Asia Market Roundup: Platinum Higher?

Poor China data starts easing rumours and a rotation into risk on. Bullish technical set-up on Platinum.

Neither of my two favourite precious metals has had a great day in Asia today. Platinum is off 2.60% on the day. Palladium is unwinding all of its Wednesday rallies in unceremonious fashion, plunging 4.35%. I shall have to go away and think more on the latter…

Like Wednesday there appears to be no one single factor driving the moves. Liquidity as ever plays its part in Asia. Japan has also returned from vacation today, and it may be more than just co-coincidence that both rallied on Wednesday in Asia only to be sold hard in Asia today.

A “risk on” buoyant stock market today and a very perky oil rally are continuing into the Asia session. I certainly have my doubts as to oils bullish longevity much as I did the New Zealand Dollars ability to sustain a meaningful sell-off in a zero percent world. (see previous articles)

The main reason I suspect is the very disappointing data from China today. Both Industrial Production and Retail Sales came out about as expected.

– (CN) CHINA JULY INDUSTRIAL PRODUCTION M/M: 0.5% V 0.5% PRIOR; Y/Y: 6.0% V 6.2%E; YTD Y/Y: 6.0% V 6.0%E
– (CN) CHINA JULY RETAIL SALES M/M: 0.8% V 0.9% PRIOR ; Y/Y: 10.2% V 10.3%E; YTD Y/Y: 10.3% V 10.3%E
Source: Trade the News

It is not the “as expected” bit that has the market nervous. The Street was looking for more positive numbers to offset a growing worry that China’s slowdown is accelerating, and its 6.5% GDP target is in doubt. We all love a good rumour on a Friday, and the market obliged with lots of talk circulating that China may introduce Quantitative Easing, etc etc etc to keep the lights on economically.

This has seen a pivot short term into “risk on” trading and out of “risk off”, with carry trades such as NZDJPY, AUDJPY, even USDJPY all higher on the day. Stock Indices and Oil and Copper have all had positive days as well, as Asia holds out for a sugar rush from China. As a result, Gold, Silver, Platinum and Palladium are all in the red to varying degrees.

Platinum

Stepping out of the noise of the day though Platinum continues to show a very interesting and potentially very bullish set up technically on the daily and the weekly charts. It appears to be consolidating a very big Inverse Head and Shoulders formation which, if correct, points to a substantial rally ahead.

The neckline for Platinum comes in at 1115 area, and this is now daily and weekly support. A daily and weekly and a consolidating break below invalidating the formation.

As I have said before, there is typically a consolidation period above the neckline after a break. Platinum has been doing this for the last two weeks very nicely. As shown on the chart the distance from the head to the neckline is $305.60. Therefore from a technical perspective Platinum should soon start climbing its merry way to a target of 1415.60. (1110 being the break)

 

Platinum

Head and Shoulder pattern points to new highs ahead.

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.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

Latest posts by Jeffrey Halley (see all)