Nasdaq closing on session highs, gold under pressure

Post-Renzi Europe moved decidedly higher, and with the European Central Bank (ECB) meeting on Thursday, traders will be looking for Draghi to give some indication of future ECB bond purchases after the current March 2017 period.

Source: Bloomberg

Markets have remained relatively calm after the Italian referendum, however pressure remains on Italy’s banking sector to raise capital with Unicredit reporting a plan to seek 13 billion euros, which is more than its current market cap. With political limbo in place, this may face some resistance.

European indices closed into highs with news from the Bank of England that the current account deficit was not as large as first thought, coming in at 5.4% of GDP.

GBP/USD moved back under 1.27 while EUR/USD briefly fell below 1.07 to recover without any current direction and still looks to be moving to parity on its current trend.

Markets have resumed the Trump rally with news that Donald Trump is planning to cancel the current order for a replacement Air Force One. The US dollar index briefly traded under the key 100 level which is a measure of strength. Probably the most crowded trade in the FX market at the moment is to hold USDs, with US equity markets pushing back towards new highs, European volatility under control and the closely watched US VIX slipping under 12, putting the equity markets in a “complacent” mode.

US ten-year yields remain steady at 2.39% with the December rate rise now factored in.

The Aussie 200 open looks positive again, with futures pointing to a 31-point higher open at 5462.Overall, the commodities sector looks supported, iron ore futures are up 3.22%, and WTI oil is trading at $51.30 into the close - down 0.31% for the session, but still bullish with consolidation under the key $52.00 level, as the market waits for the next meeting of oil producers in Vienna on 10 December.

Copper is at $2.67, consolidating below the recent 15-month high of $2.70. This sets up a strong session for the Australian market looking to retest the key 5500 point level. In the commodities sector, gold is at $1168.46 and remains under pressure, with a retest of December 2015 lows of $1100/oz being the current price target.

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