Senior Trader Market Update 25 May 2017

Good morning everyone.
 
Choppy, sideways trade within a comparatively narrow range was seen yesterday in XAU/AUD with a firming Aussie dollar during late US trading negating a rally in XAU/USD.
 
The big news yesterday was the downgrading by Moody’s Investor Service of China’s long-term sovereign debt rating to A1 from Aa3. The reason given for the downgrade was a ‘material rise’ in debt across the entire Chinese economy.
 
The minutes from the most recent FOMC were released during the US session which clouded the consensus view that a June interest rate hike by the Federal Reserve is a lay-down misere. Specifically, the FOMC noted that; ““Members generally (my emphasis added) judged that it would be prudent to await additional evidence indicating that a recent slowdown in the pace of economic activity had been transitory before taking another step in removing accommodation.”
 
US stocks advanced but the US Dollar Index pared Tuesday’s gains (which had come largely on the back of the Trump administrations intention to cut a whopping 3.6 trillion in Federal government spending over the next decade).
 
Technically in XAU/AUD, with interest seemingly confined to intra-day speculative scalping / jobbing, some of the shorter duration moving averages (21 & 55 Day moving averages) are providing good areas for investors to buy on dips, whilst the AUD 1700/1710 remains a formidable technical impediment for the moment. In broader terms, XAU/AUD is remains an AUD 1650 - 1710 range trading proposition.
 
The XAU/USD Daily price action remains contained within a triangular congestion region (with trendline support pegged at USD 1225 & trendline resistance at USD 1277 for today). Momentum buying or momentum selling is likely to ensue depending on which side of the congestion region gold eventually breaks out from
 
Regards,
Andre