Silver, XAG/USD, Australian GDP – Talking Points
- Silver prices soared today as stimulus hopes reemerged in the U.S.
- US Dollar breaches fresh multi-year lows as sentiment improves
- Australian GDP is in focus for the Asia-Pacific trading session
Stimulus hopes are once again driving market sentiment. December is kicking off with a risk-on tilt. On Tuesday, a bipartisan group of U.S. lawmakers introduced a $908 billion Covid relief plan. The recent package hasn't gained widespread support yet but is nonetheless a positive sign seeing bipartisan agreement in Congress.
The Greenback broke sharply lower on renewed stimulus hopes, with the DXY index dropping nearly a full percentage point. In turn, precious metals gained against the weaker US Dollar. Silver, specifically, rose sharply, outpacing gold. XAG/USD gained nearly 6%, clawing back a portion of November’s losses.
Earlier today, the Federal Reserve Chair Jerome Powell and Treasury Secretary Mnuchin discussed their views surrounding the economic recovery before the Senate. The two policymakers had contrasting views on the economy’s path ahead but agreed Congress should take further action to support the economy from the fiscal side.
Furthermore, boosting economic prospects, President-elect Biden’s office announced former Fed Chair Janet Yellen to head the Treasury Department. A proponent for continued economic support, her appointment appears to be bolstering market sentiment.
US Dollar, Gold, Silver – 1 Hour Price Chart
Chart created with TradingView
Wednesday’s Asia-Pacific Outlook
Tuesday’s risk-on tilt from the U.S. session is likely to spill over into Asia-pacific trading on Wednesday. Rising Covid cases continue to caution economists as the U.S. and Europe head into the winter. Still, vaccine headlines appear to be a lasting tailwind to sentiment. Following today's news on stimulus, a better-than-expected outlook for 2021 appears to be shifting market mood. It also appears to be boosting inflationary pressures.
According to the DailyFX Economic Calendar, a headline risk for the upcoming session is Australia’s Q3 GDP report. The forecasted figure for Q3 growth stands at 2.6% on a quarterly basis. A better than expected print may boost risk-sensitive assets like the Aussie-Dollar higher. Furthermore, Japan is set to release consumer confidence figures.
Silver prices may climb further on continued upbeat economic data, including the Australian GDP report. However, XAG/USD is currently up against its 100-day Moving Average which appears to be providing some resistance. After the recent move higher, traders may need some time for price to find breath for the next rally higher. Moreover, the upward price channel from March lows seem to be in play as a new area of resistance.
XAG/USD Daily Price Chart
Chart created with TradingView
XAG/USD TRADING RESOURCES
- Just getting started? See our beginners’ guide for FX traders
- What is your trading personality? Take our quiz to find out
- Join a free webinarand have your trading questions answered
--- Written by Thomas Westwater, Analyst for DailyFX.com