The dollar posted small losses against other major currencies in a quiet trading session on Monday, despite rising hopes of a possible U.S. rate hike before the end of the year which provides support to the greenback. Federal Reserve Vice Chairman Stanley Fischer on Sunday noted the strong gains of the U.S. labour market under the current economic expansion that is close to the Fed's goals of maximum employment and price stability. In addition, San Francisco Federal Reserve President John Williams on Thursday signalled his support for a September rate increase. Market players are now shifting their focus on a much anticipated speech by Federal Reserve president Janet Yellen at the annual meeting of top central bankers and economists in Jackson Hole, Wyoming, this week for fresh clues on the timing of the next U.S. rate hike. According to the Fed Rate Monitor Tool, investors are pricing in an 18% chance of a rate hike by September, up from just 6% at the start of last week. December odds were at around 52%, compared to 46% on Friday. For today, the euro zone is to release survey data looking at private sector activity and the U.S. is to publish data on new home sales.
The euro posted small gains against the dollar on Monday, despite views expressed by various Fed officials over the past week which have provided a boost to the dollar. Markets appear to remain on the side-lines waiting for a possibly decisive speech by Fed Chair Yellen on Friday. The market's focus was on whether she would express views similar to those of Vice Chair Fischer and New York Fed President William Dudley, or take a more subdued stance in line with the July Fed policy meeting minutes that suggested the central bank was not in a hurry to raise rates. Investors are now focusing on catalysts from euro zone and U.S. purchasing managers index data and U.S. home sales numbers due later in the session.
Pivot: 1.13Support: 1.13 1.127 1.125Resistance: 1.135 1.1365 1.139Scenario 1: long positions above 1.1300 with targets @ 1.1350 & 1.1365 in extension.Scenario 2: below 1.1300 look for further downside with 1.1270 & 1.1250 as targets.Comment: the RSI is bullish and calls for further upside.
Gold
Gold prices posted a slight recovery on Monday after a sharp drop in the end of last week, following a series of hawkish comments by high ranked Fed officials which provided a boost to the dollar. Fischer's speech was just the latest hawkish indication from top Fed officials which caused the Fed monitor to price in an 18% chance of a rate hike by September, up from just 6% at the start of last week. Market players are focused on a highly anticipated speech by Fed Chair Janet Yellen at the annual meeting of top central bankers and economists in Jackson Hole, Wyoming, this week for fresh clues on the timing of the next U.S. rate hike.
Pivot: 1341Support: 1331.5 1325 1321Resistance: 1341 1348 1351.5Scenario 1: short positions below 1341.00 with targets @ 1331.50 & 1325.00 in extension.Scenario 2: above 1341.00 look for further upside with 1348.00 & 1351.50 as targets.Comment: the upward potential is likely to be limited by the resistance at 1341.00.
WTI Oil
Oil prices fell by more than 3 percent on Monday, retreating from last week's two-month highs, due to concerns regarding rising Chinese fuel exports, an increase in Iraqi and Nigerian crude shipments and a rising U.S. oil rig count. China's July diesel and gasoline exports soared 181.8 percent and 145.2 percent respectively, from the same month last year, while Iraq published plans this week to increase exports of Kirkuk crude by 150,000 bpd from its northern fields adding significant pressure on prices. In addition, Nigerian rebels who regularly attacked oil facilities in the country earlier this year said they were ready for a ceasefire. Inventory data from the API later in the day remain in focus.
Pivot: 48.55Support: 45.81 45 44Resistance: 48.55 49.37 50.66Scenario 1: short positions below 48.55 with targets @ 45.81 & 45.00 in extension.Scenario 2: above 48.55 look for further upside with 49.37 & 50.66 as targets.Comment: technically the RSI is below its neutrality area at 50.
US 500
The main U.S. indices traded were mixed on Monday, as gains in the Healthcare, Utilities and Financials sectors led shares higher while losses in the Oil & Gas, Technology and Consumer Goods sectors led shares lower. The worst performer of the session was Apple Inc (NASDAQ:AAPL) which fell by 0.78% adding significant pressure on the main indices. At the close in NYSE, the Dow Jones Industrial Average fell 0.12%, while the S&P 500 index declined 0.06%, and the NASDAQ Composite index climbed 0.12%. Market players are now focused on a highly anticipated speech by Fed Chair Janet Yellen at the annual meeting of top central bankers and economists in Jackson Hole, Wyoming, this week for fresh clues on the timing of the next U.S. rate hike.
Pivot: 2120 Support: 2120 2042 1992 Resistance: 2220 2250 2350 Scenario 1: long positions above 2120.00 with targets @ 2220.00 & 2250.00 in extension. Scenario 2: below 2120.00 look for further downside with 2042.00 & 1992.00 as targets. Comment: investors have to remain cautious since these levels may trigger profit taking.