Last week, a series of soft economic data from the U.S. underlined weakness in the dollar causing it to drop against the euro and the yen on Friday while and reduced expectations that the Federal Reserve will move to an interest rate hike in the near future. The U.S. economic calendar showed on Friday, that U.S. industrial production fell for a fifth straight month posting a 0.3% drop in April and another report showed that U.S. consumer sentiment plunged to a seven month low this month. The University of Michigan's preliminary reading of the consumer sentiment index for May came in at 88.6, down from a final April reading of 95.9 and worse than forecasts for a reading of 96.0. Earlier in the week reports on retail sales and producer inflation also gave a pessimistic outlook for the second quarter after the first quarter disappointed investors. Investors focus for this week will be on Wednesday's Federal Reserve minutes for any possible hints on the timing of a rate increase. Friday's data on U.S. inflation will also be closely watched while the euro zone is to release data on private sector activity and China is to publish preliminary data on manufacturing activity.
The euro continues to rise on a steady pace against the dollar on Friday, as investors took into consideration the positive growth data from Europe earlier in the week in comparison with weak U.S. growth. In addition On Friday, the University of Michigan reported that its Consumer Sentiment Index plunged to 88.6, far below estimates of a 93.5 reading. The weak data came after the U.S. Census Bureau reported little change in consumer spending throughout the nation while U.S. retail sales remained low. Investors' attention will be shifted towards the Fed minutes this Wednesday as they look for clues on the future monetary policy of the Fed. Last month, the FOMC removed all calendar references to the timing of its first interest rate hike in nearly a decade.
Pivot
1.132
Support
1.132
1.126
1.1195
Resistance
1.153
1.1645
1.172
Scenario 1: Long positions above 1.132 with targets @ 1.153 & 1.1645 in extension.
Scenario 2: Below 1.132 look for further downside with 1.126 & 1.1195 as targets.
Comment: The RSI is mixed with a bullish bias.
Supported by the consecutive weak economic indicators from the U.S, the recent weakness in the dollar and uncertainty related to the Greek debt and the possibility of a Greek Default, gold prices soared last week reaching three month highs with the continued focus on the timing of a rate hike by the Federal Reserve. Some profit taking took place at the end of last week causing prices to drop, however, the metal received new support from the UOM Consumer Sentiment Index which plunged to 88.6, far below estimates of 93.5. Investors' attention will be shifted towards the Fed minutes this Wednesday as they look for clues on the future monetary policy of the Fed.
Pivot
1217
Support
1217
1210
1200
Resistance
1237
1245
1255
Scenario 1: Long positions above 1217 with targets @ 1237 & 1245 in extension.
Scenario 2: Below 1217 look for further downside with 1210 & 1200 as targets.
Comment: The RSI is mixed to bullish.
OIL/USD
Deputy Oil Minister Rokneddin Javadi told Reuters that a production cut is highly unlikely at OPEC's next meeting in June. Iran and Venezuela, have requested OPEC to cut output in order to support low prices. Some support came to prices recently after recent drops in U.S. inventories, and a general weakness in the dollar which makes dollar-denominated commodities such as oil cheaper for holders of other currencies. However, as the market is still considered oversupplied, investors will be focusing on supply data from the American Petroleum Institute on Tuesday and from the Energy Information Administration on Wednesday.
Pivot
59.2
Support
59.2
58.4
57.87
Resistance
60.85
61.85
62.6
Scenario 1: Long positions above 59.2 with targets @ 60.85 & 61.85 in extension.
Scenario 2: Below 59.2 look for further downside with 58.4 & 57.87 as targets.
Comment: The RSI is mixed to bullish.
DOW JONES
U.S. stocks posted a sharp rise last week as the dollar weakness pushes a potential rate hike further down the road. On Friday however, the main stock indices remained relatively flat as the University of Michigan reported that its Consumer Sentiment Index plunged to 88.6, far below low consensus estimates of a 93.5 reading. The top performer on the Dow on Friday was Cisco Systems Inc (NASDAQ:CSCO) which gained by 1.72%, while the worst performer was Microsoft Corporation (NASDAQ:MSFT) which fell by 0.87%. The Fed's point of view on the economy will be the highlight of this week at the release of the minutes from the board's April meeting.
Pivot
17585
Support
17585
17040
16330
Resistance
18290
18900
19200
Scenario 1: Long positions above 17585 with targets @ 18290 & 18900 in extension.
Scenario 2: Below 17585 look for further downside with 17040 & 16330 as targets.
Comment: The RSI is above its neutrality area at 50%.
MCDONALDS
Some of the top U.S. hedge fund investors and activists increased their positions or raised their equity stakes in fast food chain McDonald's Corp (NYSE:MCD) during the first quarter, according to regulatory filings on Friday. Jana, run by Barry Rosenstein, Keith Meister's Corvex Management LP, Larry Robbins' Glenview Capital Management and others all took new positions in the company, buying a large number of shares. Further support came to the stock as McDonald's triew to address consumer perceptions of slow service, and begun paring a menu that aims to make it easier for workers to serve food quickly. Other steps to keep up with changing consumer tastes are also taking place.
Pivot
94.5
Support
94.5
91.5
86.75
Resistance
101.1
104
107.5
Scenario 1: Long positions above 94.5 with targets @ 101.1 & 104 in extension.
Scenario 2: Below 94.5 look for further downside with 91.5 & 86.75 as targets.
Comment: The RSI broke above a declining trend line.