The dollar extended losses against the other major currencies on Wednesday, after the release of downbeat U.S. housing data, while renewed optimism following Britain’s decision to leave the European Union continued to support market sentiment.
The National Association of Realtors said its pending home sales index fell by 3.7% last month, missing expectations for a decline of 1.1%. The report came after the U.S. Commerce Department said that personal spending increased by 0.4% last month, matching expectations. Personal income, meanwhile, rose 0.2%, below forecasts for a 0.3% gain and after rising 0.5% a month earlier.
Elsewhere the pound came under broad selling pressure as 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. EU leaders continued to discuss the implications of Brexit at a summit in Brussels on Wednesday and they said there would be no special deals from former members of the trading bloc.
Today there is a lot on the calendar, infact Germany is to report on unemployment change; the U.K. is to release data on the current account; the euro area is to unveil its preliminary inflation estimate for June; the ECB is to publish the minutes of its latest meeting; Canada is to report on monthly GDP growth; and the U.S. is to release data on jobless claims.
The pound extended gains from the previous session on Wednesday, amid heavy short covering, as the British Pound continued its rally from 31-year lows against the U.S. Dollar, in the wake of last week's stunning Brexit results.Since slipping below 1.32 on Monday to its lowest level since September 1985, the Pound Sterling has rallied by more than 1.6% against its American counterpart over the last two sessions.
Speaking at the Summit, Merkel called the results of the Brexit referendum irreversible, reiterating that she sees "no way back" for the U.K. following the surprising vote. At the same time, France president Francois Hollande warned that it will be difficult for the U.K. to gain access to the EU's single market without "applying the rules of freedom of movement," a potential sticking point between the sides. At the end of the closely-watched two-day summit, EU officials announced that its 27 members will meet next in September in Bratislava, for informal talks regarding the U.K.'s potential departure from the bloc. The U.K. will not be invited to participate in the discussions.
Pivot: 1.3465Support: 1.329 1.3215 1.315Resistance: 1.3465 1.3535 1.368Scenario 1: short positions below 1.3465 with targets @ 1.3290 & 1.3215 in extension.Scenario 2: above 1.3465 look for further upside with 1.3535 & 1.3680 as targets.Comment: the RSI broke below a rising trend line.
Gold
Gold rose considerably on Wednesday, amid a weaker dollar, as the long-term ramifications stemming from last week's historic Brexit referendum remained in focus.
Meanwhile in Brussels, European Council president Donald Tusk told reporters outside the EU Summit that it will not start the divorce process on any future negotiations with the U.K. until the country invokes Article 50 of the Lisbon Treaty. It came one day after U.K. prime minister David Cameron said he will leave the task to his successor when he steps down from the position by early-September. Once the U.K. summons Article 50, it will initiate formal negotiations with the European Union to leave the European bloc, a process which is expected to take a minimum of two years.
Today investors’ focus will be on the US data on jobless claims, to gain more information on the strength of the greenback.
Pivot: 1305Support: 1305 1294 1294Resistance: 1335 1345 1359Scenario 1: long positions above 1305.00 with targets @ 1335.00 & 1345.00 in extension.Scenario 2: below 1305.00 look for further downside with 1294.00 & 1272.00 as targets.Comment: a support base at 1305.00 has formed and has allowed for a temporary stabilisation.
WTI Oil
Crude futures surged by 4% on Wednesday, as Brexit concerns took a backseat for the time being after U.S. crude inventories fell sharply last week, helping ease long-term concerns of oversupply.
On Wednesday morning, the U.S. Energy Information Administration said in its Weekly Petroleum Status Report that U.S. commercial crude oil inventories decreased by 4.1 million barrels for the week ending on June 24. At 526.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year.
Elsewhere, investors continued to monitor the threat of an oil worker strike in Norway, hours before a comprehensive labor deal expires on Friday at midnight. If a new deal is not reached, approximately 7,500 labor union workers are threatening to strike beginning on Saturday.
Pivot: 48Support: 48 46.8 45.9Resistance: 50.56 51.1 51.5Scenario 1: long positions above 48.00 with targets @ 50.56 & 51.10 in extension.Scenario 2: below 48.00 look for further downside with 46.80 & 45.90 as targets.Comment: the RSI is mixed to bullish.
US 500
U.S. stocks rose sharply extending a rally from the previous session, as equities on Wall Street continued to erase losses from last week's Brexit decision, providing optimism that markets are ready to stabilize from the unexpected shock.
The Dow Jones Industrial Average added 1.64%, finishing with its strongest session since March 1; the S&P 500 Composite rose 1.86%, completing its strongest two-day rally since February, because all 10 sectors closed in the green as stocks in the Energy and Financials sector led; while the NASDAQ Composite Index jumped 1.70%, as travel and airline stocks continued their recovery from the Brexit-inspired sell-off.
Today investors’ focus will be on the US data on jobless claims, to gain more information on the strength of the American economy.
Pivot: 2075 Support: 1992 1970 1950 Resistance: 2075 2130 2190 Scenario 1: short positions below 2075.00 with targets @ 1992.00 & 1970.00 in extension. Scenario 2: above 2075.00 look for further upside with 2130.00 & 2190.00 as targets. Comment: technically the RSI is below its neutrality area at 50.