The dollar posted a sharp drop to weekly lows versus most major currencies on Tuesday after the U.S. Commerce Department announced a decrease in factory orders for a sixth straight month, something that takes the yearly drop to 6.4% and raises concerns regarding second quarter growth. A drop in factory orders by 0.4% was announced, far below the expected 0.2% rise. Elsewhere, the Greek Prime Minister stated that Greece has submitted a "comprehensive proposal" to its lenders on Monday and now a decision must be taken by European political leaders. Data from euro zone regarding consumer prices rose in May for the first time in six months in May by 0.3%, above forecasts for a 0.2% increase. For today investors will be focusing on a series of economic indicators from euro zone including service sector growth, retail sales, and the unemployment rate which will be followed by the ECB monetary policy decision. In the U.S. front, ADP non-farm payrolls data and private sector jobs data are due later in the day.
The EUR/USD surged to weekly highs on Tuesday, approaching the 1.12 level after factory orders data from the U.S. dropped for a sixth straight month, indicating weakness in the economy. The rise was also supported by strong inflation data from euro zone released earlier in the day showing that recovery in the region is gaining momentum. Traders are now watching closely on the developments of the Greek crisis, as Greek Prime Minister has recently announced the submission of a "comprehensive proposal" and that he is waiting for an answer from the European political leaders. For Wednesday, investors will be focusing on the ECB monetary policy statement that will be followed by a press conference meeting with ECB President Mario Draghi. In addition, euro zone will release data on service sector growth, retail sales, and the unemployment rate, while the U.S. will announce its ADP non-farm payrolls report together with private sector jobs data later in the day.
Pivot: 1.1015
Support: 1.1015; 1.0945; 1.0885
Resistance: 1.1215; 1.1325, 1.1365
Scenario 1: Long positions above 1.1015 with targets @ 1.1215 & 1.1325 in extension.
Scenario 2: Below 1.1015 look for further downside with 1.0945 & 1.0885 as targets.
Comment: The RSI is well directed.
Recent weakness in the dollar supported gold prices on Tuesday pushing them back in positive territory, after a drop of 0.4% was announced for U.S. factory orders, far below the expected 0.2% rise. This was the sixth consecutive month of weak factory orders data bringing the yearly drop of the index to 6.4%. Gold traders are also watching closely on the developments of the Greek crisis for any signs of new turmoil in the markets. For Wednesday, traders will be assessing macroeconomic indicators from the U.S. including the ADP non-farm payrolls report and private sector jobs data for further indications related to the timing of the long awaited U.S. rate hike.
Pivot: 1185
Support: 1185; 1180; 1178
Resistance: 1204; 1209.3, 1214.9
Scenario 1: Long positions above 1185 with targets @ 1204 & 1209.3 in extension.
Scenario 2: Below 1185 look for further downside with 1180 & 1178 as targets.
Comment: A support base at 1185 has formed and has allowed for a temporary stabilisation.
OIL/USD
WTI crude oil prices rose to a two-week high on Tuesday, supported by a weaker dollar and by a recent decrease in oil drilling rigs from the U.S. Further support came after Saudi Arabia oil minister Ali al-Naimi gave positive comments regarding the current supply-demand balance in the market and gave hints that OPEC countries will keep production levels steady when they meet in Vienna on Friday. API data showed a rise in crude oil inventories and in gasoline supplies despite the summer driving season, thus adding some pressure on prices. For Wednesday investors will be focusing on the more closely-watched inventory data by the U.S. Department of Energy.
Pivot: 60.1
Support: 60.1; 59.4; 58.95
Resistance: 61.7; 62; 62.75
Scenario 1: Long positions above 60.1 with targets @ 61.7 & 62 in extension.
Scenario 2: Below 60.1 look for further downside with 59.4 & 58.95 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
The main U.S. stock indices posted a slight drop on Tuesday, as a rise in bond yields pressured the utilities sector, however the drop was limited by gains in the energy sector and by optimism that Greece is approaching a deal with its creditors. Bond yields rose to a two-week high on Tuesday supported by a rise in European yields which received a boost by better-than-expected consumer inflation data and optimism ahead of Friday's jobs report. Utilities fell, as they and other dividend paying shares tend to compete with bonds as investments. For today, the focus will be shifted towards the ADP non-farm payrolls report and private sector jobs data for further indications related to the timing of the long awaited U.S. rate hike.
Pivot: 2067
Support: 2067; 2021; 1972
Resistance: 2135; 2180; 2215
Scenario 1: Long positions above 2067 with targets @ 2135 & 2180 in extension.
Scenario 2: Below 2067 look for further downside with 2021 & 1972 as targets.
Comment: The RSI is mixed with a bullish bias.
INTEL
Intel (NASDAQ:INTC) was one of the worst performers in the Dow on Tuesday, falling by 2.1% after BMO Capital downgraded the company to "market perform." BMO analysts said they believe Altera (NASDAQ:ALTR) is worth less than what Intel paid to acquire it. The firm also reduced its price target on shares of Intel to $33 from $40.
