DOLLAR GAIN AS HOUSING DATA BEAT ESTIMATES

The dollar index was up 50 basis points following the release of positive economic data. The US department of commerce released data on housing which showed building permits rose to 1.3 million. This was higher than the analysts’ forecasts of 1.29 million. The housing starts stood at 1.326 million, which was higher than the forecasts of 1.23%. This was a 9.7% growth, which was higher than what analysts were expecting. The dollar is up 0.54% and 0.58% against the euro and the pound respectively.

In the United Kingdom, the Office of National Statistics released a series of retail data that missed analysts’ forecasts. January’s MoM retail sales rose by 0.1%, which was lower than the 0.5% expected by the analysts. The annualized core retail sales data rose by 1.5% compared with the analysts’ forecasts of 2.5%. At the same time, traders started worrying about Brexit after a report showed the country had started losing auto jobs.

This week, the XAU/USD pair rose from a low of 1321 to a high of 1361. This can be attributed to the weakness of the dollar, which has fallen by almost 1.50%. Historically, gold and the dollar have a negative correlation since gold is thought of as a better hedging commodity/currency. Today, gold has fallen from a high of $1361 to a low of $1351, partly because of the strong dollar.

EUR/USD

The EUR/USD pair fell following the release of positive economic data in the United States. The pair is currently trading at 1.2438 following a weekly climb to 1.2555. From this high, the pair has retraced to the 38.2 Fibonacci level, to settle at a significant support area. With the ADX currently at 64, it is likely that the downward trend could continue. Traders should however be careful because this could be a false breakout.

GBP/USD

The cable fell from a weekly high of 1.4144 following the release of negative retail data and mounting concerns about Brexit. The pair is currently trading at the 1.4021 level. At this time, as shown below, the 14-day moving average is trying to cross the 25-day moving average moving downwards. This is a strong indicator that the pair could continue moving down. This is further confirmed by the money flow index which is currently at 30, a low it reached on Tuesday.

XAUUSD

This week, the XAUUSD pair rose from a low of $1348 to a high of $1361. As it rose, the pair managed to form a near perfect Elliott Impulse Wave as shown below. As of writing, the pair is forming a reverse bearish move. Often, this is usually a short-term move before the pair starts to move upwards to form a new impulse wave. There is a likelihood that the pair could start another upward trend. Of course, this will depend on next week’s PMI data.