The dollar rose on Monday from its biggest weekly fall in more than seven years against the yen, but softened against other major currencies, in particular the euro, which was helped by stronger German manufacturing data.
Worries over Japanese policymakers' inability to stem the yen's rise pushed the dollar to an 18-month low of 106.14 yen in the first hours of Asian trade. It later bounced to 106.78 yen, up 0.4% on the day. But the greenback was already fallen since mid-March, after Federal Reserve Chair Janet Yellen signaled the Fed would proceed with further rate increases with "caution."
Monday's data on global manufacturing supported the notion of sluggish global growth. U.S. factory growth slowed more than expected in April, while Chinese manufacturing activity expanded only marginally.
Today markets in Japan will be closed for a holiday. The Reserve Bank of Australia announced its benchmark interest rate, published its rate statement, and also released data on building approvals. China published the Caixin manufacturing index. The U.K. is to publish its manufacturing activity index. Bank of Canada Governor Stephen Poloz is to speak at an event in Los Angeles.
EUR/USDThe euro surged above 1.15 for the first time since the August flash crash on Monday, as soft monthly manufacturing data in the U.S. pushed the dollar to fresh 8-month lows.
On Monday morning, the Institute for Supply Management (ISM) said its Manufacturing Index for the month of April fell 1.0 to 50.8, below consensus forecasts for a reading of 51.4. Within the report, supplier deliveries plunged 1.1 points, underscoring low inventory levels throughout the sector and dragging down the composite index. New orders also slowed by 2.5%, while employment remained in contraction despite a gain of 1.1 points.
In the euro area, Markit's Manufacturing PMI index for April ticked up 0.2 to 51.7, above analysts' expectations for slight gains to 51.6. Elsewhere, European Central Bank president Mario Draghi fired back at critics of the Central Bank's easy monetary policies at a closely-watched speech in Frankfurt. Draghi emphasized that low interest rates are the result of an underlying economic problem and that investors in Germany should respond by developing diversified savings patterns comparable to their counterparts back in the U.S.
Pivot: 1.148Support: 1.148 1.145 1.1415Resistance: 1.159 1.163 1.169Scenario 1: long positions above 1.1480 with targets @ 1.1590 & 1.1630 in extension.Scenario 2: below 1.1480 look for further downside with 1.1450 & 1.1415 as targets.Comment: The pair is trading within a bullish channel.
Gold surged above $1,300 an ounce for the first time in 15 months in spite of light volume due to the May Day holiday, as the dollar fell to fresh 9-month lows amid soft U.S. manufacturing data.
The precious metal traded in a broad range between $1,290.50 and $1,305.95 an ounce before settling up 0.43% on the session. Gold has now closed higher in seven straight sessions and eight of the last 10.
Also on Monday, billionaire investor Warren Buffett defended the Federal Reserve's recent actions, but cautioned that it could be challenging to predict economic conditions in the near-term future due to the unanticipated consequences of low interest rate policies throughout the world.
Today investors are considering Chinese data on Caixin manufacturing index, to gauge the global economy strength of the world’s largest consuming nations.
Pivot: 1287Support: 1287 1281 1270Resistance: 1304 1314 1321Scenario 1: long positions above 1287.00 with targets @ 1304.00 & 1314.00 in extension.Scenario 2: below 1287.00 look for further downside with 1281.00 & 1270.00 as targets.Comment: a support base at 1287.00 has formed and has allowed for a temporary stabilisation.
Crude oil prices fell about 2% on Monday, as OPEC's crude production climbed in April to 32.64 million barrels per day, close to the highest level in recent history.
Iraq's April exports from southern fields increased, as did seaborne exports from Russia, the biggest exporter outside OPEC. Traders also cited a bearish stockpile rise of 821,969 barrels at the Cushing, Oklahoma delivery point for WTI crude futures during the week to April 29.
Today the American Petroleum Institute will release its estimates of crude and refined product stocks last week, which will be closely watched by energy traders.
Pivot: 45.67Support: 44.4 43.75 43.15Resistance: 45.67 46.17 46.75Scenario 1: short positions below 45.67 with targets @ 44.40 & 43.75 in extension.Scenario 2: above 45.67 look for further upside with 46.17 & 46.75 as targets.Comment: the RSI is mixed with a bearish bias.
U.S. stocks rose on Monday, rebounding from losses last week, as financials gained with Berkshire Hathaway (NYSE:BRKa) and weakness in the dollar eased worries about earnings for multinationals.
The Nasdaq snapped a seven-session losing streak, though Apple (NASDAQ:AAPL) fell for an eighth straight session, its longest run of losses since mid-1998. Gains in consumer shares also lifted stocks, which on Friday had posted their largest weekly drop in more than two months. Amazon (NASDAQ:AMZN) shares jumped 3.7% to $683.85, giving the S&P 500 and Nasdaq their biggest boosts, while both the consumer discretionary sector and staples gained more than 1% each.
For the day the Dow Jones industrial average closed up 0.66%, the S&P 500 gained 0.78% and the Nasdaq Composite added 0.88%.
Pivot: 2033 Support: 2033 2006 1970 Resistance: 2111 2130 2135 Scenario 1: long positions above 2033.00 with targets @ 2111.00 & 2130.00 in extension. Scenario 2: below 2033.00 look for further downside with 2006.00 & 1970.00 as targets. Comment: investors have to remain cautious since these levels may trigger profit taking. A bearish divergence is confirmed on the RSI indicator.