Sell gold | Barclays Sell EUR/USDl gold European Central Bank QE 24 ...

Barclays September 'Global Outlook' is out today:
The economic recovery remains weak, monetary policy support is extraordinary, risk assets are well supported and inflation and "safe" bond yields are at historically low levels
ECB President Draghi appears to have declared another "We will do whatever it takes" policy stance, this time to prevent deflation (whereas last time it was to avoid a collapse in the euro area debt markets)
This is likely to have important market implications … it should reinforce the trend toward weakness in the euro, especially against the dollar
We believe the ECB will need to resort to outright government bond purchases to achieve its balance sheet objectives (a whopping 50% expansion) and to arrest the recent drop in long-term inflation expectations (an ECB bellwether for future inflation). This is not priced in and would send a powerful signal to market participants of the ECB's determination to resuscitate growth and inflation.
There are reasons to believe in a generally stronger dollar as well: US growth appears set to accelerate and the Fed is winding down its large QE program and setting the stage for rate hikes.
While the dollar has already moved up, it is still at a relatively low level from an historical perspective
The Bank of Japan remains committed to extraordinary monetary stimulus

Key recommendations:
Sell EUR/USD
With more dollar strength expected, we recommend shorting gold
In oil, better pipeline connectivity to the US gulf means we recommend selling the WTI spread on any big move below $8/barrel



Categories: All, Asia Pacific, Bank of Japan, Central Banks, Euro, European Central Bank, Gold, Japanese yen | Tags: barclays, euro, Gold | Permalink




Author: Eamonn Sheridan

Eamonn Sheridan worked with Bankers Trust Australia for 13 years as a Spot foreign exchange dealer, trading across all major currencies and all time zones. He rose to a Vice President position, running spot operations during the busy European time, leaving the bank just prior to it being sold to concentrate on running his own business in the 'real world'! The markets, however, had him hooked – he continued to trade equities, CFDs and then on to futures, giving him broad experience across financial markets. He is now active in FX and equity index futures as well as writing for ForexLive™. Eamonn is a graduate of The University of Melbourne in Australia and lives in New South Wales.