September 1, 2022
More “Transitory” Inflation
September 1 (KWN) – Charlie Bilello: Eurozone inflation has moved up to 9.1%, its highest level ever. Meanwhile, the ECB only recently abandoned their negative rate policy by moving back to 0%. This is the greatest disconnect between easy monetary policy and unabating rising prices that the world has ever seen.
THE GREATEST DISCONNECT:
Interest Rates Are Far Below Inflation In Europe
Expect Even More Physical Gold Demand
Garic Moran: Gold tested $1700 support in July, Swiss exports exploded. Opec was openly on the buy side of Gold in years. This test of $1700 will create more central bank demand for Gold than July…
US Dollar May Weaken Before Strengthening…Again
From top Citi analyst Tom Fitzpatrick: Both the DXY and USDJPY failed to complete bullish outside months on Wednesday with closes above 109.29 and 139.39 respectively. Today, however, price action continued higher and closed above both levels, setting new 2022 highs in process. This continues to support our strong USD view; however, given payroll numbers on Friday and, the extended US holiday weekend, we’re a bit cautious in the short-term.
In the medium-term, we bias USD strength, targeting 117.50 on the DXY (double bottom neckline at 102.99) with resistance at 115.47 (long-term ascending resistance) and 121.02 (2001 high). This bias is especially true with USDJPY. We’re watching for a move to the 1998 high at 147.66 given the bullish outside months completed on US5YR, 10YR and 30YR charts with closes above 3.21%, 3.10%, and 3.28%, that suggest an acceleration back to the 2022 highs at 3.62%, 3.50%, and 3.49% respectively.
US Dollar Index Target 117, Then 120
US Dollar Target 148 vs Yen
US Dollar And Gold
GSDesk note: There is significant physical gold demand across the globe. We will keep a close eye on how the currency markets will impact the gold market. Remember, there are times where the US dollar and gold rise together because gold is in a bull market vs all fiat currencies.
Remain patient.
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