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Oil and Gold hitting multi-year highs

Published: Wednesday 03 January 2018

  • Oil and Gold hitting multi-year highs
  • Sterling improves on manufacturing growth
  • US data dominates the afternoon
By  David Johnson

With the US president tweeting that his nukes are bigger than Kim Jong Un’s nukes, we have to wonder whether World War III is going to be started by two overgrown (but sadly not grownup) playground bullies. Despite this, 2018 continues to get into gear with improvements in various currency and commodity markets. The price of gold hit a 42 month high; crude oil is near a two year high and share markets continue to levitate. Sterling has also gained strength after yesterday’s UK manufacturing sector data, which was below forecasts, but still indicated strong growth. There is a deafening silence from UK data sources today, other than the latest Construction Purchasing Managers’ Index (PMI), which shows some tentative signs of recovery for the UK construction industry. Given the lack of other data releases today, the Pound is likely to tread water but be washed around in the wake of other currencies.

US Dollar likely to move today
Most likely to be volatile today is the US Dollar. The minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC) will be published later and, as is always the case, analysts and traders will scrutinise these with the ubiquitous comb of fine teeth to see if there are any further hints of rate hikes in the months ahead. We have to suspect they will be disappointed. Having raised their base rate four times in the last 13 months, it seems likely the Federal Reserve will sit on its hands for a period, awaiting further positive economic data. Speaking of data, we will also see manufacturing, construction and housing market data from the US today, along with a few minor data releases. It looks set to be a busy afternoon for the US Dollar.
Don’t panic!
And about those childlike tweets from President Trump… it seems Nostradamus was way ahead of me. It’s in the Daily Star, so it must be true, but one Nostradamus researcher believes he predicts 2018 to be the starting year for WW III. But don’t panic, anyone who has ever read any of the quatrains written by the 16th Century’s most  famous forecaster will know, you can interpret them in a gazillion different ways, so they are all but pointless. I predict we will be here in Jan 2019 reading exactly the same forecasts. The only caveat is that someone needs to take Trump’s phone away from him and close his Twitter account. 
Some other predictions – pinch of salt, anyone?

"There is no likelihood man can ever tap the power of the atom."
Robert Millikan, Nobel Prize in Physics, 1923
"I think there is a world market for maybe five computers."
Thomas Watson, chairman of IBM, 1943
"640K ought to be enough for anybody."
Bill Gates, 1981
"I'm just glad it'll be Clark Gable who's falling on his face and not Gary Cooper."
Gary Cooper on declining the leading role in "Gone With The Wind."
"We don't like their sound, and guitar music is on the way out."
Decca Recording Co. rejecting the Beatles, 1962.
"Heavier-than-air flying machines are impossible."
Lord Kelvin, president, Royal Society, 1895.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Construction Purchasing Managers' Index 53.1 52.8
USD 15:00 US: ISM Manufacturing Purchasing Managers' Index 58.2 58.1
USD 15:00 US: Construction Spending 1.4% 0.6%
USD 19:00 Federal Open Market Committee Meeting Minutes     

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