The dollar edged lower against a basket of other currencies on Wednesday, after data showing that U.S. inflation rose at a slower than expected rate last month, infact the consumer price index ticked up just 0.1% in July, below forecasts for a 0.2% gain. Furthermore the greenback was not supported by the minutes from the FOMC, which provided no indications that the U.S. Central Bank could raise interest rates soon. This uncertainty supported gold that raised sharply in Asia on Thursday. While oil prices kept on dropping, and went below $41 a barrel, as EIA reported another increase in crude oil stockpiles. Finally U.S. stocks experienced a session of volatile trading and ended up closing with significant losses. Today investors will focus on: British data on retail sales and Canada data on wholesale sales, but mostly on the US reports on initial jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
EUR/USD surged on Wednesday, halting a five-day losing streak, as the minutes from the Federal Open Market Committee's July meeting provided little to no indication that the U.S. Central Bank could raise interest rates before the end of the fall.
The euro closed above 1.11 against the dollar, for the first time in four sessions. After Wednesday's gains, EUR/USD is now up by more than 2.65% over the last month of trading.
Following the completion of its July FOMC meeting three weeks ago, the Fed provided no explicit indications that it could raise short-term interest rates when it meets next in September. It seems to continue to take a "data-driven" approach over the next weeks, before determining whether to raise short-term interest rates or to wait.
Today investors will focus on: British data on retail sales and Canada data on wholesale sales, but mostly on the US reports on initial jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
Pivot: 1.107Support: 1.107 1.1015 1.098Resistance: 1.1165 1.1185 1.121Scenario 1: Long positions above 1.107 with targets @ 1.1165 & 1.1185 in extension.Scenario 2: Below 1.107 look for further downside with 1.1015 & 1.098 as targets.Comment: The RSI is bullish and calls for further advance.
Gold
Gold gained smartly in Asia on Thursday, as prospects for a rate hike in September by the Federal Reserve appeared dim after the release of July meeting minutes late on Wednesday.
Infact the Federal Reserve has indicated that it could raise short-term interest rates for the first time in nearly a decade when it is "reasonably confident" that long-term inflation is moving toward its targeted goal of 2%.
A delay in the start of the tightening cycle is seen as supportive of equities, the same way as concern about the strength of the global economy.
Overnight, gold surged amid a weaker dollar and muted U.S. inflationary gains last month.
Pivot: 1126.8Support: 1126.8 1119 1109.15Resistance: 1143.5 1149.5 1156.7Scenario 1: Long positions above 1126.8 with targets @ 1143.5 & 1149.5 in extension.Scenario 2: Below 1126.8 look for further downside with 1119 & 1109.15 as targets.Comment: The RSI is well directed.
Oil
Crude oil prices dropped sharply in Asia on Thursday, as oversupply in the U.S. and global markets pushed prices down below $41 a barrel and investors sounded increasingly worried about weak China demand.
On Wednesday morning, the U.S. Energy Information (EIA) said in its Weekly Petroleum Status Report that U.S. crude stockpiles increased by 2.6 million for the week ending on August 14, marking its highest weekly build since April.
The latest Federal Reserve meeting highlighted concern over the state of the global economy, driving markets to question the likelihood that the Fed will raise rates next month.
For today investors will focus on U.S Jobless Claims data, Existing homes Sales and Philadelphia Manufacturing Index.
Pivot: 41.4Support: 40.4 40.1 39.75Resistance: 41.4 42.14 42.67Scenario 1: Short positions below 41.4 with targets @ 40.4 & 40.1 in extension.Scenario 2: Above 41.4 look for further upside with 42.14 & 42.67 as targets.Comment: As long as 41.4 is resistance, likely decline to 40.4.
Dow Jones
U.S. stocks experienced a wild session of unpredictable, volatile trading, paring significant losses after the Federal Reserve provided no clear indications on an imminent interest rate hike midway through Wednesday afternoon, before again falling precipitously near the close.
After completing the roller coaster day of trading came to a halt, the Dow Jones Industrial Average and the NASDAQ both fell sharply moving to nearly its lowest level in a month. The S&P 500 Composite index also suffered significant losses, as a massive sell-off in crude stocks and continued instability in China weighed on all three major indices.
Today investors will focus on the US reports on initial jobless claims, existing home sales and manufacturing activity in the Philadelphia region, to gain more information on the strenght of the US economy.
Pivot: 18350 Support: 17040 16820 16550 Resistance: 18350 18650 18900 Scenario 1: Short positions below 18350 with targets @ 17040 & 16820 in extension. Scenario 2: Above 18350 look for further upside with 18650 & 18900 as targets. Comment: The RSI is capped by a declining trend 50.