The dollar ended the week sharply higher against the other major currencies on Friday despite diminished expectations for a summer rate hike by the Federal Reserve. The CME Group's (NASDAQ:CME) Fed Watch tool indicated on Friday that there is a 1.9% chance the FOMC will raise rates in June. The probability of at least one rate hike in 2016 stood at 58.8%. A speech by Fed Chair Janet Yellen on Monday indicated that interest rates won’t rise until uncertainty over the economic outlook is resolved. Sterling was sharply lower, with GBP/USD tumbling 1.39% on Friday at 1.4258. The pair ended the week down 1.8% amid uncertainty over whether Britain will remain in the European Union or not at a referendum on June 23. The British pound and the euro fell to their lowest level since 2013 against the yen on worries about a possible disruption of European and political and economic affairs. In the week ahead, investors will be turning their attention to Wednesday’s monetary policy announcement by the Fed for clues on the future direction of U.S. interest rates. Monetary policy meetings in Japan, Switzerland and the U.K. will also be closely watched.
The euro fell sharply on Friday against the dollar dropping to fresh 1-week lows, as Brexit concerns and a massive government bond yield issued throughout the euro zone sent investors towards the dollar. On Friday, the euro settled below 1.13 against its American counterpart for the first time in seven sessions. Investors continued to pile into safe-haven assets on Friday, as government bond yields worldwide tumbled to fresh record lows. The dollar also received strong upside pressure from solid consumer spending data on Friday morning. In the week ahead, investors will be turning their attention to Wednesday’s monetary policy announcement by the Fed for clues on the future direction of U.S. interest rates.
Pivot: 1.1305
Support: 1.122 1.118 1.1135
Resistance: 1.1305 1.135 1.139
Gold
Gold prices moved higher on Monday supported by a weaker dollar and after data in China that showed strong retail sales and industrial production. In China, fixed asset investment in May rose 9.6%, below the 10.5% gain expected. Industrial production for May gained 6.0%, a tad better than the 5.9% anticipated and retail sales jumped 10%, but still below the 10.1% expected. Prices of the precious metal are up nearly 5% so far in June, after sliding more than 6% a month earlier. Investors will turn their attention to Wednesday’s monetary policy announcement by the Fed for clues on the future direction of U.S. interest rates as well as monetary policy meetings in Japan, Switzerland and the U.K.
Pivot: 1264.5
Support: 1264.5 1257 1246
Resistance: 1293 1303 1315
Scenario 1: long positions above 1264.50 with targets @ 1293.00 & 1303.00 in extension.Scenario 2: below 1264.50 look for further downside with 1257.00 & 1246.00 as targets.Comment: the RSI shows upside momentum.
WTI Oil
U.S. crude oil prices fell sharply from near-yearly highs on Friday retreating below $50, as the domestic oil rig count moved higher for a second consecutive week providing indications that producers are ready to increase output. Oil prices ended the week sharply lower on Friday, falling by almost 3%, while market players continue to monitor supply disruptions across the world for further indications on the rebalancing of the market. Oil traders will focus on U.S. inventory data on Tuesday and Wednesday for fresh supply-and-demand signals and on the Monday release of the Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.
Pivot: 49.5
Support: 48 47.5 47.1
Resistance: 49.5 50 50.35
Scenario 1: short positions below 49.50 with targets @ 48.00 & 47.50 in extension.Scenario 2: above 49.50 look for further upside with 50.00 & 50.35 as targets.Comment: the RSI advocates for further downside.
US 500
U.S. stocks closed broadly lower on Friday, as crude oil prices dropped below $50 a barrel and as global bond yields fell sharply and had a negative impact on equity markets worldwide. Investors continued to move into safe-haven assets on Friday, as government bond yields throughout the world tumbled to fresh record lows. The Dow Jones fell 0.67% while the S&P 500 dropped 0.92% as nine of 10 sectors closed in the red, with stocks in the Energy, Financials and Technology industries dropping. One of the worst performers was Goldman Sachs Group Inc (NYSE:GS), which lost 2.14%. Investors keep a close eye in developments in the U.K. after a poll released on Friday showed that 55% of voters support a referendum to leave the European Union. Investors will turn their attention to Wednesday’s monetary policy announcement by the Fed for clues on the future direction of U.S. interest rates
Pivot: 2025
Support: 2025 1970 1950
Resistance: 2130 2190 2250
Scenario 1: long positions above 2025.00 with targets @ 2130.00 & 2190.00 in extension. Scenario 2: below 2025.00 look for further downside with 1970.00 & 1950.00 as targets. Comment: the RSI is bullish and calls for further advance. A bullish continuation flag is confirmed.