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Commodity Brief: Gold below $1590 as 'sequester' looms

Another flat day in commodities overall as reflected by the Commodity Research Bureau index, up +0.02%, with Copper down -0.67%, Silver -1.82%, Gold -1.01%, and Oil also down -1% below the $92 mark, while Wheat closed in NY up +0.56%, Sugar +1.71%, and Soybeans +0.87%. Gold-Silver ratio went last at 55.3, off 2013 highs area around the 56 level, above its 50 and 200 day SMA, which means with 1 troy ounce of Gold we could buy up to 55.3 troy ounces of Silver, a ratio way above the 31 level it was back in May 2010.

Focus is now on upcoming “sequester” of US budget that will take place automatically in less that 2 hours when midnight comes to New York. Cuts are estimated in $1.2T over US Federal spending for the coming 9 years, according to WSJ MarkeWatch, which could represent up to -0.5% of GDP this year, based on CBO’s estimates, and it would be not too good for commodities. "We think investor focus will be on the sequester", said analyst at INTL FC Stone Edward Meir, as cited by Barani Krishnan for Reuters.

USD meanwhile went higher, as usually does with commodities lower, or better said, with USD higher, commodities usually go lower, as a USD higher is interpreted as a non inflationary sign, linked with US yields also higher, and seen as well as a safe haven for capital flows. USD index was +0.43% higher at the NY close, limited so far below the 82.00 figure and key 61.8% Fibo retrace of 84/78.5 leg down, while US 10 year bond yields have been steady around the 1.89% level, right below its 50 day SMA.

Forex: AUD/USD little moved around 1.0220

Aussie is not catching up enough steam so far, following both PMI China data, the official and the final HSBC one. Both of them came in in line with expectations, being the official one 0.01 lower than expected, while HSBC came in exactly as the previous one at 50.4. Probably more worried on US “sequester”, that will take place automatically in about 2 hours time when midnight strikes in NY, as “Congress on Thursday abandoned efforts to avert the cuts and left town for the weekend,” said the Washington Post.
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Forex Flash: AUD outlook turning down - RBS

While the outlook for the AUD "is not deteriorating rapidly, it nonetheless is turning down", these are the opening remarks from today's note to clients from Greg Gibbs, currency strategist at RBS.
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