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Gold back in focus amidst Russia concerns

Four markets in focus today: Spot Gold, Goodman Fielder, USD/JPY and EUR/USD.

Spot Gold

The precious metal is back in focus after a sharp reversal on Friday on the back of escalating Russia concerns. Gold bottomed at 1269 and has now popped back above the 1300 mark. Russia had to hike rates to keep inflation under control and stabilise the ruble. With further sanctions for Russia looking certain, traders are likely to continue seeking safety in gold in the near term. If gold continues to rally, April highs at 1331 will be the key level to look out for this week.

Goodman Fielder

The company rejected a $1.3 billion takeover bid from Wilmar International and First Pacific. The deal values GFF at 65 cents a share and the company rejected it, feeling it significantly undervalues it. The offer is 18% above GFF’s closing price on Thursday and it will resume trading at 11am AEST. While the offer was rejected, it seems GFF would be willing to play ball if it gets a reasonable offer which focuses on maximising shareholder value. Speculative buying is likely to be rampant today and we’re likely to see the stock trade north of 65 cents at the open.

USD/JPY

Japan’s CPI came in at 1.6% y/y on Friday, which was in-line with estimates. Despite inflation remaining on track, USD/JPY tested 102 on Friday and managed to find support. Today we’ll be focusing on Japan’s retail sales at 9.50am AEST, of which the market is looking for a 10.9% rise. This is remarkably better than the previous reading of 3.6%. With the sales tax hike kicking in in April, perhaps this figure is a bit optimistic. A miss today could be negative for the yen and ultimately see USD/JPY push higher and also support Japanese equities.

EUR/USD

The single currency remains in focus with German import prices and the German Buba monthly report. Despite efforts to jawbone by ECB President Mario Draghi, EUR/USD remains fairly elevated above 1.38. Last week Draghi said a firmer euro would call for policy action to prevent a tightening of conditions and downside risk to inflation outlook. With Russia/Ukraine concerns also ramping up, I get the sense something’s got to give at some point, and therefore the pair could be one to watch this week.

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