The dollar continues to gain against most major currencies on Monday, after data showed that pending home sales in the U.S. rose to the highest level since 2006 in May, as worries related to the Greek debt crisis continue to affect market sentiment. The National Association of Realtors said its pending home sales index increased by 0.9% last month, compared to expectations for a gain of 1.2%.The euro found some support after SNB Chairman Thomas Jordan said Monday the bank had intervened "in order to stabilize the markets," which were thrown into turmoil after Greece announced an emergency bank shutdown. Greece's Prime Minister Alexis Tsipras hinted on Monday he might resign if the Greek people vote in favour of the creditors' proposal. Meanwhile, Standard & Poor's lowered Greece's long-term credit rating to "CCC minus" from "CCC" and pegs the odds of a "Grexit" at 50%. Monday's drop in the stock markets picked up speed in the final hour of trading, a warning sign that investors can expect more turmoil from Greece's debt crisis. For today Germany is to release data on retail sales and the change in the number of people employed while euro zone is to release consumer inflation and a report on the unemployment rate. In the U.S. front data on consumer confidence are due later in the day.
The euro posted a sharp recovery, approaching the 1.12 level once more after opening 1.4% lower yesterday as SNB Chairman Thomas Jordan said Monday the bank had intervened "in order to stabilize the markets and as President Obama and Angela Merkel urging for renewed efforts to find a solution. Ratings agency Standard and Poor's cut Greece's sovereign debt rating one notch further into junk levels to CCC-, saying there was a 50 percent probability it would leave the euro zone. All eyes are on whether the Greek government will default on its debt obligations. Greece's Prime Minister Alexis Tsipras hinted on Monday he might resign if the Greek people vote in favour of the creditors' proposal. For today Germany is to release data on retail sales and the change in the number of people employed while euro zone is to release consumer inflation and a report on the unemployment rate. In the U.S. front data on consumer confidence are due later in the day.
Pivot: 1.113
Support: 1.113; 1.106; 1.097
Resistance: 1.128; 1.135; 1.141
Scenario 1: Long positions above 1.113 with targets @ 1.128 & 1.135 in extension.
Scenario 2: Below 1.113 look for further downside with 1.106 & 1.097 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
GOLD
Gold prices opened higher following the developments in Greece, and then prices fluctuated between $1188 and $1174 for the day supported by increased turmoil in the markets and rising demand for safe haven assets, as outlook seems negative for Greece and the Eurozone. The rise in the yellow metal is capped by recent strength in the dollar following the pending home sales index which increased by 0.9% last month, compared to expectations for a gain of 1.2%. For today, gold traders will be focusing on consumer confidence data from the U.S. which are due later in the day.
Pivot: 1175
Support: 1175; 1169; 1162.5
Resistance: 1184; 1188; 1190
Scenario 1: Long positions above 1175 with targets @ 1184 & 1188 in extension.
Scenario 2: Below 1175 look for further downside with 1169 & 1162.5 as targets.
Comment: A support base at 1175 has formed and has allowed for a temporary stabilisation.
OIL
Crude oil prices posted a sharp drop upon market opening in Asia, as increased turmoil in Greece creates a negative outlook for demand from the single currency bloc. Prices continue to drop in Asia on Tuesday with investors less focused on supply/demand figures due later from the API inventory report, as geopolitical concerns related to the Greek debt crisis and negotiations with Iran regarding a nuclear program are driving market sentiment. On Tuesday, the American Petroleum Institute will release its survey of U.S. crude and refined products stocks at the end of last week. The data is followed Wednesday by more closely-watched figures from the U.S. Department of Energy.
Pivot: 59.3
Support: 57.6; 56.85; 55.7
Resistance: 59.3; 60; 60.5
Scenario 1: Short positions below 59.3 with targets @ 57.6 & 56.85 in extension.
Scenario 2: Above 59.3 look for further upside with 60 & 60.5 as targets.
Comment: As long as the resistance at 59.3 is not surpassed, the risk of the break below 57.6 remains high.
U.S. stock futures posted a slight recovery on Tuesday as Greece moves closer to a debt default and an exit from the euro zone. Greece does not appear willing to pay a 1.6 billon euro loan due to the International Monetary Fund on Tuesday, while banks in Greece would remain closed until July 6 with ATM withdrawal limits of 60 euros a day. The three major stock indices fell sharply following the events, with the Dow Jones industrial average dropping by 1.95 percent, the S&P 500 losing 2.09 percent and the Nasdaq Composite dropping 2.4 percent as the current situation is expected to affect significantly the earnings of U.S. multinational companies. For today, traders will be focusing on consumer confidence data from the U.S. for further signs of strength in the dollar.
Pivot: 2067
Support: 2021; 1972; 1925
Resistance: 2067; 2135; 2180
Scenario 1: Short positions below 2067 with targets @ 2021 & 1972 in extension.
Scenario 2: Above 2067 look for further upside with 2135 & 2180 as targets.
Comment: The RSI is mixed and calls for caution.