The dollar rallied against the yen and the euro on Wednesday, but lost ground against the pound.
The dollar was supported by solid economic reports from the U.S. Incomes and household spending grew at a fast pace for the second straight month in October, according to government data, demonstrating that consumers, rather than businesses, are supporting economic growth in the U.S. Another report showed that private-sector hiring continued at a quick pace this month, showing the economy is stronger now than earlier this year.
Additional reports are due out later this week on non-farm employment data.
The Federal Reserve is expected to take a more strict view on monetary policy in December, and higher interest rates are expected to boost the dollar, making the currency appealing to investors seeking yield.
The U.S. National Association of Realtors said pending home sales rose by 0.1% last month, missing expectations for an increase of 0.2%. The report came after U.S. payroll processing firm ADP said non-farm private employment rose by 216,000 in November, above forecasts for an increase of 165,000. Separately, the U.S. Commerce Department said that personal spending increased by 0.3% in October, below expectations for a 0.5% gain. The dollar hit a 9-1/2-month high against the yen on Thursday as oil prices surged after OPEC agreed to output cuts, lifting inflation expectations and U.S. bond yields. Today, the U.K. is to release its manufacturing PMI.
The U.S. is to release figures on initial jobless claims and the Institute for Supply Management is to release its manufacturing PMI. Tomorrow the U.S. is to round up the week with the non-farm payrolls report for November.
The dollar reached 9-1/2-month highs against the yen on Thursday, as oil prices surged after OPEC agreed to output cuts, lifting inflation expectations and U.S. bond yields.
Further pressure on the yen came from comments by Bank of Japan board member Makoto Sakurai who said the central bank will continue to buy massive amounts of government bonds even under a new policy framework easing fears that its bond-buying programme was nearing a limit.
The dollar's rebound came as oil prices jumped around 9 percent on Wednesday as OPEC members agreed to cut production, its first reduction since 2008. Today, the U.S. is to release figures on initial jobless claims and the Institute for Supply Management is to release its manufacturing PMI.
Pivot: 113.25Support: 113.25 112.55 112Resistance: 114.8 115.3 115.9Scenario 1: long positions above 113.25 with targets at 114.80 & 115.30 in extension.Scenario 2: below 113.25 look for further downside with 112.55 & 112.00 as targets.Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold
Gold prices fell once again on Wednesday, as a widespread expectation of an interest-rate hike by the Federal Reserve in December weakens demand for the yellow metal.
Investors reckon the Federal Reserve will raise interest rates at a meeting next month, and the odds of a rate increase is now at 94%, according to Fed fund futures tracked by the CME.
The drop in the yellow metal continues early on Thursday, as regional growth signals in China came in positive, supporting sentiment for higher risk assets.
Meanwhile, gold demand in India, one of the globe's biggest buyers of the metal, is declining, with gold traders saying imports could fall to a combined 60-70 tons over the next two months, according to Commmerzbank AG. Gold traders are focusing mainly on tomorrow’s U.S. report on Non-Farm Payrolls.
Pivot: 1182Support: 1155 1148 1140Resistance: 1182 1198 1208Scenario 1: short positions below 1182.00 with targets at 1155.00 & 1148.00 in extension.Scenario 2: above 1182.00 look for further upside with 1198.00 & 1208.00 as targets.Comment: the RSI is below its neutrality area at 50%
WTI Oil
Oil prices gained by more than 9 percent on Wednesday, on a high trading volume day, after OPEC and Russia reached a deal to reduce output in order to improve a global supply glut that is pressuring prices.
OPEC agreed on Wednesday its first oil output reduction since 2008 after Saudi Arabia accepted "a big hit" and demanded that Iran also cuts output.
The deal also included the group's first coordinated action with non-OPEC member Russia in 15 years. A cut of 0.7-1.2 million barrels per day was in the deal and markets are now acting on the recent rise expecting to see whether this move can sustainably take prices above $50 per barrel.
Markets are now focusing on Friday’s data from Baker Hughes as investors are worried that this move would leave the field open for other producers, especially U.S. shale drillers.
Pivot: 48.45Support: 48.45 47.35 46.35Resistance: 51.2 51.65 52.15Scenario 1: long positions above 48.45 with targets at 51.20 & 51.65 in extension.Scenario 2: below 48.45 look for further downside with 47.35 & 46.35 as targets.Comment: the immediate trend remains up and the momentum is strong.
US 500
U.S. stocks ended with big gains for November on Wednesday thanks to a sharp post-election rally but finished the day mostly lower as drops in utilities and technology offset energy's surge.
Energy shares jumped with oil prices after OPEC agreed to cut production. U.S. oil prices soared 9.3 percent, while the S&P energy index jumped 4.8 percent. Bank shares also rose after comments by Steven Mnuchin, Donald Trump's pick for U.S.
Treasury secretary, told CNBC that tax reforms and trade pact overhauls would be top priorities of the new administration. Bank of America (NYSE:BAC) gained 4.5 percent, while Goldman Sachs (NYSE:GS) ended up 3.6 percent and hit its best level since the financial crisis.
Attention is now shifted on Friday’s Non-Farm employment report for further clues on the pace of interest rate hikes coming from the Fed in the coming months.
Pivot: 2214 Support: 2187 2179 2169 Resistance: 2214 2225 2247 Scenario 1: short positions below 2214.00 with targets at 2187.00 & 2179.00 in extension. Scenario 2: above 2214.00 look for further upside with 2225.00 & 2247.00 as targets. Comment: the RSI advocates for further downside.