USDNOK and Gold
This is a long term chart going back to 1987, charting the weekly closes for USDNOK. As you can see we are at a key technical level after last nights Fed “cut”!
This is an interesting chart when compared to charts of other crosses such as EURUSD, USDJPY, USDSEK, AUDUSD, NZDUSD and even the GBPUSD charts over the same period of time.
Norges Bank is the only central bank that I know of in a hiking mode. (Norges Bank has interest rate meeting on the 15th of August)
We don’t know if the 8.90 level will hold, but we think if you are positive to the NOK and looking for a way to short the USD, the USDNOK cross may be an opportunity.
We think that with the currency being so weak, the domestic economy performing well, and oil prices holding, Norges Bank will use the window of opportunity to hike again.
Given the current volatility and the lack of resistance above in the USDNOK cross, we suggest clients to look at positioning via the FX options market, or if trading cash to have a defined stop in case the USD continues to rally from here.
Call for input!
On the back of the Fed disappointing the market in terms of interest rate cuts and forward guidance, the USD rallied and in turn gold sold off. We at Minter are a buyer of dips in gold and think clients should look to buy gold on a dip towards the $1400. It is possible that there is a bit more downside, but we like the trade for the medium and longer term perspective.
*We have personal positions in gold mining stocks and ETFs.
The names we focus on are:
Agnicio Eagle Mines AEM
Alamos gold Inc. AGI
Franco Nevada Copr. FNV
Barrick Gold Corp GOLD
Kirkland Lake Gold Co KL
New Gold Inc NGD