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Gold Emerges Winner After Fed’s Minutes

Thursday, August 20, 2015 1:39 PM GMT


- Norway Sovereign Wealth Fund - which owns over 1% of global equities - said it was keeping its exposure to China. (Source: Bloomberg)

- Fed's Kocherlakota: Low real interest rates pose instability risks. Raising inflation goal could hurt Fed credibility. Additionally, more government debt would help financial stability; higher inflation target could mitigate risks. (News: ForexLive)

- During the New York session, minutes from the last meeting of the Federal Reserve appeared not to satisfy the market’s thirst for hints on the timing of its first interest rate rise, previously projected to be in September or December. The minutes emphasized risks to inflation, which has missed the 2 percent target for three years and recently took a hit from China’s currency devaluation. This appeared to cloud the chances of a September hike and dragged the USD down, which is positive to commodities prices. (Source: Yahoo!Finance)

- Gold emerged a winner as the Fed’s minutes eased interest rate concerns for bullion investors, resulted in the biggest advance in three months at 1.5 percent. It has gained 1.1 percent in the Asian morning and surpassed the previous session high on Wednesday, at 1134.57. On the other side, oil crashed to a new six-year low of 40.40 in the US session after the Energy Information Administration’s weekly report revealed a tremendous surprise of additional inventories at 2.6 million barrels, in contrast to an expected drop and a huge drop of 2.3 million barrels reported by API yesterday. (Source: Yahoo!Finance)

- U.S. housing costs continue to soar, CPI shows. Higher costs of housing are taking a bigger bite out of American incomes. The consumer price index, or the cost of living, rose a scant 0.1% in July to mark the smallest increase in three months. Yet the cost of housing, the largest expense for most Americans, continued to rise, threatening bigger advances in consumer inflation in the near future unless prices ease up. The cost of shelter rose 0.4% last month, reflecting the biggest gain in more than eight years. And housing expenses have climbed 3.1% in the past 12 months, the largest annual increase since 2008. (Source: MarketWatch)

- Slightly more dovish FOMC minutes didn't prevent Dow from closing at a six-month low and hitting that H&S neckline. (Source: StockTwits)

- Banking union before euro adoption: flak jacket or straitjacket? All European Union members, except Denmark and the United Kingdom, are expected under EU treaties to eventually adopt the euro. Six Central and Eastern EU members – Bulgaria, Croatia, Czech Republic, Hungary, Poland and Romania – are yet to do so. In the meantime, these countries have a decision to make: Should they opt in to the Banking Union before adopting the euro? Such a move may offer greater insurance against shocks, but at a certain cost to policy flexibility. (Source: iMFdirect)

- German Finance Ministry: Germany to post 'high' trade, current account surpluses. Finally, he added that 'Debt to fall below 70% of GDP in 2016. Data suggest 'moderate' economic expansion.' (Source: FXStreet)

- Switzerland's exports fell in July as the strength of the Swiss franc curbed demand in the European Union and Asia for its chemicals, pharmaceuticals, machinery and watches. Exports in July slipped 4.9% from a year earlier, in real terms, to 17.93 billion Swiss francs ($18.6 billion), the customs office said today (Thursday). Will SNB do something regarding for the 'overvalued' Swiss Franc? (Source: MarketWatch)

- Euro zone finance ministers approve the 1st tranche of the bailout funds for Greece, to unlock 13 bln euros. (Source: WSJ)

- Kazakhstan’s tenge plunged a record 23 percent after the country relinquished control of its exchange rate, becoming the latest emerging market to abandon efforts to prop up its currency before the U.S. raises interest rates. The country moved to a free-floating currency effective Thursday and will adopt an inflation-targeting monetary policy, Prime Minister Karim Massimov told a government meeting in Astana. (Source: Bloomberg)

- CHF was the best performing major versus USD on Wednesday with +1.2% spot returns while CAD was the worst performing with -0.53% returns. (Source: DailyFX)

- Today’s Important Events: US Home Sales, UK Retail growth, US Jobless Claims.

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