In yesterday's FOMC statement, no hints were given on the timing of the initial rate hike, however Federal Reserve officials clearly stated that they consider the current growth path as very fragile and aggressive moves could break something. Projections from the FOMC published Wednesday showed that five officials forecast only one increase in the rate this year, while before, only on policy maker supported this. Fed Chair Janet Yellen said she still wants to see more "decisive" evidence of a lasting turnaround according to Bloomberg. This uncertainty on behalf of the Fed comes from a slump in growth at a 0.7 percent annual rate in the first quarter, caused by severe weather, port disruptions and a stronger dollar that affected exports. Following the FOMC statement, the dollar fell against most major currencies while stocks rose with the Standard & Poor's 500 Index up by approximately 0.2 percent. For today, New Zealand is to release data on growth, Switzerland is to publish data on the trade balance, the Swiss National Bank is to announce its Libor rate and publish its monetary policy and the U.K. is to release data on retail sales. Later in the day, the U.S. is to release a string of data, including reports on consumer prices, initial jobless claims and manufacturing activity in the Philadelphia region.
The euro gained significantly against the dollar on Wednesday, crossing 1.13, after dovish comments by the Federal Open Market Committee and no hints on the timing of the initial rate hike. Despite the increased possibility of a rate hike this year, the Fed still expects to raise rates gradually on a longer-term basis, as growth is still considered as fragile and more "decisive" evidence of a turnaround is required. By the end of 2016, the Fed projects the rate will reach 1.625%, down from previous projections of 1.875% made in March. The Fed also downgraded its expectations for GDP growth for the year, slashing it to a level between 1.8%-2.0%, down from previous of forecasts of 2.3 to 2.7%. In Europe, the Greece Central Bank warned that the nation could be facing an "uncontrollable crisis," if a deal is not reached with its international creditors to unlock critical aid deemed necessary to avoid bankruptcy. For today, markets will be focusing on a string of data from the U.S., including reports on consumer prices, initial jobless claims and manufacturing activity in the Philadelphia region.
Pivot: 1.127
Support: 1.127; 1.1235; 1.12
Resistance: 1.1385; 1.141; 1.145
Scenario 1: Long positions above 1.127 with targets @ 1.1385 & 1.141 in extension.
Scenario 2: Below 1.127 look for further downside with 1.1235 & 1.12 as targets.
Comment: The RSI is bullish and calls for further upside.
OIL/USD
Crude oil prices fluctuated between gains and losses on Wednesday, and finally ended the day in negative territory. Prices were supported by a report from the Energy Information Administration that showed a drop in inventories by 2.7 million barrels for last week, exceeding analysts' expectations for a decrease of 1.7 million barrels, however, strong pressure came after gasoline stocks reported an increase by 460,000 barrels, more than analysts' expectations for a 314,000-barrel drop. Recent weakness in the dollar after the Federal Reserve signaled it may only raise rates once by the end of this year, also supported the price of crude. Markets will now be focusing on data from the U.S. like today's jobless claims and manufacturing activity in the Philadelphia region as indications on the strength of the dollar while Friday's oil rig count by Baker Hughes (NYSE:BHI) Company will also be in focus.
Pivot: 60.41
Support: 58.9; 58.5; 58.23
Resistance: 60.41; 61.4; 61.8
Scenario 1: Short positions below 60.41 with targets @ 58.9 & 58.5 in extension.
Scenario 2: Above 60.41 look for further upside with 61.4 & 61.8 as targets.
Comment: The RSI lacks upward momentum.
DOW JONES
U.S. stocks moved moderately higher on Wednesday, following dovish comments by the Fed, while recent weakness in the dollar gave a significant boost in multinational companies after the Federal Open Market Committee gave no hints as to the timing of its long awaited first rate hike. "The importance of the initial increase should not be overstated," Federal Reserve chair Janet Yellen said, adding that interest rates will be "highly accommodative," for quite some time. The Dow Jones Industrial Average gained more than 0.15% on the session, with the top performer in the index being Procter & Gamble Company (NYSE:PG) which gained 1.24%. For today, markets will be focusing on a string of data from the U.S., including reports on consumer prices, initial jobless claims and manufacturing activity in the Philadelphia region.
Pivot: 17730
Support: 17730; 17360; 17040
Resistance: 18350; 18900; 19230
Scenario 1: Long positions above 17730 with targets @ 18350 & 18900 in extension.
Scenario 2: Below 17730 look for further downside with 17360 & 17040 as targets.
Comment: A support base at 17730 has formed and has allowed for a temporary stabilisation.
Shares of Facebook (NASDAQ:FB) are gained close to 1% on trading Wednesday, following a positive note by analysts at Brean Capital earlier this morning. The firm maintained its "buy" rating on Facebook, telling investors to own the stock for the long run. This decision was supported by the company's strengths that can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance.
Pivot: 86.2
Support: 77; 73.3; 70.35
Resistance: 86.2; 89.5; 94.5
Scenario 1: Short positions below 86.2 with targets @ 77 & 73.3 in extension.
Scenario 2: Above 86.2 look for further upside with 89.5 & 94.5 as targets.
Comment: As long as the resistance at 86.2 is not surpassed, the risk of the break below 77 remains high.