The U.S. dollar continued its course higher against the other major currencies in light pre-New Year holiday trade on Wednesday, as expectations for strong economic growth under Donald Trump's Administration and more rate hikes by Federal Reserve next year continued to lend support.
Trading activity was likely to stay subdued, as many investors already closed books before the end of the year, reducing liquidity in the market.
Against the yen, the dollar was up 0.2% at 117.64, crawling back towards a 10-1/2 month high of 118.65 set last week.Elsewhere, the British pound slumped 0.5% to a fresh two-month low of 1.2206 against the dollar, amid renewed uncertainty over the process by which Britain will leave the European Union.
On Wall Street, shares fell with the S&P 500 posting its largest daily drop since Oct. 11. Data showed contracts to buy previously owned U.S. homes fell in November to their lowest level in nearly a year, a sign that rising interest rates could be weighing on the housing market.
Today, the U.K. is to release industry data on house prices, the euro zone is to publish a report on money supply growth and private loans and the U.S. is to produce data on weekly jobless claims, wholesale inventories and the trade deficit.
On Wednesday, the euro lost some ground against the dollar, ending the session at 1.0413, after recovering from 1.0352, the lowest since January 2003.
Investors are now be eyeing Banca Monte dei Paschi di Siena after the European Central Bank told the embattled Italian lender that it needs to plug an €8.8 billion ($9.2 billion) capital shortfall, higher than a previous €5 billion gap estimated by the bank.
The dollar remains well-supported thanks to expectations of higher U.S. growth and a faster pace of interest rate increases under incoming president Donald Trump.
The Federal Reserve hiked interest rates for the first time in a year earlier this month and projected three more increases in 2017. In contrast, central banks in Europe and Japan remain committed to very loose monetary policies.
Today, the euro zone is to publish a report on money supply growth and private loans and the U.S. is to produce data on weekly jobless claims, wholesale inventories and the trade deficit.
Pivot: 1.0425Support: 1.0425 1.041 1.0385Resistance: 1.048 1.05 1.0525Scenario 1: long positions above 1.0425 with targets at 1.0480 & 1.0500 in extension.Scenario 2: below 1.0425 look for further downside with 1.0410 & 1.0385 as targets.Comment: the RSI is bullish and calls for further upside.
Gold
Gold settled higher on Wednesday, for a third consecutive session and appears on its way to end its first week in positive territory after seven consecutive weekly declines. The precious metal was boosted near a two-week high on government inflation data from Japan. Trading was moderate with investors in the U.S. returning to work after the lengthy Christmas weekend. London markets are still closed.
Analysts reckon broad concerns about European bank solvency and uncertainty surrounding President-elect Donald Trump's economic policies will likely bolster gold prices in 2017.
Today, gold traders will be fousing on weekly jobless claims, wholesale inventories and the trade deficit data from the U.S.
Pivot: 1145.5Support: 1145.5 1142.9 1140Resistance: 1152 1154 1156Scenario 1: long positions above 1145.50 with targets at 1152.00 & 1154.00 in extension.Scenario 2: below 1145.50 look for further downside with 1142.90 & 1140.00 as targets.Comment: the RSI advocates for further advance.
WTI Oil
Oil prices gained early on Wednesday, approaching their highest levels in 1-1/2 years, but they turned negative later in the afternoon, after API data showed a surprise build in U.S. crude inventories.
Data released by the American Petroleum Institute late on Wednesday showed a 4.2 million barrel build in U.S. crude stocks in the week to Dec. 23, while analysts polled ahead of the weekly inventory reports had forecast, on average, that inventories would decline 2.1 million barrels. Meanwhile, a committee of OPEC and non-OPEC producers responsible for monitoring compliance with a production cut agreement will meet in Vienna on Jan. 21-22.
For today, oil traders will be focusing on inventory data from the U.S. Energy Information Administration.
Pivot: 54.1Support: 53.35 53.1 52.8Resistance: 54.1 54.4 54.8Scenario 1: short positions below 54.10 with targets at 53.35 & 53.10 in extension.Scenario 2: above 54.10 look for further upside with 54.40 & 54.80 as targets.Comment: the RSI is bearish and calls for further decline.
US 500
U.S. stocks fell in low volume on Wednesday in a broad decline triggered in part by a sharp drop in home resales. Contracts to buy previously-owned U.S. homes fell in November to their lowest level in nearly a year, a sign that rising interest rates could be weighing on the housing market.
The S&P 500 posted its largest daily drop since Oct. 11.with its tech sector dropping 0.9 percent after closing on Tuesday at its highest closing level since the year 2000.
The Dow Jones Industrial Average fell 0.56 percent, the S&P 500 lost 0.84 percent, and the Nasdaq Composite dropped 0.89 percent. Meanwhile, Visa Inc (NYSE:V) fell 0.06% and Intel Corporation (NASDAQ:INTC) declined 1.19%.
Today, traders attention will be shifted on weekly jobless claims, wholesale inventories and the trade deficit data from the U.S.
Pivot: 2241 Support: 2241 2235 2230 Resistance: 2252 2258 2267 Scenario 1: long positions above 2241.00 with targets at 2252.00 & 2258.00 in extension. Scenario 2: below 2241.00 look for further downside with 2235.00 & 2230.00 as targets. Comment: the RSI is posting a bullish divergence (not confirmed yet).