The dollar held onto gains against the other major currencies on Tuesday, as the release of upbeat U.S. retail sales data boosted optimism over the strength of the economy and as investors eyed the Federal Reserve’s monthly policy meeting due to begin later in the day.
The U.S. Commerce Department said that retail sales increased by 0.5% last month, compared to the forecast for a rise of 0.3%. Core retail sales, which exclude automobile sales, increased by 0.4% in May, in line with forecasts. Markets have pushed back expectations on the timing of the next rate hike by the U.S. central bank after a dismal U.S. employment report for May, which showed the slowest rate of jobs growth since September 2010.
The pound extended earlier losses after a TNS poll showed that the Leave campaign held 47% of the vote, compared with 40% for Remain. Undecided voters totaled 13%.
Today the U.K. is to release the monthly employment report; Canada is to publish data on manufacturing sales; and the U.S. is to release reports on producer prices, industrial production and manufacturing activity in the New York region. But all the focus will be on the Federal Reserve’s announcement of its benchmark interest rate and economic projections, at the conclusion of its two-day policy meeting. The announcement is to be followed by a press conference by Fed Chair Janet Yellen.
The euro fell sharply on Tuesday, dropping to one week lows, as German 10-Year Bunds slipped into negative territory for the first time on record and increased Brexit fears prompted investors to exit their positions from the euro and pound sterling.
The currency pair traded between 1.1189 and 1.1298 before settling down 0.73% on the session. The euro has closed lower against the dollar in three of the last four sessions.
Today investors will focus on the Federal Reserve’s announcement of its benchmark interest which will be followed by a press conference by Fed Chair Janet Yellen, to gain more information on the strength of the American economy.
Pivot: 1.125
Support: 1.1185 1.116 1.1135
Resistance: 1.125 1.128 1.1305
Scenario 1: short positions below 1.1250 with targets @ 1.1185 & 1.1160 in extension.Scenario 2: above 1.1250 look for further upside with 1.1280 & 1.1305 as targets.Comment: a break below 1.1185 would trigger a drop towards 1.1160.
Gold
Gold remained near four-week highs on Tuesday, as mounting Brexit fears accelerated a global flight to safety that pushed German 10-Year Bunds into negative territory for the first time in history.
The precious metal traded between $1,279.00 and $1,292.95 an ounce before settling down 0.12%. With the slight losses, gold halted a five day winning streak. Despite the mild sell-off, the precious metal has still surged approximately 20% in 2016, and is on pace for one of its strongest first halves of a year in more than a decade.
Today gold traders will focus on the Federal Reserve’s announcement of its benchmark interest which will be followed by a press conference by Fed Chair Janet Yellen, to gain more information on the strength of the greenback.
Pivot: 1278
Support: 1278 1265.6 1257
Resistance: 1293 1303 1315
Scenario 1: long positions above 1278.00 with targets @ 1293.00 & 1303.00 in extension.Scenario 2: below 1278.00 look for further downside with 1265.60 & 1257.00 as targets.Comment: a support base at 1278.00 has formed and has allowed for a temporary stabilisation.
WTI Oil
Crude futures pared sharp losses on Tuesday, ahead of the release of the American Petroleum Institute's weekly inventory report, as rising Brexit fears continued to spook global energy markets.
But WTI prices dropped in Asia on Wednesday, after an industry report on U.S. crude and refined product stockpiles showed sharp builds.
The American Petroleum Institute said crude stocks gained by 1.518 million barrels last week, well above the 1.4 million barrels fall seen while distillates stocks rose 3.725 million barrels, well more than the drop of 750,000 expected, and gasoline stock gained 2.254 million barrels, considerably higher than the drop of 1.25 million barrels seen.
Separately, today the U.S. Energy Information Administration (EIA) is expected to report a draw of 2.3 million barrels for the week ending on June 10.
Pivot: 48.6
Support: 47.5 47.1 46.5
Resistance: 48.6 49.3 50
Scenario 1: short positions below 48.60 with targets @ 47.50 & 47.10 in extension.Scenario 2: above 48.60 look for further upside with 49.30 & 50.00 as targets.Comment: the RSI lacks upward momentum.
US 500
Wall Street dropped for a fourth straight session on Tuesday, as central bank policymakers weighed the health of the U.S. economy and investors worried about an upcoming vote in Britain on whether to leave the European Union.
Investors launched a late-day rally but the major indices still ended with losses.
For the day the Dow Jones industrial average fell 0.335; the S&P 500 lost 0.18%, while the Nasdaq Composite declined 0.1%.
The U.S. Federal Reserve began its two-day meeting to decide whether the U.S. economy has recovered enough to absorb an interest rate hike. While traders have discounted a rate increase this month, they will parse today Fed Chair Janet Yellen's comments, for clues on the health of the economy and the trajectory of hikes.
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: even though a continuation of the consolidation cannot be ruled out, its extent should be limited. A bullish continuation flag is confirmed.