Following a batch of positive economic reports from the U.S. the dollar surged to new highs against most major currencies yesterday, as the possibility for a U.S. rate hike continues to be supported. The U.S. Commerce Department reported an increase in new home sales by 6.8% last month, compared to expectations for a gain of 5.0%. The Commerce Department also reported that total U.S. durable goods orders, which include transportation items, declined by 0.5% last month, compared to expectations for a drop of 0.4%. However, core durable goods orders, excluding transportation items, increased by 0.5% in April, exceeding expectations for an increase of 0.4%. Consumer confidence data published by the Conference Board reported an increase to 95.4 this month when analysts expected a drop to 94.9 in May. Recent strength in the dollar after indications of economic recovery, is something that hurt commodity prices, and also adds pressure on multinational companies' earnings as it will have a negative impact on exports.
The euro reached a new monthly low against the dollar on Tuesday, after a batch of solid economic reports from the U.S. which makes a potential U.S. interest rate hike in the coming months even more possible. In addition, continuing fears of a Greek default and an exit from the European Union add further pressure on the single currency which fell to levels below 1.09, it's lowest since April 28. U.S. core durable goods orders together with new home sales and consumer confidence showed signs of improvement. For today, investors will be focusing on the German GfK Consumer Confidence report, while a group of euro zone officials will hold a teleconference on Thursday after the conclusion of several days of talks between Greece and its troika of creditors.
Pivot: 1.096
Support: 1.082; 1.078; 1.071
Resistance: 1.096; 1.1005; 1.106
Scenario 1: Short positions below 1.096 with targets @ 1.082 & 1.078 in extension.
Scenario 2: Above 1.096 look for further upside with 1.1005 & 1.106 as targets.
Comment: The RSI lacks upward momentum.
Gold prices posted a sharp drop on Tuesday following a big wave of optimistic U.S. economic data that pushed the dollar to its highest level in four weeks and increased the possibility for the long awaited interest rate hike to take place in the coming months. Core durable goods orders rose by 0.5% last month, above expectations of a 0.4% gain, new home sales in April rose by 6.8%, above the expected 5% and consumer confidence showed signs of stabilizing rising to 95.4, above the expected 94.9. Signs of a strong economic recovery reduce demand for safe haven assets such as gold, causing the precious metal to drop below $1990 per ounce. Market focus is now shifted to Thursday's jobless claims data from the U.S, while euro zone officials will hold a teleconference on Thursday after the conclusion of several days of talks between Greece and its troika of creditors.
Pivot: 1196
Support: 1182; 1178; 1170
Resistance: 1196; 1204; 1209.6
Scenario 1: Short positions below 1196 with targets @ 1182 & 1178 in extension.
Scenario 2: Above 1196 look for further upside with 1204 & 1209.5 as targets.
Comment: As long as 1196 is resistance, likely decline to 1182.
OIL/USD
Crude oil prices fell sharply yesterday reaching the lowest price for this month, pressured by recent strength in the dollar, and also by a note of Goldman Sachs (NYSE:GS) U.S. saying that output could increase in the coming months if prices stabilize. The U.S. Department of Energy will release its inventory data on Thursday, delayed a day because of a public holiday. In the meantime, investors will be watching closely on the OPEC meeting of June 5, where a discussion for lifting economic sanctions from Iran this summer will be discussed.
Pivot: 59.15
Support: 57.7; 57.2; 57
Resistance: 59.15; 59.9; 60.25
Scenario 1: Short positions below 59.15 with targets @ 57.7 & 57.2 in extension.
Scenario 2: Above 59.15 look for further upside with 59.9 & 60.25 as targets.
Comment: As long as 59.15 is resistance, likely decline to 57.7.
The main U.S. stock indices fell yesterday, with the S&P 500 posting its biggest drop in three weeks pressured by a recent strength in the dollar, as well as fears that the market will soon not be receiving the support of low interest rates. The market showed losses in the Oil & Gas, Technology and Basic Materials sectors with the worst performers of the session being Apple Inc (NASDAQ:AAPL)., which fell 2.20%, Visa Inc (NYSE:V). that fell by 1.55% and Chevron Corporation (NYSE:CVX) that was down 1.53%. Investors will now be focusing on tomorrow's jobless claims as well as other indicators from the U.S. in order to assess the status of recovery.
Pivot: 2067
Support: 2067; 2021; 1972
Resistance: 2180; 2215; 2280
Scenario 2: Long positions above 2067 with targets @ 2180 & 2215 in extension.
Scenario 2: Below 2067 look for further downside with 2021 & 1972 as targets.
Comment: The RSI is mixed with a bullish bias.
AMAZON
Amazon.com Inc (NASDAQ:AMZN). announced the hiring of more than 6,000 workers in an effort to meet its growing customer demand. The employees will help process customer orders in the company's fulfillment centers across a dozen states nationwide. The stock price of Amazon is showing little movement, trading in the range of $ 452 and $ 414 in the past two weeks. However, the company is now facing increased costs as, it has begun booking revenue from retail sales in individual European countries, rather than doing all sales through Luxembourg, a low tax country, as corporate tax practices become more strict in Europe.
Pivot: 427
Support: 439; 446; 452
Resistance: 427; 423; 418
Scenario 1: Long positions above 427 with targets @ 439 & 446 in extension.
Scenario 2: Below 427 look for further downside with 423 & 418 as targets.
Comment: The RSI lacks downward momentum.