The dollar pushed broadly higher against the other major currencies on Tuesday, as downbeat euro zone inflation data, concerns over Chinese growth and mounting tensions in the Middle East continued to weigh on market sentiment.
Today the U.K. is to release survey data on service sector activity; both the U.S. and Canada are to release data on the trade balance; and the U.S. is also to release the monthly ADP nonfarm payrolls report, the ISM report on service sector growth and data on factory orders. Later in the day, the Federal Reserve is to publish the minutes of its December meeting.
But investors will be mainly looking ahead to Friday’s U.S. jobs report for December, to gain more information on the strength of the American economy and on the possible timing of the next rate hike by the Federal Reserve.
The euro fell sharply on Tuesday to drop to fresh one month lows, after Eurostat reported that the annual rate of inflation in the euro zone rose just 0.2% in December, matching November’s reading and falling short of forecasts for an increase of 0.3%. Core inflation, which strips out food and energy costs, rose 0.9% in December, below forecasts for 1.0% and matching November’s reading.
The weak data added to pressure on the European Central Bank to step up measures to bolster price and economic growth in the single currency bloc. The ECB targets annual inflation of close to, but just below 2%.
Always on Tuesday, Germany's Federal Statistics Office said the number of unemployed people decreased by 14,000 last month, better than expectations for a drop of 6,000. Germany’s unemployment rate held steady at a record low of 6.3% in December, in line with expectations.
Now investors will be looking ahead to Friday’s U.S. jobs report for December, to gain more information on the strength of the American economy.
Pivot: 1.08Support: 1.0705 1.067 1.0635Resistance: 1.08 1.084 1.0865Scenario 1: short positions below 1.08 with targets @ 1.0705 & 1.067 in extension.Scenario 2: above 1.08 look for further upside with 1.084 & 1.0865 as targets.Comment: technically the RSI is below its neutrality area at 50.
Gold
Gold prices inched higher on Tuesday, holding near the prior session's four-week high, in spite of a broadly stronger dollar, as fresh concerns over global growth boosted demand for safe-haven assets.
A day earlier, prices rose to a session peak of $1083, the most since December 9, before ending up $15.00, or 1.41%, as investors reacted to a move by Saudi Arabia to cut commercial ties with Iran, fueling concerns over geopolitical instability in the Middle East.
Gold received another boost after data showed that manufacturing activity in the U.S. and China, the world's two biggest economies, both contracted last month, rekindling fears over the global growth outlook.
Now investors will be looking ahead to Friday’s U.S. jobs report for December, to gain more information on the strength of the greenback.
Pivot: 1074.7Support: 1074.7 1072.5 1070Resistance: 1082 1083.6 1086Scenario 1: long positions above 1074.7 with targets @ 1082 & 1083.6 in extension.Scenario 2: below 1074.7 look for further downside with 1072.5 & 1070 as targets.Comment: a support base at 1074.7 has formed and has allowed for a temporary stabilisation.
WTI Oil
Crude futures fell sharply on Tuesday, ahead of the release of the American Petroleum Institute's weekly inventory report, as investors weighed the escalating geopolitical tensions in the Middle East and as gloomy Chinese data dragged on sentiment in a market already weighed down by persistently high production levels.
Oil futures were pulled down as data showed China's national rail freight volumes logging their biggest ever annual decline in 2015, raising questions about how sharply the world's number two economy was slowing and what this meant for oil demand.
Always on Tuesday, Islamic State militants attacked checkpoints near the Libyan oil port of Es Sider for a second day and an oil storage tank in the port was set on fire by a long-range rocket. Ali Hassi said militants had attacked checkpoints 30-40 km from the port, and that two guards were killed and 16 wounded in the fighting. The National Oil Corporation (NOC) said the oil tank fire started just as firefighters were close, to bringing under control another blaze at an oil tank that was hit during fighting in the nearby port of Ras Lanuf on Monday. Both fires were still burning on Tuesday afternoon.
But crude oil prices started to reverse the trend on Wednesday in Asia, as industry estimates from the U.S. showed a sharp drop in crude stockpiles. A report said that the American Petroleum Institute estimates showed a 5.6 million barrel drop last week, while crude stocks at the Cushing, Oklahoma hub gained 1.4 million barrels.
Today investors will be focusing on the weekly government report on stockpiles.
Pivot: 37Support: 35.73 35.35 34.8Resistance: 37 37.45 38.3Scenario 1: short positions below 37 with targets @ 35.73 & 35.35 in extension.Scenario 2: above 37 look for further upside with 37.45 & 38.3 as targets.Comment: the RSI is mixed with a bearish bias.
U.S. stocks were mixed on Tuesday, snapping back one session after weak manufacturing data in China sent the Shanghai Composite Index spiraling, pulling down equity markets worldwide.
As a result, the Dow Jones Industrial Average fell by as much as 450 points on Monday, before a late rally spared it from finishing with its worst open to a year in more than 80 years.
The major indices still posted one of their largest one day sell offs in three months, extending losses from the final week in December, when the Dow and S&P 500 Composite index ended 2015 in negative territory for the year.
On Tuesday, the Dow gained 0.06%, paring earlier losses with a late rebound; while the NASDAQ Composite index fell 0.24%, as losses in Apple Inc (O:AAPL). and several other prominent tech stocks weighed; and the S&P 500, meanwhile, added 0.20%, as eight of 10 sectors closed in the green.
Now investors will be looking ahead to Friday’s U.S. jobs report for December, to gain more information on the strength of the American economy.
Pivot: 1989 Support: 1989 1953 1867 Resistance: 2043 2090 2116 Scenario 1: long positions above 1989 with targets @ 2043 & 2090 in extension. Scenario 2: below 1989 look for further downside with 1953 & 1867 as targets. Comment: the RSI lacks downward momentum.