The DOLLAR index was little changed in Asian trading on Thursday, trading near 92.90. Spot gold retreated to near $1,946 an ounce after rising sharply on Wednesday amid tensions between China and the United States. Fed Chairman Colin Powell is due to speak on Thursday and his comments are expected to spark market volatility. Investors will also keep an eye on the china-U.S. situation, as The Republican Party nominated President Donald Trump on Monday. Trump is scheduled to deliver his acceptance speech on Thursday, in which he is expected to repeat his china-bashing.
Powell’s big speech comes as gold bulls prepare for bigger outbursts
On Thursday, Federal Reserve Chairman Colin Powell will speak at a video conference in Jackson Hole to discuss the review of the monetary policy framework. Investors are watching to see if he will hint at an average inflation target.
Powell’s remarks on Thursday could be the next major market driver. The main focus for investors will be whether Fed Chairman Colin Powell signals that the fed will move its inflation target to an average level, which would push inflation higher than it was before the fed raised rates, further harming the dollar.
Investors are likely to be disappointed if Mr Powell does not announce the change. “The market expects Powell to make modest concessions,” Jonathan Coughtrey, managing director at Action Economics, said in a note. Any disappointment could catalyse a rally in the dollar, which has been falling since March.”
The dollar fell on Wednesday, but remained within a relatively narrow range. The dollar index.DXY closed at 92.90 on Wednesday, down 0.12 percent after hitting 92.85 as the lowest level in the session.
Minh Trang, a senior currency trader at Silicon Valley Bank, said: “The most anticipated conversation will be Powell’s speech on Thursday. People expect there could be subtle changes in how much the Fed is willing to tolerate higher inflation going forward.”
“Targeting average inflation over time, rather than a fixed 2 percent target, could mean keeping rates low for longer,” said Raffi Boyadjian, senior investment analyst at XM, an online brokerage. If the Fed confirms this move, the chances of a meaningful dollar rebound in the near term will be slim.”
Peter Hug, head of global trading at Kitco Metals, said: “Whenever the Fed chairman speaks, there is a significant movement. Markets are watching to see if Powell is worried and what he thinks about the economy in three months ‘time. If he shows any signs of concern, it could cause major swings. When an event like this happens, many people tend to reduce their long or short positions.”
Citigroup notes that an upcoming speech by Federal Reserve Chairman Colin Powell is unlikely to be more dovish than markets are expecting. Mr Powell’s speech will support the idea of a temporary spike in inflation, but headline inflation remains low, though the risk of a very dovish surprise cannot be completely ruled out. The basic scenario expectation is that the dollar will continue to fall and the euro/dollar will rise.
Gold rose more than 1 per cent on Wednesday as the us dollar weakened ahead of a speech by Federal Reserve Chairman Colin Powell and investors bet on further government stimulus to mitigate the impact of the coronavirus outbreak. Tensions between China and the US have also been a major factor in gold’s strength.
Spot gold closed Wednesday at $1953.15 an ounce, up $25.34, or 1.31 percent. On the day, spot gold hit as high as $19,54.56 an ounce and as low as $1,902.22, a swing of more than $50.
“I expect Powell and other central bank leaders to be dovish at Jackson Hole,” Fawad Razaqzada, market analyst at ThinkMarkets, wrote in a research note on Wednesday. If I am right, then yields and the dollar should continue to fall, which in turn could support gold and silver.”
“There are still a lot of concerns about the economy and these concerns continue to point to low interest rates and continued stimulus, which should boost gold prices,” said Daniel Hynes, an analyst at ANZ.
George Gero, managing director of RBC Wealth Management, said gold’s rally will continue this week and Powell’s speech this week will be one of the most noteworthy events.
Chris Weston, director of Pepperstone Research, said the market will be watching closely any communication about the Fed’s monetary policy review. “The Fed communication panel has indicated that Powell will outline the outcome of the monetary policy review,” Weston said. So this could be a multi-asset volatility event risk.”
Td Securities said Federal Reserve Chairman Colin Powell’s Jackson Hole speech could “revive” precious metals prices. The market is now focused on Powell’s keynote speech at the Jackson Hole conference on Thursday. Mr Dominicanexpects Mr Powell, in effect, to announce the results of a review of the monetary policy framework, recommending the formal adoption of average inflation targeting. Precious metals may be supported by the Fed changing its forward guidance and explicitly proposing inflation above 2 percent.
Standard Chartered precious metals analysts said the long-term outlook for gold remained positive with further dollar weakness, low interest rates and support from additional stimulus measures.
“Covid-19 vaccine developments and improving economic data have put a headwind on the gold market in the short term,” Standard Chartered analyst Suki Cooper said in a note. “However, low and negative interest rates, a weaker dollar, and expectations of further stimulus all weigh on the upside.”
“Sentiment is deteriorating and that will force Congress to do more stimulus,” said Edward Moya, senior market analyst at OANDA. Because of all the uncertainty… They can’t let all that go for naught, which would reinforce the bullish outlook for gold.”
US President Donald Trump is set to deliver his acceptance speech
The US Department of Commerce on Wednesday announced sanctions against 24 Chinese companies involved in building military islands in the South China Sea, the first time it has imposed sanctions on China over the issue. This is the latest development in the tension between China and the United States. US President Donald Trump has accused China of not doing enough to prevent the coronavirus from becoming a global pandemic.
The Trump administration has placed 24 Chinese companies on a government list of companies banned from buying US products for helping the Chinese military build artificial islands in the disputed South China Sea. “The United States, China’s neighbors and the international community have condemned the Chinese Communist Party’s claims to the South China Sea and the construction of artificial islands for China’s military,” said COMMERCE Secretary Ross. “The entities designated today have played an important role in China’s provocative construction of these artificial islands and must be held accountable.”
Since 2013, the Chinese Communist Party has dredged and built more than 3,000 acres of land on seven islands and reefs in the South China Sea, including anti-aircraft and anti-ship missile facilities. In addition, China’s dredging and construction of certain outposts violated the sovereign rights of the Republic of the Philippines, according to the Ruling of the Permanent Court of Arbitration of the Philippines in July 2016 in the arbitration case initiated by China. The added list of entities that the business has identified as enabling China to build and militarize disputed outposts in the South China Sea.
The trump administration has already fined dozens of Chinese companies in the past few months, placing them on a list of so-called entities for their involvement in advanced technology and alleged human rights abuses against Muslim minorities in the Xinjiang region. But this is the first time the Trump administration has used a “list of entities” against China when it comes to the South China Sea. South of Hong Kong, the South China Sea borders the Philippines, Vietnam, Malaysia and other countries.
Kevin Wolf, an international trading partner at Akin Gump, said companies on the physical list would no longer be able to buy technology and other products shipped from the United States, “whether toothbrushes or semiconductors,” without special permission. While companies can apply for licenses to continue selling products to entities on the list, such applications are often rejected, the Commerce Department said.
The State Department also announced that it would begin imposing visa restrictions on Chinese citizens who “participate in or participate in large-scale land reclamation, construction or militarization of disputed outposts in the South China Sea.” They will be barred from entering the United States and their families may also face visa restrictions, the statement said.
Bai Ming, deputy director of the International Market Research Institute at the Ministry of Commerce, said the latest round of US sanctions and its recent moves showed that China’s evasive attitude was no longer working. “China should make predictions about what will happen in the future, including how Chinese companies will survive and how to protect their legitimate rights and interests overseas.”
The spokesperson of the Chinese Foreign Ministry has repeatedly said on the South China Sea issue that Nanhai Zhudao is China’s inherent territory, and it is completely normal for China to deploy necessary national defense facilities on its own territory. This is a normal right of a sovereign state recognized by international law.
Tensions over the South China Sea escalated on Wednesday as China fired four missiles into a disputed waterway and the Trump administration stepped up sanctions against companies helping to set up outposts in the region, Bloomberg reported.
China fired four medium-range ballistic missiles into the South China Sea On Wednesday as the People’s Liberation Army was conducting large-scale military exercises, according to a U.S. defense official who spoke on condition of anonymity. The official said the missile landed in the sea between Hainan Island and the Paracel islands. A day earlier, China had protested a us spy plane’s overflight.
In an August 24 article in the Wall Street Journal titled ‘The Pentagon is ready for China,’ U.S. Defense Secretary Mark Esper proposed three major measures to counter the threat from the People’s Liberation Army. In a new era of global competition, Mr. Esper writes, the United States feels threatened by Chinese leaders’ positioning of the military and the potential to reshape the international order.
, a former U.S. trade representative and deputy secretary of state and the World Bank, World Bank President Zoellick (Robert Zoellick) said on Monday that relations between Washington and Beijing are dangerous to fall, the two sides is more and more big, the risk for military confrontation and may be a terrible impact on the global order, unless both parties to take a step back, better coexistence.
The Republican National Convention kicks off on August 24. The Republican National Convention Wednesday afternoon formally nominated President Donald Trump as the Party’s 2020 presidential nominee, pitting him against Democratic presidential nominee Joe Biden. Trump will deliver his acceptance speech on the South Lawn of the White House on Wednesday.
US President Donald Trump warned his supporters at the Republican National Convention on Monday that Beijing would “own” the US if a Democratic administration took office. In a speech on Monday, Mr Trump said the US had “built China” and he criticised China’s accession to the World Trade Organisation. Trump also repeated an earlier claim that his Democratic challenger Joe Biden “fell into The pockets of Beijing” because of his son’s previous business dealings in China. “If this guy gets elected, China will own our country,” Trump said. We can’t let that happen.”
On Tuesday, U.S. Secretary of State Mike Pompeo used an unusual appearance at the Republican National Convention to promote President Trump’s hard line against Beijing. Peng’s President on Tuesday from Jerusalem, the capital of Israel, through the video to speak at the republican national convention, said the President trump “uncover the veil of the plunder of the communist party of China and aggression”, ensures the trump those communist spy disguised as a diplomat in the United States will be sent back to China, in prison or terminate the ridiculous and unfair trade agreement with China, will also lose jobs to China back to the United States.
Pompeo added that President Trump will hold China accountable for covering up the “China virus” and spreading death and economic damage to the United States and around the world. “He will not rest until justice is done.”
The Trump administration did not take any direct punitive action against Beijing over the novel Coronavirus outbreak, but the United States has announced its withdrawal from the World Health Organization (WHO). Since April this year, with the spread of the epidemic in the US, Trump has publicly intensified his conflict with THE WHO. He has repeatedly attacked the WHO, claiming that Tedros Adhanom Ghebrev, who Director-General tedros Adhanom Ghebrev, was influenced and even manipulated by China to help China conceal the epidemic and delay the fight against the epidemic in the US and other countries.