Week in FX Americas – Gold And Loonie Prices Diverge

Commodity sensitive currencies did not garner much love from “yellow metal” this week. The latest ‘loonie’ and Aussie price moves appear to have decoupled themselves ever so slightly from gold prices. The commodity looks to be ending the week rallying to their best levels of the current counter trend advance since the metal lows were set back in late June.

It’s looking like gold demand is shifting from the west to the east again. Mostly speculators who seem to be closing out their short positions have driven the recent price rally. In the second week of August, money managers closed about +3% of their ‘long’ positions, but closed+17% of their ‘short’ positions. It’s been reported that the gold bars from the ETF outflow have been travelling to Switzerland, and are then re-melted into smaller size bars and coins to be used for sale into Asia, mainly China and India. Analysts had been expecting Indonesia’s gold jewelry demand to jump to +30% this year as income rises and the citizens catch up on the latest fashion trends. The number will likely be revisited especially now that the emerging markets have come under increased selling pressures of late – equity market capitulation.

Canadian data on Friday revealed that inflation is now gradually climbing from the depths of earlier this year (+0.1%) – however, it remains non-threatening. The steady decline in the CAD will add to the mild upward pressure in inflation, but a “sluggish underlying growth profile, coupled with slow wage growth will contain most of the upswings. Corporate dollar buyers continue to lurk sub-1.0500, while sellers hold steadfast at 1.0600.


* USD Durable Goods Orders
* USD Consumer Confidence
* EUR German Unemployment Change
* EUR German Consumer Price Index –
* JPY National Consumer Price Index
* EUR Euro-Zone Consumer Price Index
* CAD Gross Domestic Product (YoY)

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell