is broken decisively gold could trade down to the 1722 – 1729 range. This would probably be a buying opportunity but let’s focus on the range if the market moves there. At the time of writing this gold is still trading above the 1755 level. Above the level, the market is likely to move to 1780 (T1) or so.

DJ chart 11 14

DJ created a momentum loss day on Friday. The market couldn’t close higher than the open. This could mean the bulls’ commitment to the market in short term is wavering and increases the probability of the market retesting the 33358 support again. The nearest key support below the level is 32473. DJ remains bullish above this level.

USDCAD chart 11 14

USDCAD is trending lower in the daily chart but the weekly chart shows how the market is now trading above a major support area at 1.3205 – 1.3220. This has brought in some short covering and the market has moved sideways in the Asian session today. If attempts to penetrate 1.3306 are rejected my downside target is 1.3220. If USDCAD rallies decisively above the 1.3306 level my target is 1.3380.

USOIL chart 11 14

USOIL trades in a range after traders started to take profits. The market has created a lower high at 89.08 which increases the downside risk for oil. The 87.29 level is a key now. A break below it would probably move oil to 86.20 or so. If the 87.29 level is defended and we see a decisive break above 89.31 the USOIL is likely to rally to 89.80. The 86.20 and 89.80 are my targets for the two scenarios above.

Macro Drivers for the USD 

As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.

The Federal ReserveThe Fed hiked the target range for the federal funds rate by 0.75% to 3.75%-4% in its November meeting.
YieldsThe 10-week range in the US 10-year treasury yield has been from 3.05% to 4.335.
EmploymentThe US economy added 263K new jobs in September and the unemployment rate dropped by 0.2% to 3.5%. The monthly earnings data showed no change (0.3% vs. 0.3% prior). The participation rate ticked down by 0.1% to 62.3%.
InflationThe inflation rate in the US slowed for a 4th month to 7.7% y/y in October. This was the lowest reading since January and well below the market expectation (8%).

 The Next Main Risk Events

  • USD FOMC Member Brainard Speaks
  • USD Empire State Manufacturing Index
  • USD PPI 
  • USD Retail Sales
  • USD FOMC Member Bullard Speaks
  • USD Philly Fed Manufacturing Index
  • USD Unemployment Claims
  • USD FOMC Member Mester Speaks
  • USD Existing Home Sales

For more information and details see the TIOmarkets economic calendar here

Trade Safe!

Janne Muta
Chief Market Analyst

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