The dollar held onto gains against the other major currencies on Thursday, after data showed that manufacturing activity in the Chicago area returned to expansion in June, while markets continued to recover from the Brexit vote.
Data showed that the Chicago purchasing managers’ index increased to 56.8 this month, from a reading of 49.3 in May, while analysts had expected the index to rise to 50.7 in June. The report came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending June 25 rose by 10,000 to 268,000, from the previous week’s total of 258,000, while analysts expected jobless claims to increase by 9,000 to 267,000 last week.
Elsewhere, the pound was still recovering from record losses posted amid fears that a Brexit could hit investment in the U.K. economy, threaten London's role as a global financial capital and usher in a period of slower global economic growth. European Council President Donald Tusk said that there was a "calm and serious discussion" about the consequences of the vote. He also reiterated that there would be no negotiations with the U.K on any future relationship until the country formally notified the EU of its intention to withdraw.
Today the U.K. is to release data on manufacturing activity, while the Institute of Supply Management is to report on U.S. manufacturing activity.
The pound pared some losses after re-testing 31-year lows on Thursday, as Bank of England governor Mark Carney sent strong hints that the Bank of England could ease monetary policy later this summer, to help prevent irreparable harm to the British economy in the wake of last week's Brexit decision.
The BOE has left interest rates steady since 2012 and held its benchmark interest rate at a record-low of 0.5% in every meeting dating back to 2009. While the BOE meets next in July, Carney hinted that the central bank could wait until August to loosen policy.
Yesterday the currency pair was down 1.02% on the session. Since eclipsing 1.50 in the final hours of Brexit polling last Thursday, the British Pound has crashed more than 10% against the U.S. Dollar.
Today investors’ focus will be on U.K. data on manufacturing activity, to gain more information on the strength of the pound.
Pivot: 1.336Support: 1.3215 1.3145 1.31Resistance: 1.336 1.343 1.3495Scenario 1: short positions below 1.3360 with targets @ 1.3215 & 1.3145 in extension.Scenario 2: above 1.3360 look for further upside with 1.3430 & 1.3495 as targets.Comment: technically the RSI is below its neutrality area at 50.
Gold
Gold fell slightly but ended June with one of its strongest first halves on record, after Mark Carney strongly hinted that the Bank of England could ease monetary policy later this summer sending the Pound lower versus the dollar.
The precious metal traded between $1,315.00 and $1,325.65 an ounce, before closing down 0.51% on the session. Gold has remained near 27-month highs throughout the week, after surging nearly $100 an ounce last Friday to eclipse $1,360. Since opening the year around $1,075, Gold has soared nearly 25% over the last six months, amid heightened concerns of a global recession and a delayed interest rate hike from the Federal Reserve. Over the first 11 weeks of the year, the precious metal completed its largest sustained weekly inflow since the Financial Crisis, as investors poured $13.4 billion into Gold assets, according to Bank of America Corporation (NYSE:BAC).
Pivot: 1314Support: 1314 1305 1294Resistance: 1345 1359 1375Scenario 1: long positions above 1314.00 with targets @ 1345.00 & 1359.00 in extension.Scenario 2: below 1314.00 look for further downside with 1305.00 & 1294.00 as targets.Comment: the RSI is supported by a rising trend line.
WTI Oil
Crude futures retreated from two-week highs on Wednesday, amid heavy profit taking, but still ended the second quarter with one of its strongest three-month rallies in seven years, amid a host of global supply disruptions in recent weeks.
For the quarter, both the U.S. and international benchmarks surged approximately 25%, as a series of production slowdowns throughout the world helped provide significant upside pressure for crude futures. While investors continued to express widespread concerns related to the global oversupply, their fears were softened somewhat by Canadian wildfires in May and a string of rogue attacks on oil facilities in Southern Nigeria. At the same time, outages in Iraq and Libya have helped limit OPEC production from hitting fresh record-highs.
Pivot: 48Support: 48 46.8 45.9Resistance: 50 50.47 51.5Scenario 1: long positions above 48.00 with targets @ 50.00 & 50.47 in extension.Scenario 2: below 48.00 look for further downside with 46.80 & 45.90 as targets.Comment: a support base at 48.00 has formed and has allowed for a temporary stabilisation.
US 500
On Thursday U.S. stocks rallied for a third consecutive day, recouping nearly all their losses from last week's surprising U.K. referendum to leave the European Union, as the Dow Jones Industrial Average and S&P 500 Composite index ended the month of June slightly higher.
In Thursday's session, the Dow surged 1.33%, completing its third straight move of 150 points or higher; the S&P 500 Composite Index added 1.36%, ending the first half up by more than 2%; while the NASDAQ Composite index added 1.33%, amid continued gains among semiconductor stocks.
For the session all 10 sectors of S&P 500 closed in the green, as stocks in the Consumer Goods, Utilities and Basic Materials industries led. In total, seven sectors jumped by more than 1%, led by Consumer Goods, which surged by more than 12 points for the session.
Pivot: 1990 Support: 1990 1950 1895 Resistance: 2130 2190 2250 Scenario 1: long positions above 1990.00 with targets @ 2130.00 & 2190.00 in extension. Scenario 2: below 1990.00 look for further downside with 1950.00 & 1895.00 as targets. Comment: the RSI is mixed to bullish.