The RBA kept interest rates unchanged, in a move that was widely expected by markets. Fears over the coronavirus are factoring into the short-term outlook by various central banks. Despite numerous warnings from health officials that the global system is not prepared for an epidemic, traders have pushed aside those concerns. Silver was pressured into a strong horizontal support area, where is price action headed from here? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Forex traders were surprised by better than expected manufacturing PMI data out of the Eurozone and the US. Today’s data set features PPI data out of Italy and the Eurozone as well as factory orders out of the US. Will Silver bears get the data to extend the sell-off in this precious metal, or can bulls force a price action reversal? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this commodity.
Here are the key factors to keep in mind today for Silver trades:
- New Zealand Building Permits: New Zealand Building Permits for December increased by 9.9% monthly. Forex traders can compare this to New Zealand Building Permits for November, which decreased by 8.5% monthly.
- Australian ANZ Roy Morgan Weekly Consumer Confidence Index: The Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of February 2nd was reported at 108.5. Forex traders can compare this to the Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of January 26th, which was reported at 108.0.
- Japanese Monetary Base and Monetary Base end of Period: The Japanese Monetary Base for January increased by 2.9% annualized and the Monetary Base end of Period was reported at ¥517.2T. Forex traders can compare this to the Japanese Monetary Base for December, which increased by 3.2% annualized and to the Monetary Base end of Period, which was reported at ¥518.2T.
- Australian RBA Interest Rate Decision: The Australian RBA left interest rates unchanged at 0.75%. Economists predicted no change in interest rates. Forex traders can compare this to the previous Australian RBA Interest Rate Decision where interest rates were left unchanged at 0.75%.
- UK Markit/CIPS Construction PMI: The UK Markit/CIPS Construction PMI for January is predicted at 47.1. Forex traders can compare this to the UK Markit/CIPS Construction PMI for December, which was reported at 44.4.
- Preliminary Italian CPI: The Preliminary Italian CPI for January is predicted to increase by 0.1% monthly and by 0.5% annualized. Forex traders can compare this to the Italian CPI for December, which increased by 0.2% monthly and by 0.5% annualized. The Preliminary Italian Harmonized Italian CPI for January is predicted to decrease by 1.7% monthly, and to increase by 0.5% annualized. Forex traders can compare this to the Italian Harmonized Italian CPI for December, which increased by 0.2% monthly and by 0.5% annualized.
- Eurozone PPI: The Eurozone PPI for December is predicted flat at 0.0% monthly and to decrease by 0.7% annualized. Forex traders can compare this to the Eurozone PPI for November, which increased by 0.2% monthly and which decreased by 1.4% annualized.
- US Factory Orders: US Factory Orders for December are predicted to increase by 1.1% monthly, and factory orders excluding transportation are predicted to increase by 0.1% monthly. Forex traders can compare this to US Factory Orders for November, which decreased by 0.7% monthly and to factory orders excluding transportation, which increased by 0.3% monthly.
Should price action for Silver remain inside the or breakout above the 17.500 to 17.850 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 17.650
- Take Profit Zone: 18.820 – 19.250
- Stop Loss Level: 17.350
Should price action for Silver breakdown below 17.500 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 17.350
- Take Profit Zone: 16.000 – 16.500
- Stop Loss Level: 17.650
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