Forex Today: Dollar gives back as euro rallies on surprise positive data …

  • Forex today came with a focus on the EZ GDP data which made for a subsequent drop in the DXY as the euro took up the baton, leading the FX space.

In the U.S. session, there was a dip in the Chicago PMI which fell to a twenty-eight month low in Apr, 52.6, pointing to cooler manufacturing conditions in the Midwest. The market paid particular attention to that ahead of today’s Markit and PMI manufacturing data. 

In other data, the outcomes were mixed but the contrast between the Eurozone Q1 GDP that came in at +0.4%q/q, 1.2%y/y beating +0.3%q/q and 1.1%y/y expectations, along with German April CPI headlined at 2.0%y/y against an average estimate of 1.5%y/y and a prior 1.3%y/y for March (harmonised 2.1%y/y, est. 1.7%y/y, prior 1.4%y/y), as well as with Italy’s unemployment dropping 10.2% vs expectations of 10.7%, the EUR climbed 50 pips and the DXY was sent down 0.4% on the day. 

Currencies in action

  • USD/JPY fell from 111.60 to 111.25. 
  • GBP/USD fell from 1.3048 to 1.3024.
  • EUR/USD climbed from 1.1180 to 1.1229.
  • AUD was sideways between 0.7030 and 0.7060 in anticipation of the RBA next week and the possibility of a rate cut.
  • Joining that camp, the NZD rose initially from 0.6655 to 0.6685 prior to the NZD jobs data, of which disappointments sunk the Kiwi down to a low of 0.6627. 

Key notes from overnight:

Key events ahead:

With the NZ jobs data out of the way, there is a quiet looking Asian session before a crowded U.S. calendar brings markets back to life.  Both the Apr manufacturing ISM survey and the FOMC meeting concluding will be sure to spark up an FX space frenzy ahead of the NFPs on Friday which will be preluded by the ADP report. 

Hungary keeps rates, affirms accommodative stance

By CentralBankNews.info
Hungary’s central bank left its key interest rates unchanged and affirmed its guidance that its monetary policy stance will continue to be accommodative as “persistently buoyant domestic demand is boosting, and weakening external activity is restraining the pace of price increase.”
In March the National Bank of Hungary (NBH) tightened its policy stance for the first time since May 2016 when it raised the overnight deposit rate by 10 basis points to minus 0.05 percent as it kicked off its long-awaited phase of policy normalization due to meeting its inflation target.
The benchmark base rate, however, was left unchanged at 0.90 percent in March as the central bank remains “very very cautious” – to quote Deputy Govenor Marton Nagy – and will only take further tightening steps as needed.
The bank’s monetary council said today it was applying a cautious approach in its policy decisions and would rely on projections for the economy and inflation.
After a steady stream of cuts to its benchmark rate from August 2012 to June 2016 – the rate was cut by a total of 610 basis points – the NBH was still confronted with low inflation and responded with a series of unconventional measures, similar to the policy of major central banks.
In the case of Hungary, the NBH launched low-cost lending programs, lowered its overnight lending rate and the required reserve requirement, and also decided to limit the use of its 3-month deposit facility to encourage banks to buy government debt and offer cheaper loans.
Faced with a tightening of monetary conditions in September 2017, the NBH lowered its overnight deposit rate by 10 basis points to minus 0.15 percent to ensure it would meet its inflation target of 3.0 percent,  plus/minus 1 percentage point.
NBH’s increase of the deposit rate in March was the first time it was raised since then.
In response to improving growth in Europe and easy monetary policy, Hungary’s inflation rate finally started accelerating in early 2018 and by September last year the central bank began preparing financial markets for “the gradual and cautious normalization of monetary policy,” a move it then began to execute in March.
But NBH is only tightening its policy gradually, aware that tightening against a backdrop of easing by the European Central Bank (ECB) will push up the exchange rate of the forint and thus tighten monetary conditions and push down inflation again.
The forint began rising against the euro at the beginning of July last year until late March this year and since then it has fall back to trade at 323.9 to the euro today,  down 0.7 percent this year.
Today the central bank said it was launching a corporate bond purchase program (Bond Funding for Growth Scheme) worth 300 billion forint on July 1 as a complement to its Funding for Growth Scheme Fix that was launched at the start of this year.
After a dip in December and January, Hungary’s headline inflation rate rose to 3.7 percent in March from 3.1 percent in February, boosted by higher fuel prices.
Core inflation rose to 3.8 percent in March from 3.5 percent in February, boosted by the hike in taxes on tobacco at the start of 2019.
The central bank confirmed its outlook for inflation to fluctuate around its target in coming quarters, with core inflation excluding indirect taxes continuing to rise until the fall when it then starts  to decline.
Hungary’s economy strengthened steadily through 2018 on the back of corporate and household lending and although gross domestic product is expected to slow this year from last year’s 4.9 percent pace, the NBH still expects growth to remain strong.

The National Bank of Hungary issued the following press release:

 

 



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Currency Volatility: All Eyes on the Fed and US Dollar Tomorrow

USD CURRENCY VOLATILITY & FEDERAL RESERVE – TALKING POINTS:

  • USD overnight implied volatility skyrockets to its highest reading in over a month to 8.73 percent while the DXY US Dollar Index recedes from its recent top at 98.33, a price level not seen since May 2017
  • Traders will closely look for key insight from the Federal Reserve tomorrow as markets digest the latest FOMC interest rate decision and follow-up commentary from Chair Jerome Powell on Fed policy and the US economy
  • Take a look at this article for information on the How to Trade the Top 10 Most Volatile Currency Pairs or download the free DailyFX 2Q USD Forecast for comprehensive fundamental and technical insight on the US Dollar over the second quarter

Currency market volatility has begun to rebound from the unprecedented lows experienced by traders lately. Judging by the DXY US Dollar Overnight Implied Volatility Index, forex price action appears to be trending higher. In fact, the metric has jumped to 8.73 percent, its highest level since March 20, ahead of the Federal Reserve’s FOMC meeting tomorrow.

DXY US DOLLAR OVERNIGHT IMPLIED VOLATILITY INDEX PRICE CHART: DAILY TIME FRAME (APRIL 02, 2018 TO APRIL 30, 2019)

DXY Index US Dollar Implied Volatility Price Chart

If Fed Chair Powell touts Friday’s US GDP report and other positive economic developments, it could reduce rate cut bets which are currently pricing a 67 percent probability that the Federal Reserve lowers its policy interest rate by 25 basis points before the end of the year.

On the contrary, if the Fed reiterates a patient approach and focuses on downside market risks, the odds that the FOMC decides to cut rates could be expected to move higher which would likely weigh negatively on the US Dollar.

DXY US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (AUGUST 30, 2018 TO APRIL 30, 2019)

DXY Index Price Chart Currency Volatility Trading Range before FOMC Fed Meeting

The US Dollar advanced steeply throughout April and notched its highest close since May 2017 before pulling back over the last few days. Now, the greenback’s next direction hinges largely on the relative dovish or hawkish tone from the Fed tomorrow.

That being said, the DXY Index is estimated to trade between 97.07 and 97.97 with a 68 percent statistical probability judging by US Dollar overnight implied volatility. Downside could be limited by trendline support, however, which happens to align with the 20-day moving average and 23.6 percent Fibonacci retracement level as well.

FOREX MARKET IMPLIED VOLATILITY AND TRADING RANGES

Implied currency market volatility EURUSD, USDJPY, GBPUSD, USDCHF, NZDUSD, AUDUSD, USDCADForex implied volatility USD, EUR, JPY, NZD, AUD, CHF, CAD, GBP

Currency pairs worth watching over the next 24-hours highlights EURUSD and USDJPY. The Euro just reclaimed the 1.1200 level against the US Dollar following the Eurozone’s relatively upbeat GDP report released during Tuesday’s session.

Looking to the Japanese Yen, USDJPY should be closely monitored as Japan’s financial markets remain closed in observation of its Golden Week – the lack of liquidity raises JPY flash crash risk.

Here are some additional US Dollar Price Action Setups ahead of tomorrow’s FOMC meeting and Friday’s Nonfarm Payroll Report by DailyFX Currency Strategist James Stanley.

FOREX ECONOMIC CALENDAR – USD

Forex economic calendar US Dollar April 2019 Federal Reserve FOMC Meeting

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

Prior to the Fed tomorrow, the ADP Change in Employment and ISM Manufacturing Index will be released at 12:15 GMT and 14:00 GMT respectively.Although the market’s reaction to the Fed will largely dictate tomorrow’s price action, these economic indicators have potential of setting the tone for trader sentiment and risk appetite during Wednesday’s session.

TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

GBPUSD Reverses on Brexit Latest. USDCAD Falls on Poloz After GDP

Asia Pacific Market Open Talking Points

  • GBP/USD clears resistance on latest Brexit developments
  • Canadian Dollar brushes aside GDP data for BoC’s Poloz
  • S&P 500 gains to be tested on Fed, bearish sentiment signals

Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in the DailyFX Webinars. We’d love to have you along.

FX News Tuesday

The British Pound was the best-performing major on Tuesday ahead of this week’s Bank of England rate decision. Though its appreciation may have been due to Brexit-related fundamentals. UK Foreign Secretary Jeremy Hunt warned against a change of leadership, a rising concern for Prime Minister Theresa May, as it could delay the EU-UK divorce. Avoiding the extra uncertainties that this may pose increases Sterling’s relative appeal.

Weakness in the US Dollar ahead of Wednesday’s FOMC rate decision also aided to GBP’s cause. Most of the declines in the Greenback occurred during European hours where a slew of better-than-expected regional economic data crossed the wires. This included rosy Eurozone GDP, German CPI and as Italy’s economy slowly exited the technical definition of a recession. EUR/USD closed above near-term resistance.

GBP/USD Technical Analysis

On the daily chart, GBP/USD broke above a near-term falling trend line going back to March. This followed a bottom after falling under the rising support line from the end of December. Confirming another close to the upside opens the door to overturning GBP’s recent downtrend. Otherwise, turning lower places near-term support between 1.2866 and 1.2888.

GBP/USD Daily Chart

GBPUSD Reverses on Brexit Latest. USDCAD Falls on Poloz After GDP

Chart Created in TradingView

Despite initially falling on softer-than-expected local GDP data, the Canadian Dollar was another solid performer on Tuesday. Rosy commentary from Bank of Canada Governor Stephen Poloz later in the day boosted CAD. He expects the economy to accelerate in the second half of this year, undermining dovish bets that were fueled by February’s disappointing growth figures.

Wednesday’s Asia Pacific Trading Session

The New Zealand Dollar is off to a rocky start in early Wednesday trade following a weaker-than-expected local jobs report. Accompanying a decrease in the unemployment rate was the smallest labor force participation reading since the second quarter of 2017. This suggested that this may be have been as a result of discouraged workers exiting the workforce.

Aside from that, Wednesday’s Asia Pacific trading session is lacking notable economic event risk. This places the focus on risk trends. S&P 500 futures are pointing notably higher following rosy Apple earnings. But market optimism will be tested on the Fed rate decision. Meanwhile, sentiment readings warn. that the S&P 500 could still top.

Want to learn more about how sentiment readings may drive the S&P 500? Tune in each week for live sessions as I cover how sentiment can be used to identify prevailing market trends!

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

NZD/USD Falls on Mixed Employment Data – Eyeing FOMC Ahead

NZD TALKING POINTS – NEW ZEALAND UNEMPLOYMENT RATE, NZD/USD, FOMC

See our free guide to learn how to use economic news in your trading strategy!

The New Zealand fell alongside bond yields after mixed employment data crossed the wires. While the unemployment rate fell to 4.2 percent and beat the 4.3 percent forecast, the participation rate and employment change disappointed. In fact, labor force participation fell to its weakest point since Q2 2017. The undershooting data is a deviation from the country’s overall economic trajectory which has seen indicators fall in line with analysts’ expectations for the past few months.

NZD/USD, NZD/JPY – Daily Chart

Chart Showing NZD/USD, NZD/JPY

Slower growth in employment undercuts inflationary pressure which the RBNZ has reiterated is still below its two percent target. This gives the central bank further impetus to cut rates following its meeting in March that sent the New Zealand Dollar tumbling. This was subsequently followed by weaker-than-expected CPI in April, likely a result of the ailment caused by reduced consumption as a result of fewer hirings

Overnight index swaps are currently pricing in a 76.1 percent probability of a cut by September. The monetary policy statement from the March 27 meeting cited “reduced momentum in domestic spending” and slower global growth as key concerns that caused the central bank to pivot to a more dovish disposition. Much like what ECB officials said in March, risks have broadly tilted towards the downside.

The cycle-sensitive New Zealand Dollar will continue to monitor US-China trade talks as the two appear to be closing in on a deal. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are traveling to Beijing today to continue the negotiations. However, given prevailing global growth trends,

the broader questions remain that even if a US-China trade spat is resolved, will it be enough to lift global sentiment?

Looking ahead, the cycle-sensitive New Zealand Dollar – along with global markets – will be eyeing the upcoming FOMC meeting. Market participants are expected for the central bank to hold the benchmark rate where it is, with commentary from Fed Chairman Jerome Powell as the key catalyst for any major market moves. Get live coverage of the rate decision and market reaction here!

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

NZ Q1 Labour market statistics are out, not so good employment rate (NZD/…

We have the RBNZ around the corner next week where markets are expecting at least a dovish delivery from the Central Bank – Today’s jobs data was critical in that respect in determining just how dovish the RBNZ might be next week, or potentially, even lowering the bar for a rate cut. 

Due to NZ GDP growth being subdued, markets were expecting a stable unemployment rate of 4.3% in today’s Q1 Labour Market Statistics, accompanied by modest growth in wages and employment.

The data has arrived as follows:

  • Unemployment rate 4.2% vs exp 4.2% vs prior 4.3%.
  • Employment rate -0.2% vs exp 0.5% vs prior 0.1%.
  • Participation rate 70.4% vs exp 70.9% vs prior 70.9%.
  • Average earnings better 1.1% (more to come)

“These data have been volatile of late, but the general trend has been a gradual tightening,”

analysts at ANZ Bank explained prior to the release.

This all should set the scene for the RBNZ to deliver a dovish May MPS but hold off on an OCR cut. 

About The Unemployment Rate 

The Unemployment Rate released by the Statistics New Zealand is the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the New Zealand labor market. As a result, a rise leads to weaken the New Zealand economy. A decrease of the figure is seen as positive (or bullish) for the NZD, while an increase is seen as negative (or bearish).

 

AAPL Stock Soars After Earnings Beat, Looks to Bolster Nasdaq

AAPL, AMD Earnings Talking Points:

  • Apple (AAPL) announced a substantial buyback plan, continuing the trend from recent quarters
  • Advanced Micro Devices (AMD) narrowly beat expectations but saw its stock price pop 7%
  • Wednesday’s FOMC rate decision will now be the focus of traders as the central bank looks to offer insight on its policy path after strong US GDP in the first quarter

Stock Market Update: GE, GM Earnings Recap, AAPL and AMD Ahead

Apple delivered strong quarterly results after Tuesday’s close, avoiding another miss from a FAANG member after Google missed the day prior. Similarly, AMD beat out Wall Street estimates. As a key player in the semiconductor space, AMD will look to join AAPL in bolstering the Nasdaq after it slumped in Tuesday trading compared to its more diversified counterparts.

AAPL Stock Soars After Earnings Beat, Looks to Bolster Nasdaq

AAPL Earnings Recap

After a cut to their earnings outlook caused a USDJPY Flash Crash, Apple looks to have righted the ship. Despite lower forecasts, traders were thrilled to see the strong performance and pushed the stock 5% higher in after-hours trading. Earnings per share read in at $2.46 on $58 billion in revenue – higher than the expected $2.37 EPS on $57.5 billion in revenue expected.

Apple (AAPL) Stock Price Chart: Daily Time Frame (January – 2019) (Chart 1)

AAPL stock price after earnings

Outside of the two headline figures, an announcement to buyback $75 billion worth of shares likely buoyed price – but could be indicative of broader economic illness. Buybacks have been a point of contention in recent months, ranging from economists who are wary of current stock market valuations to politicians in Washington that question their economic fairness.

AAPL Stock Soars After Earnings Beat, Looks to Bolster Nasdaq

Either way, one thing is clear. Flush with cash, Apple has shelled out considerable capital on share repurchases and is now responsible for 12 of the 20 record-quarter buybacks according to data from S&P Global. Apple’s actions play into the larger theme of growth concerns as companies are frequently unable to find efficient uses of capital and invest in themselves, effectively inflating stock valuations. While the ramifications of elevated share repurchases may eventually weigh on investor sentiment, Wednesday’s session will look to more immediate developments.

Check out our Second Quarter forecasts for the S&P 500, Dow Jones, Gold and more.

AMD Earnings Recap

Contributing another strong performance to the season, AMD offered $0.06 EPS on $1.27 billion in revenue – compared to analyst expectations of $0.05 and $1.26 billion respectively. Although narrow, the beat was accompanied by a rally in AMD’s share price. Immediately following the release, AMD jumped 7% but remained within its implied price range – probing trendline resistance around $29.25.

AMD Stock Price Chart: Daily Time Frame (December 2018 – April 2019) (Chart 2)

AMD stock price chart earnings

Check out the Technical Forecast for the S&P 500, Dow Jones, DAX 30, and FTSE 100.

With the risk of an abysmal report from AAPL in the rearview, traders will now await Wednesday’s FOMC rate decision. Ahead of the event, check out a variety US Dollar trade set ups and view our Economic Calendar for all upcoming events in the week ahead.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: USDCAD’s Failed Breakout Attempt Hinges on Next Crude Oil Price Move

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

US Pres. Trump drops cyber theft demands in bid for swift trade deal with…

Having witnessed mixed updates from the ongoing trade negotiations between the US and China, the Financial Times reported relief news to the global trade watchers as it says that the US President Donald Trump drops cyber theft demands in a bid for a swift trade deal with China.

The news report says that the US is set to accept watered-down security pledge from Beijing to reach summer signing target.

A team consisting of the US trade representative Robert Lighthizer and Treasury secretary Steven Mnuchin are in Beijing for less than 48 hours to give a final push to the US-China trade negotiations in order to soon have a deal to sign.

How Close Are The Markets From Topping?

By TheTechnicalTraders.com

Now that most of the US Major Indexes have breached new all-time price highs, which we called over 5+ months ago, and many traders are starting to become concerned about how and where the markets may find resistance or begin to top, we are going to try to paint a very clear picture of the upside potential for the markets and why we believe volatility and price rotation may become a very big concern over the next few months.  Our objective is to try to help you stay informed of pending market rotation and to alert you that we may be nearing a period within the US markets where increased volatility is very likely.

Longer term, many years into the future, our predictive modeling systems are suggesting this upside price swing is far from over.  Our models suggest that price rotation will become a major factor over the next 12 to 15+ months – headed into the US Presidential election cycle of November 2020.  Our models are suggesting that the second half of this year could present an incredible opportunity for skilled investors as price volatility/rotation provide bigger price swings.  Additionally, our models suggest that early 2020 will provide even more opportunity for skilled traders who are able to understand the true price structure of the markets.  Get ready, thing are about to get really interesting and if you are not following our research or a member of our services, you might want to think about joining soon.

We are focusing this research post on the NQ, ES and YM futures charts (Daily).  We will include a longer-term YM chart near the end to highlight longer-term expectations.  Let’s start with the NQ Daily chart.

The NQ Daily chart, below, highlights our ongoing research, shows the 2018 deep price rotational low and the incredible rally to new all-time highs recently.  The most important aspect of this chart is the “Upside Target Zone” near the $8040 level and the fact that any rally to near these levels would represent an extended upside price rally near the upper range of the YELLOW price channel lines.  We believe any immediate price rotation may end near the $7500 level (between the two Fibonacci Target levels near $7400 & $7600) and could represent a pretty big increase in price volatility.



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This ES Daily chart highlights the different in capabilities between the NQ and the ES.  While the NQ is already pushing into fairly stronger new price highs, the ES is struggling to get above the Sept/Oct 2018 highs and this is because very strong resistance is found between $2,872 and $2,928.  It is very likely that the price volatility will increase near these highs as price becomes more active in an attempt to break through this resistance.  It is also very likely that a downside price rotation may happen where price attempts to retest the $2,835 level (or lower) before finally pushing into a bigger upside price trend.  The Upside Target Zone highs are just below $3,000.  Therefore, we believe any move above $2,960 could represent an exhaustion top type of price formation.

 

This YM chart is set up very similarly to the ES chart.  Historical price highs are acting as a very strong price ceiling.  While the NQ is already pushing into fairly stronger new price highs, the YM continues to struggle to get above the Sept/Oct 2018 highs and this is because very strong resistance is found between 25,750 and 27,000.  Please take notice of the very narrow resistance channel (BOX) on this chart that highlights where we believe true price support/resistance is located.  We believe it is likely that a downside price rotation may happen where price attempts to retest the $26,000 level (or lower) before finally pushing into a bigger upside price trend.

 

As you can tell from our recent posts and this research, we believe price volatility is about to skyrocket higher as price rotates downward.  Our predictive modeling systems are suggesting that we are nearing the end of this current upside move where a downward price move will establish a new price base and allow price to, eventually, push much higher – well above current all-time high levels.

We’ve issued research posts regarding Presidential election cycles and how, generally, stock market prices decline 6 to 24 months before any US Presidential election.  We believe this pattern will continue this year and we are warning our followers to be prepared at this stage of the game.  No, it will not be a massive market crash like 2008-09.  It will be a downside price rotation that will present incredible opportunities for skilled traders.  If you want more of our specialized insight and analysis, then please visit www.TheTechnicalTraders.com to learn how we help our members find success.

Lastly, we’ve included this Weekly YM chart to show you just how volatile the markets are right now.  Pay very close attention to the Fibonacci Target Levels that are being drawn on this chart.  The downside target levels range from $16,000 to $21,060.  The upside target levels range from $30,000 to $32,435.  Top to bottom, The Fibonacci price modeling system is suggesting a total volatility range of over $16,000 for the YM Weekly chart and this usually suggests we are about to enter a period of bigger price rotation and much higher price volatility.

 

Right now, we suggest that you review some of our most recent posts to see how we’ve been calling these market moves, visit www.TheTechnicalTraders.com/FreeResearch/.  It is important for all of our followers to understand the risks of being complacent right now.  The markets are about to enter a period of about 24+ months where incredible opportunities will become evident for skilled traders. If you know what is going to happen, you can find opportunities everywhere.  If not, you are going to be on the wrong side of some very big moves.

Chris Vermeulen

Zonte Confirms Fertile, Highly Mineralized IOCG System at Cross Hills

By The Gold Report

Source: Ron Struthers for Streetwise Reports   04/27/2019

Ron Struthers of Struthers’ Resource Stock Report reviews results from drilling at the company’s project, including a drill hole that intersected significant mineralization.

I am very surprised at these great, high-grade results for the first drill pass on the first target at Zonte’s Cross Hills. Before seeing more details below, or if you skip down lower, come back for some detail on IOCGs.

What is an Iron Oxide Copper Gold (IOCG) mine? That is a very good and very important question that I have been grappling with and learning about for over a year. IOCGs are rare and often massive in scale. There are not any IOCG mines in Canada, but a few prospects exist. Therefore, junior mining investors have little knowledge about these. What I have learned, with some help from Zonte Metals Inc.’s (ZON:TSX.V) exploration, is that there never seems to be two alike. An explorer cannot use a known deposit effectively as a model, except as a general concept. Some deposits are located in magnetic highs and others peripheral to the magnetic highs. Each IOCG seems to have a different mixture of metals. With Zonte’s Cross Hills it looks like mineralization is around or near the oxide zones and contains copper (Cu), silver (Ag) and gold (Au).



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This is the technical geological definition, as provided by Natural Resources Canada: “IOCG deposits are polymetallic hydrothermal mineral occurrences that contain Cu and economic Au concentrations with potential enrichment in Ag, uranium, rare earth elements, bismuth, cobalt, nickel, niobium, etc., set in abundant low-titanium iron-oxide (magnetite, hematite) gangue minerals or associated alteration sulphide. The sulphide-deficient ore includes native elements and low-sulphur base-metal sulphides and arsenides, such as chalcopyrite, bornite, chalcocite, pyrrhotite and arsenopyrite (Corriveau, 2007; Corriveau and Mumin, 2010). All IOCG deposits are enclosed within regional scale-alteration haloes of intensely iron oxide-alkali-altered metasomatized rocks and breccias.”

The most well known IOCG example is Olympic Dam in Australia, operated by BHP. It is simply the most massive mineral system in the world. In the past BHP has stated there are 500 years of mining life left and new discoveries could add centuries to this. Currently its proven reserves make it the largest uranium deposit in the world and fourth largest copper deposit, and they have only scratched the known system.

These are regional-scale systems and we know that Cross Hills has several more anomalies that exemplify this. For that reason and the large-scale potential of these systems, I am certain the majors are going to soon rush into the Cross Hills area.

The best know occurrences in Canada, before Zonte’s Cross Hills, are in the Northwest Territories/Great Slave Lake region. It is remote and reserves defined to date are small. Fortune Minerals Ltd.’s(FT:TSX) NICO has 33 million tonnes at 1.02 g/t Au, 0.12% cobalt and 0.04% copper. Sue-Dianne is only 8.4 million tonnes at 0.80% copper with 0.07 g/t Au and 3.2 g/t Ag. There is also the Michelin project in Labrador. These deposits could be bigger, but in recent years it has been difficult to raise exploration funding for projects like these inremote areas. Read more in a 2018, 154-page IOCG publication.

Cross Hills is different. It can be worked year-round, has road access, a high-voltage power line through the property and is close to a sea port.

The major miners are very aggressively looking for copper and I expect that, before the end of the year, one or more of them will be all over Zonte and the Cross Hills region. Mining giant BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK) made a decision in 2016 to raise its annual exploration spending by 29%, allocating nearly all of its $900 million budget to finding new copper deposits to add to a portfolio that includes Escondida in Chile, the world’s biggest copper mine, and the Olympic Dam.

Zonte Metals: recent price $0.33; entry price $0.15; opinion = strong buy

Zonte released the first drill results from the Cross Hills project in Newfoundland, and they definitely surprised me and came back way better than my best expectations. I was expecting lower grades over longer widths, and that any high grade would maybe be 5% or 6% copper and 2 or 3 g/t gold.

Zonte expedited assays on parts of drill hole 19-004 based on visual observations in the drill core. Here is a pic of the high-grade intersect. This ran 14.0% Cu, 15.8 g/t Au and 352 g/t within a 0.43 m interval sitting in a 2.76 m interval that averaged 2.89% Cu, 2.65 g/t Au, 73.3 g/t Ag.

This drill hole also had some more low-grade intercepts from 204.41 meters to 243 meters.

In first pass drilling the idea is to test different parts of the target and different theories. Drill holes 19-001 and 19-002 tested the magnetic highs in the anomalies and only intersected some anomalous copper values. It appears thus far that mineralization is in the transition zone from high to moderate magnetics.

Drill hole CH-19-004 was set up to test the eastern side of the Dunns Mountain magnetic anomaly, aiming to pass under the magnetic high, in the ‘transition’ from high to moderate magnetics. This was the only drill hole targeting the transition zone in the magnetic profile. The company noted a number of discrete visually mineralized intervals were noted throughout a 70-meter interval, between 168 and 243 meters, sitting directly below a magnetic high. The hole was initially drilled to a depth of 204 meters and later deepened to 283 meters copper mineralization was discovered in the last meter of core.

This graphic shows the orientation of drill hole 19-004. It went under the small anomaly, the larger one was not tested in this fashion.

This high-grade intersect is narrow at just under a half-meter but you don’t get numbers like this in the drill cores unless there is a very significant source for this mineralization. This drill program has gone a long way in aiding Zonte in finding this source in the next drill round.

Key Points

  • Waiting on results for drill hole 19-003 and 19-005;
  • Very high grade for first results: 14.0% Cu, 15.8 g/t Au and 352 g/t within a 0.43 m interval;
  • Drill sample much higher than any surface samples and system hidden at depth;
  • Fertile IOCG system represents the early stages of defining a new copper belt in Canada;
  • A new copper belt will get the attention from major miners;
  • Zonte controls 25 kilometers of strike length in this new copper belt;
  • Fertile IOGC system means other anomalies yet to be drilled are likely mineralized;
  • Planning for a phase 2 drill program is underway and program expanding;
  • Phase 2 drilling, further testing at Dunns and initial drill tests at Carols Hat or K6 or both;
  • Planned gravity surveys will help pinpoint targets outside and near the magnetic highs.

“This is an exciting new discovery for Zonte Metals, adding to our growing portfolio of large- scale mineral opportunities. Early indications show a discovery that has all the geologic signatures of a copper-rich fertile IOCG target and possibly a new copper belt in Canada. The Company controls 25 kilometre strike length of the belt with the Dunns Mountain target located at the northern end. In light of these results Zonte will increase its exploration and drilling program at Cross Hills,” states Terry Christopher, president and CEO of Zonte Metals.

On the drill map above, drill hole 19-005 looks like it might be crossing some magnetic transition zones and might see some decent numbers. Having been to the property and the Dunns target I can appreciate the sophistication of Mother Nature and her secrets. Hole 19-004 was on the other side of the large Dunns hill from where I looked at the target, and at the time it was not considered an area of interest. My, my, how things can change.

The press release also stated: “In preparation for phase 2 drilling at Dunns Mountain, additional geophysics will be carried out including ground magnetics, Induced Polarization (IP) and a gravity survey to first define the area to be tested around drill hole CH-19-004 and secondly aim to identify additional targets along the periphery of the magnetic anomaly. These surveys will also cover the anomalies 2.5 km to the south in the Carols Hat target area. In addition, the Company will complete a deep penetrating IP and gravity surveys, over the K6 target in preparation for phase II drilling. The K6 target sits 12 kilometres south of Dunns Mountain.”

On the chart, I have been watching the wedge pattern and today we can clearly see a breakout from the wedge to the upside. I expect the stock will move much higher. Normally on breakouts with good news, a stock will go up 3 or 4 days in a row before consolidating.

Ron Struthers founded Struthers’ Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 – $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.

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