The dollar rose to a four-month high against a basket of major currencies on Tuesday, after the release of data showing U.S. housing starts rose more than expected in June, surging 4.8% to a seasonally adjusted annual pace of 1.19 million units, underpinning a theme of strength in the U.S. economy. Furthermore, after June's jobs report showed U.S. employers added 287,000 jobs, beating expectations by more than 100,000, continued positive data have convinced some investors pricing back in the chances the Federal Reserve will raise U.S. overnight interest rates before the end of the year, at his last meeting in December.
The rise in the dollar index was backed by a sizeable fall in the euro, which dipped to an 11-day low against the dollar of $1.1011, the euro was last down 0.5% for the day.
The dollar also gained ground against the yen, touching its highest level since June 24, the day after Britain's surprise vote to leave the European Union.
The greenback was also boosted by expectations of upcoming central bank easing from the Reserve Bank of Australia and Reserve Bank of New Zealand.
Now investors’ focus will be on Thursday ECB monetary policy decision, followed by a post-policy meeting press conference with President Mario Draghi, and on U.S. data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
GBP/USDThe pound continued to show weakness on Tuesday, despite official data showing a larger than expected increase in inflation and while markets waited for the International Monetary Fund to slash economic forecasts in the wake of the U.K.’s decision to leave the European Union.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation rose by a seasonally adjusted 0.5% last month, above forecasts for a gain of 0.4%. Though sterling initially pared losses on the news, managing to break through $1.32, the strength was shown to be temporary.
Meanwhile, credit rating agency Moody’s warned in a report that the U.K.’s credit worthiness was under downward pressure following its decision to exit the EU, and that medium-term growth prospects for the British economy could be weaker, if it fails to reach a new trade agreement with Europe. Today the U.K. is to publish the monthly employment report.
Pivot: 1.3175Support: 1.301 1.2945 1.29Resistance: 1.3175 1.3235 1.328Scenario 1: short positions below 1.3175 with targets @ 1.3010 & 1.2945 in extension.Scenario 2: above 1.3175 look for further upside with 1.3235 & 1.3280 as targets.Comment: as long as 1.3175 is resistance, look for choppy price action with a bearish bias.
Gold ticked up on Tuesday, in spite of a firmly stronger dollar, as investors awaited two critical central bank meetings later this month, for further indications on the strength of the yellow metal as a hedge against inflation.
The precious metal has rebounded somewhat over the last two sessions, after retreating from 28-month highs earlier this month, in a Brexit-inspired rally. Last week, gold slid by more than 2.2%, suffering its first negative week since early-June. Nevertheless, the yellow metaL is on track for one of its strongest years on record after soaring roughly 25% year to date.
Pivot: 1337Support: 1320 1312 1305Resistance: 1337 1342 1350Scenario 1: short positions below 1337.00 with targets @ 1320.00 & 1312.00 in extension.Scenario 2: above 1337.00 look for further upside with 1342.00 & 1350.00 as targets.Comment: the upward potential is likely to be limited by the resistance at 1337.00.
Crude futures wavered in choppy, volatile trade on Tuesday, ahead of the release of the American Petroleum Institute's weekly inventory report, as investors await for further signals on the glut of crude and refined product on the domestic market.
But oil prices were slightly higher in early Asia on Wednesday, after industry data on U.S. crude stocks showed a solid fall at the end of last week. Figures from the American Petroleum Institute showed that U.S. crude supplies fell by 2.3 million barrels for the week ended July 15.
Today the U.S. Energy Information Administration is to release its weekly report on oil and gasoline stockpiles, which could show a draw of 2.2 million barrels.
Pivot: 45.5Support: 44.55 43.85 43Resistance: 45.5 45.75 46.3Scenario 1: short positions below 45.50 with targets @ 44.55 & 43.85 in extension.Scenario 2: above 45.50 look for further upside with 45.75 & 46.30 as targets.Comment: a break below 44.55 would trigger a drop towards 43.85.
Wall Street traded mixed on Tuesday as investors took a breather, pocketing some profits after the record closing highs reached in the prior session, while markets digested a slew of second quarter earnings and the U.S. watched from the sidelines, as the U.K.’s decision to leave the EU took its toll on economic forecasts.
The S&P 500 and the Nasdaq were lower, weighed down by Netflix (NASDAQ:NFLX) and health insurers, but the losses were offset on the Dow by Johnson & Johnson (NYSE:JNJ)'s strong results. Also weighing on sentiment was the International Monetary Fund's move to cut its global growth forecasts for the next two years, due to uncertainty over Britain's looming exit from the European Union.
Now investors’ focus will be on Thursday U.S. data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
Pivot: 2072 Support: 2072 1992 1950 Resistance: 2190 2220 2250 Scenario 1: long positions above 2072.00 with targets @ 2190.00 & 2220.00 in extension. Scenario 2: below 2072.00 look for further downside with 1992.00 & 1950.00 as targets. Comment: the RSI is bullish and calls for further advance.