The dollar gained, reaching two-week highs against most major currencies on Monday, supported by positive U.S. data and by hopes for a rate hike by the Federal Reserve in the near future. The U.S. Commerce Department reported earlier Monday that personal spending increased 0.3% last month, in line with expectations. The core PCE price index was up 1.6% on a year-over-year basis, where it has held since March. At the Jackson Hole symposium on Friday, Fed Chair Janet Yellen said the case for U.S. interest rate hikes has “strengthened” in recent months due to improvements in the labour market and to expectations for solid economic growth. However, she did not indicate when the Fed would act, saying that higher interest rates will depend on incoming economic data. The Fed Rate Monitor Tool, is currently pricing in a 24% chance of a rate hike by September, up from 21% before Yellen and Fischer spoke. In the week ahead, investors’ attention will be shifted towards economic reports from the U.S. in order to assess whether the world's largest economy is strong enough to proceed with a rate hike in the coming months, with Friday’s nonfarm payrolls data in the spotlight. For today, Germany and Spain are to produce preliminary data on consumer prices, the U.K. is to report on net lending and the U.S. is to publish private sector data on consumer confidence.
The euro ended Monday slightly lower against the dollar, with the dollar reaching fresh two week highs earlier in the day, after U.S. economic data showed consumer spending increased for a fourth straight month, pointing to a recovery in growth that could open the way for the Fed to raise interest rates later this year. Markets appear reluctant to commit to further short positions before the jobs figures are released. The August report would be a key factor and good numbers could easily bring a rate hike in September. For today, Germany and Spain are to produce preliminary data on consumer prices, and the U.S. is to publish private sector data on consumer confidence.
Pivot: 1.124Support: 1.1145 1.113 1.1105Resistance: 1.124 1.1255 1.128Scenario 1: short positions below 1.1240 with targets @ 1.1145 & 1.1130 in extension.Scenario 2: above 1.1240 look for further upside with 1.1255 & 1.1280 as targets.Comment: technically the RSI is below its neutrality area at 50.
Gold
Gold prices are fluctuating around five-week lows after rising speculation by several Fed officials that a September interest rate hike is on the table and after Fed Chair Janet Yellen said Friday that the case for an interest rate hike this year was strengthening. Chances of an upcoming rate hike combined with positive personal spending data from the U.S. supported the dollar and weighed on gold, as they lower the metal's appeal as an alternative asset and make dollar-priced commodities more expensive for holders of other currencies. Investors are now looking forward to the upcoming nonfarm payroll data at the end of the week for a clearer view on the status of the U.S. economy.
Pivot: 1314.8Support: 1314.8 1309.5 1304.5Resistance: 1331.25 1335 1340Scenario 1: long positions above 1314.80 with targets @ 1331.25 & 1335.00 in extension.Scenario 2: below 1314.80 look for further downside with 1309.50 & 1304.50 as targets.Comment: the RSI lacks downward momentum.
WTI Oil
Oil prices extended fell as low as 2% on Monday, and recovered later in the session, as a broadly stronger U.S. dollar and fading hopes of a production freeze by major producers weighed on sentiment. Chances that the upcoming meeting among major oil producers in late September would yield any action to reduce the global glut appeared minimal after Iran said it would only cooperate in talks to freeze output if fellow exporters recognized its right to fully regain market share. In addition, last week, Saudi Arabia's Energy Minister Khalid al-Falih said that he does not believe any "significant intervention" in the oil market is necessary. For today and tomorrow, inventory data from the U.S. will be in the spotlight.
Pivot: 47.4Support: 46.4 45.81 45Resistance: 47.4 47.96 48.45Scenario 1: short positions below 47.40 with targets @ 46.40 & 45.81 in extension.Scenario 2: above 47.40 look for further upside with 47.96 & 48.45 as targets.Comment: the upward potential is likely to be limited by the resistance at 47.40.
US 500
The main U.S. stock indices gained Monday, with the S&P 500 trading right below an all-time record high, as gains in the Basic Materials, Financials and Telecoms sectors led shares higher. At the close in NYSE, the Dow Jones Industrial Average added 0.58%, while the S&P 500 index climbed 0.52%, and the NASDAQ Composite index added 0.26%. The top performers on the S&P 500 were CF Industries Holdings Inc (NYSE:CF) which rose 4.17% and Alcoa Inc (NYSE:AA) which gained 2.55% while the worst performer was Tegna Inc which was down 2.20%. With earnings season winding down, investors are now shifting their focus on U.S. data and the possibility of a rate hike by the Federal Reserve.
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: the RSI has just landed on its neutrality area at 50% and is turning up.