The US Dollar fell against a basket of other major currencies on Thursday amid concerns how and when the corporate tax reform initiated by the Trump administration will be passed. The US Dollar Index (USDX) closed 0.36% lower after news came that Senate Republicans would be in favor of decreasing corporate tax rates only from 2019 onward.
Oil traded moderately higher as it was reported that Saudi-Arabia intends to reduce oil exports in December by 120,000 barrels per day in December. Gold traded higher supported by a weaker US Dollar and rising tensions in the Middle East between Saudi-Arabia and Iran, as Saudi-Arabia advised its citizen to leave Lebanon.
US equities traded initially significantly lower but later in the trading session recovered closing less than 0.5% in the red. The retracement is attributed by the disappointment that the corporate tax reform might be delayed. Biggest losses were seen in bank and industry stocks, while energy stock showed resilience as the US Energy ETF (NYSE:XLE) closed 0.43% higher.
The Bitcoin was down relative to its previous day’s level, while remaining in the range between $7,000 and $7,500 after the day before it experienced high volatility and reached an all-time high after it became clear that the Segwit2X fork will be called off for the time being. Other significant cryptocoins such as Ethereum and Monero showed a stronger performance and gained over 3%. Citigroup’s analysts estimated that the energy cost alone of mining one Bitcoin in 2022 would reach at least $300,000, raising concerns over increasing the supply of the cryptocurrency.
On Friday Industrial Production (IP) figures will be published in France, Italy and the UK, while the UK also publishes Manufacturing and International Trade statistics. The US will publish Treasury Budget statistics and the University of Michigan publishes its Consumer Sentiment level research.
EUR/USD was trading higher amid a weaker US Dollar after it became known that the tax reform proposed by the Trump administration would face difficulties in the Senate as Senate Republicans suggested delaying corporate tax rate cuts until 2019.
New jobless claims were up at 239,000 (before 229,000 / expected 232,000), while wholesale trade was +0.3% (before +0.9%).
On Friday Italy and France publish Industrial Production (IP) statistics, while the US is set to publish the US Treasury budget level and the University of Michigan will release Consumer Sentiment figures.
Pivot: 1.1605
Support: 1.1605 1.1585 1.157
Resistance: 1.172 1.1695 1.1665
Scenario 1: long positions above 1.1605 with targets at 1.1665 & 1.1695 in extension.
Scenario 2: below 1.1605 look for further downside with 1.1585 & 1.1570 as targets.
Comment: the RSI lacks downward momentum. Prices broke above an ascending triangle pattern.
Gold (EUR)
Gold edged up slightly for the second day in a row.
The uncertainty surrounding the corporate tax reform, as well as a stronger US Dollar pushed Gold higher.
Building tensions in the Middle East also pushed investors towards the safe haven, as Saudi Arabia advised its citizens against travel to Lebanon amidst new allegations against Iran’s interference.
Gold traders would primarily look at global politics, be it the corporate tax proposal in the US, the developments in the Middle East and North Korea, while US President visits Asia.
Pivot: 1280
Support: 1280 1277 1273
Resistance: 1292 1295 1299
Scenario 1: long positions above 1280.00 with targets at 1292.00 & 1295.50 in extension.
Scenario 2: below 1280.00 look for further downside with 1277.00 & 1273.00 as targets.
Comment: the RSI is mixed to bullish.
WTI Oil
Oil traded higher while remaining within the range it stayed since Monday.
According to a report by Reuters, Saudi Arabia intends to cut production by 120,000 barrels per day in December compared to November.
The internal and external upheavals in Saudi-Arabia has the markets on edge as the situation remains fluid.
On Friday the Baker Hughes Oil Rig count will show the currently operating number of oil rigs in the US.
Pivot: 56.65
Support: 56.68 56.4 56.1
Resistance: 57.5 57.9 58.48
Scenario 1: long positions above 56.68 with targets at 57.50 & 57.90 in extension.
Scenario 2: below 56.68 look for further downside with 56.40 & 56.10 as targets.
Comment: the RSI is mixed to bullish
US 500
US equity indices closed lower on Thursday while recovering form bigger intraday losses.
Markets were disturbed by reports that Senate Republicans would be in favor of cutting corporate tax rates only from 2019 onwards.
Most affected by this downturn were banks (US Banks ETF -0.84%) and industrial stocks (US Industrial ETF -1.20%).
Snapchat, which was almost -15% on Wednesday following disappointing earning numbers further lost track on Thursday as an analyst from Deutsche Bank (DE:DBKGn) suggested that weak performance of the company stock could turn off potential advertising customers, making SNAP close at its second-lowest level since the IPO.
On Friday the US Treasury will release its budget statistics, while the University of Michigan Consumer Sentiment level could give further insight in the consumer market in the US.
Pivot: 2570.5
Support: 2570.5 2563 2559
Resistance: 2584 2589.5 2594.5
Scenario 1: long positions above 2570.50 with targets at 2584.00 & 2589.50 in extension.
Scenario 2: below 2570.50 look for further downside with 2563.00 & 2559.00 as targets.
Comment: the RSI is bullish and calls for further upside.