COMMODITIES: Gold Hits New Record High Above $3500 Mark
A bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind. Recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat. A resumption of the bear cycle would open $53.72, a Fibonacci projection. Initial firm resistance is seen at $64.49, the Mar 5 low and a recent breakout level. The trend needle in Gold continues to point north and this week’s fresh cycle highs confirm a resumption of the primary uptrend. The yellow metal has traded to another fresh all-time high. Note too that moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. The next objective is $3499.0, a Fibonacci projection. Initial firm support lies at 3163.5, the 20-day EMA.
- WTI Crude up $0.97 or +1.54% at $64.05
- Natural Gas up $0.02 or +0.73% at $3.038
- Gold spot up $25.06 or +0.73% at $3449.28
- Copper up $2.15 or +0.45% at $480.3
- Silver down $0.31 or -0.94% at $32.376
- Platinum up $5.03 or +0.52% at $971.03
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US TSYS: Available "Extraordinary Measures" Pick Up Slightly From Lows
Treasury has $163B of "extraordinary measures" remaining for authorities to use to fend off hitting the debt limit as of March 19, per the latest release of Treasury data. That's up from $86B on Mar 17 and a low of $34B on Feb 24.
- That's a little under half of the $377B in measures available to Treasury, with most of the amount remaining ($143B) coming from the so-called "G Fund".
- This headroom is in addition to $416B in cash left in the TGA, at last count.
- We haven't seen any changes recently to "x-dates" by when Treasury will run out of cash until the debt limit is lifted.
- Consensus still centers around late July/early August, but much will depend on April's major mid-month tax take. Treasury wrote to Congress last week that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
USDCAD TECHS: Short-Term Outlook Remains Bullish
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4345 @ 16:27 GMT Mar 21
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD is trading closer to its recent lows. The bull cycle that started Feb 14 remains intact and moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Note that the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.
US DATA: Current Account Deficit Set To Widen Further In Early 2025
The Q4 current account deficit reported this week was much smaller than expected at $303.9B ($330B consensus), unexpectedly narrowing from $310.3B in Q3.
- This came despite a widening of the net trade deficit to $250B (widest since Q2 2022), from $236B prior as the goods deficit jumped $17B on the quarter to $326B.
- Offsetting this however were a pickup in primary income (positive $2.3B, after two consecutive negative quarters) as reinvested earnings soared $38B to $42B, the highest in 4 quarters (which appears to account for most of the consensus miss, though offset by a $20B pullback in dividends/withdrawals). There was also a $3B increase in the services surplus and a $4B decline in the secondary income deficit.
- The Q4 current account shortfall came to 4.1% of GDP, slightly smaller than Q3's 4.2% - but still above the sub-4% levels for the preceding 8 quarters.
- Obviously trade is a sensitive topic in policy circles at present, and bump in the primary income account (which looks like a one-off) doesn't obscure the very large sustained trade deficit which looks to have expanded substantially in Q1 even if that's on the back of idiosyncratic factors such as gold imports/tariff front-running.
- January's goods and services trade deficit was $131.4B, representing a material jump from December's $98.1B and by far the largest monthly print in history. Next week we get February advance goods trade data - more in a separate note ("US OUTLOOK/OPINION: Macro Week Ahead: PCE Plus A Rare Flagging Of Trade Data").
