The dollar remained lower against the other major currencies on Wednesday, after the release of positive U.S. new home sales data, as investors prepared for the British vote on a potential exit from the European Union, or Brexit, due the next day.
The National Association of Realtors said that existing home sales rose 1.8% in May, to 5.53 million units, from the 5.43 million units in April. The consensus forecast was for a 1.1% increase to 5.54 million units. Separately, the International Monetary Fund said the U.S. economy was "overall in good shape" and expects U.S. growth to be 2.2% in 2016 and 2.5% in 2017.
The dollar erased gains posted on Tuesday after Federal Reserve Chair Janet Yellen said that gradual interest rates hikes were likely to be needed, during her testimony to Congress.
Elsewhere, an opinion poll on Tuesday showed that the campaign for the U.K. to stay in the EU lost some of its lead ahead of Thursday’s vote. The Survation poll showed that 45% of voters supported the campaign to remain in the EU, with 44% supporting Brexit, as a vote to leave is known; 11% were undecided. This compared to the 45% voting for remain and 42% voting to leave in an earlier survey.
Today investors’ focus will mainly be on the U.K. referendum on EU membership. But furthermore the euro zone is to release data on private sector business activity and the U.S. is to release data on initial jobless claims and new home sales.
The pound advanced to a six-month high against the dollar on Thursday, after the latest polls favored Britain remaining in the European Union, just hours before referendum voting was due to open.
In the U.K., markets braced for widespread volatility in the coming days, hours before polls open in Thursday's Brexit referendum. After the close of trading in the euro area on Wednesday, the "Leave" campaign surged ahead by a small margin in two closely-watched public opinion polls. A poll from Opinium showed that the Exit vote had taken a slight 45-44% lead, while a TNS survey found that the Leave camp jumped in front by a 43-41% margin, with 16% undecided. Still, British sportsbook Ladbrokes (LON:LAD) placed the probability of Remaining at 73% based on its live odds, down slightly from a 76% chance earlier this week.
A vote supporting Britain's departure from the European Union could complicate free travel arrangements for U.K. workers employed abroad by foreign oil companies.
Pivot: 1.464Support: 1.464 1.4555 1.4495Resistance: 1.485 1.49 1.4985Scenario 1: long positions above 1.4640 with targets @ 1.4850 & 1.4900 in extension.Scenario 2: below 1.4640 look for further downside with 1.4555 & 1.4495 as targets.Comment: the RSI is supported by a bullish trend line.
Gold
Gold fell to fresh two-week lows before paring some of the losses on Wednesday afternoon, on the eve of the historic Brexit referendum in the U.K.
On Wednesday, the FTSE 100 gained 57 points or 0.9%, closing at a two-week high. With the continued gains, U.K. equities returned to a level from earlier this month before the "Leave" campaign in Thursday's highly-anticipated vote began to gain momentum. Analysts at UBS added a twist by offering predictions that the FTSE could plummet by 20% if the U.K. decides to leave the European Union. Billionaire investor George Soros said Tuesday that the British Pound could also fall 20% given such a scenario. Over the last few months, prominent politicians and economists have issued stark warnings on the ramifications of a potential Brexit. At the same time, House of Commons Leader Chris Grayling, Culture Secretary John Whittingdale and former London mayor Boris Johnson have shown support for the Leave movement.
Pivot: 1278Support: 1256.5 1249 1242Resistance: 1278 1294 1300Scenario 1: short positions below 1278.00 with targets @ 1256.50 & 1249.00 in extension.Scenario 2: above 1278.00 look for further upside with 1294.00 & 1300.00 as targets.Comment: the RSI is capped by a bearish trend line.
WTI Oil
Crude futures fell more than 1% on Wednesday, amid a lower than expected U.S. inventory draw last week and favorable polling results supporting the Leave campaign in the U.K. on the eve of a highly-anticipated Brexit vote.
On Wednesday morning, the U.S. Energy Information Administration said in its Weekly Petroleum Status Report that crude inventories fell by 0.9 million last week, for the week ending on June 17. At 530.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year.
Elsewhere, Saudi Arabia energy minister Khalid al-Falih indicated on Wednesday's that the world's largest exporter could resume its role of helping rebalance the market once the global oil downturn abates.
Now energy traders will focus on Baker Hughes weekly data on the U.S. oil rig count, which will be released on Friday.
Pivot: 50.54Support: 48.34 47.34 46.52Resistance: 50.54 51.4 51.92Scenario 1: short positions below 50.54 with targets @ 48.34 & 47.34 in extension.Scenario 2: above 50.54 look for further upside with 51.40 & 51.92 as targets.Comment: the RSI lacks upward momentum. The declining 50-period moving average acts as resistance role and maintains the downside bias.
US 500
U.S. stocks dipped in low trading volume on Wednesday, with traders focusing on Thursday's referendum on whether Britain will remain part of the European Union.
Stocks rose early, after data showed U.S. home resales rose in May to a more than nine-year high, adding to retail sales and international trade data that painted an upbeat picture of the economy in the second quarter. The S&P 500 once more hit a ceiling at the 2,100 level, which has been an area where sellers cluster.
For the day the Dow Jones industrial average fell 0.27%, the S&P 500 lost 0.17% and the Nasdaq Composite dropped 0.22%.
Today investors’ attention is all on Britain's vote.
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 mixed to bullish. A bullish reversal candlestick took shape on Thursday.