The dollar rose against the euro and the yen on Friday as comments from a senior Federal Reserve official indicated that the central bank could still raise interest rates next month despite the recent turmoil in global markets. Moreover, the dollar was still supported by data on Thursday which showed that the U.S. economy grew at a faster than expected rate in the second quarter. Market sentiment also improved after Beijing moved to ease monetary policy in order to support growth. China's central bank lowered interest rates for the second time in two months on Tuesday. In the week ahead, investors will be focusing on Friday’s U.S. jobs report for August, which could help to provide more clarity on the possibility of a near-term interest rate hike. Markets will also be watching surveys of the manufacturing and service sectors, factory orders and trade data from the world’s largest economy for fresh indications on the timing of a rate hike. Central bank meetings in the euro zone and Australia will also be in focus. For today, the euro zone is to publish preliminary data on consumer price inflation, while Germany is to publish data on retail sales. Switzerland is to publish its KOF economic barometer, Canada is to report on the current account and the U.S. is to release data on manufacturing activity in the Chicago region.
The euro fell against the dollar on Friday after a senior Federal Reserve policymaker indicated that it is still possible for the central bank to raise short-term interest rates next month. The euro fell following the remarks that indicate a rate hike is still on the table, with EUR/USD down 0.51% to 1.1187 later in the day. The dollar had weakened earlier in the week as fears over a slowdown in growth in China had troubled global markets and pushed back expectations on the timing of an initial rate hike by the Fed. However, market sentiment improved after Beijing moved to lower interest rates for the second time in two months on Tuesday. For today, the euro zone is to produce preliminary data on consumer price inflation, while Germany is to publish data on retail sales. The U.S. is to release figures on manufacturing activity in the Chicago region.
Pivot: 1.131Support: 1.12 1.1155 1.11Resistance: 1.131 1.135 1.141Scenario 1: Short positions below 1.131 with targets @ 1.12 & 1.1155 in extension.Scenario 2: Above 1.131 look for further upside with 1.135 & 1.141 as targets.Comment: As long as 1.131 is resistance, look for choppy price action with a bearish bias.
Oil
Crude oil prices extended gains on Friday after moving higher a day earlier. Prices had been boosted by hopes that a rebound on global markets could stimulate demand. Crude oil future contracts hit six-year lows earlier this week. WTI prices closed 10.3% higher on Thursday, posting its biggest one-day percentage gain since March 2009. Prices added another 6.3% to $45.22 a barrel on Friday and closed with the week with a gain of 11.8%, the biggest weekly rise in the last six years. Worries over high domestic U.S. oil production are likely to remain in focus after industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. increased by one last week to 675, the sixth straight weekly gain. For today the focus will be manufacturing activity data from the Chicago region.
Pivot: 42.75Support: 42.75 41.75 40.55Resistance: 46 46.9 47.8Scenario 1: Long positions above 42.75 with targets @ 46 & 46.9 in extension.Scenario 2: Below 42.75 look for further downside with 41.75 & 40.55 as targets.Comment: The RSI has just landed on its neutrality area at 50% and is turning up.
Dow Jones
High volatility has been shown in global stock markets in the past week, with the S&P 500 ending the week up 0.89%, the Nasdaq climbing by 0.32% and the Dow Jones Industrial Average adding 1.1%, even after a historic 1,000-point drop earlier this week. Gains in the Oil & Gas, Basic Materials and Technology sectors led shares higher while losses in the Healthcare, Financials and Utilities sectors led shares lower. Global volatility could be a consideration for the Federal Reserve in its September meeting and its decision to raise interest rates, according to some economists. Fed Vice Chairman Stanley Fischer did not state on when an interest rate hike could occur, but didn't rule out September. For today, the U.S. is to release figures on manufacturing activity in the Chicago region.
Pivot: 17570 Support: 15370 14765 14200 Resistance: 17570 18350 18650 Scenario 1: Short positions below 17570 with targets @ 15370 & 14765 in extension. Scenario 2: Above 17570 look for further upside with 18350 & 18650 as targets. Comment: Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
Apple shares (NASDAQ:AAPL) ended Friday in positive territory, following reports that one of the top executives at the recently launched Beats Music is resigning. Ian Rogers, former CEO of Beats Music, gave up on Apple's Beats online radio service which Apple launched after purchasing Beats for $3 billion last year. Apple said that at least 11 million people signed up for Beats' free three-month trial, with the first batch of those users having to decide whether to pay to keep using the service at the end of September.
Pivot: 117.6 Support: 102.1 92.35 86.5 Resistance: 117.6 125 134.4 Scenario 1: Short positions below 117.6 with targets @ 102.1 & 92.35 in extension. Scenario 2: Above 117.6 look for further upside with 125 & 134.4 as targets. Comment: The RSI is below its neutrality area at 50% The 20-day moving average (red) is heading down and is possible area of resistance.