The dollar eased off a 16-month trough against the other major currencies on Tuesday, as the greenback began to finally recover from last week’s policy decisions by the Bank of Japan and the Federal Reserve, although gains were expected to remain limited.
USD/JPY was down 0.19% at 106.21, after hitting 18-month lows of 105.55 earlier in the day. Safe-haven demand strengthened after data earlier showed that China’s Caixin manufacturing purchasing managers’ index ticked down to 49.4 in April from 49.7 the previous month, compared to expectations for a rise to 49.9. The weak data added to concerns over slowdown in the world’s second largest economy.
Elsewhere the sterling weakened after research group Markit said its U.K. manufacturing PMI fell to 49.2 last month from a reading of 51.0 in March. That was its lowest level since February 2013.
Always on Tuesday the Reserve Bank of Australia surprised markets by lowering its benchmark interest rate to 1.75% from 2.00%; the rate cut was based on last week's surprisingly weak inflation reading. Furthermore yesterday the Australian Bureau of Statistics said that building approvals rose by 3.7% in March, confounding expectations for a 3.0% decline. Building approvals rose 2.9% in February, whose figure was revised from a previously estimated 3.1% gain.
Today markets in Japan are to remain closed for a national holiday. The U.K. is to report on construction sector activity; the U.S. is to release the ADP report on private sector job creation, the ISM report on service sector activity and data on factory orders; and both the U.S. and Canada are to release trade data.
The euro retreated from 9-month highs hit early in Tuesday's session, after the European Commission sent stark warnings of stagnant economic growth amid severe headwinds from persistently low inflation. The currency pair traded in a broad range between 1.1496 and 1.1615, before settling down 0.22% on the session.
On Tuesday morning, the European Commission downgraded its annual GDP growth outlook citing weakness in China, subdued performance among key trade partners and lagging investments. In its 2016 spring forecast the 19-nation bloc lowered full-year economic growth to 1.6%, slightly below previous estimates of 1.7%. At the same time, the European Commission expects consumer prices to tick up by 0.2%, sharply below previous expectations of 0.5%. "The economic recovery in Europe continues but the global context is less conducive than it was," European Commissioner vice president Valdis Dombrovskis said in a statement.
Today investors’ focus will be on U.S.’s ADP, ISM and trade reports, for further information on the strength of the greenback.
Pivot:1.154Support:1.1451.14151.137Resistance:1.1541.161.166Scenario 1:short positions below 1.1540 with targets @ 1.1450 & 1.1415 in extension.Scenario 2:above 1.1540 look for further upside with 1.1600 & 1.1660 as targets.Comment:The pair broke below the lower boundary of a bullish channel.
Gold
Gold fell slightly on Tuesday, despite signs that a widespread global economic slowdown could resurface, as the dollar bounced off 15-month lows and a non-voting member of the Federal Reserve failed to rule out the possibility for as many as two interest rate hikes by the U.S. central bank before the end of the year.
The precious metal wavered between $1,284.00 and $1,303.85 an ounce, before settling down 0.53%.
On Tuesday morning, Federal Reserve Bank of Atlanta president Dennis Lockhart told reporters at the 21st Annual Financial Markets Conference outside of Jacksonville, Florida, that although it is still possible for the Fed to raise short-term interest rates this year, further tightening "depends entirely on how the economy evolves." Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
Today investors’ focus will be on U.S.’s ADP, ISM and trade reports, for further information on the strength of the greenback.
Pivot:1291Support:127012641253Resistance:12911301.51314Scenario 1:short positions below 1291.00 with targets @ 1270.00 & 1264.00 in extension.Scenario 2:above 1291.00 look for further upside with 1301.50 & 1314.00 as targets.Comment:the RSI is bearish and calls for further downside.
WTI Oil
Crude oil prices pointed downward in Asia on Wednesday, after industry supply data noted a build in crude, though refined products showed healthy drawdowns.
WTI crude for June delivery was last quoted down 0.25% to $43.78 a barrel.
The American Petroleum Institute late Tuesday said its estimate of weekly crude oil stock showed a build of 1.265 million barrels. Distillates stocks dropped 2.6 million barrels in line and gasoline stock fell 1.17 million barrels as the summer driving season nears.
A number of prominent energy analysts, however, are optimistic that the massive stockpile build will level as Non-OPEC production continues to wane
More closely-watched data from the U.S. Department of Energy is due later on today.
Pivot:44.18Support:43.1642.5641.95Resistance:44.1844.6645.35Scenario 1:short positions below 44.18 with targets @ 43.16 & 42.56 in extension.Scenario 2:above 44.18 look for further upside with 44.66 & 45.35 as targets.Comment:the RSI lacks upward momentum.
US 500
U.S. stocks fell on Tuesday after weak economic data in China and Europe reignited worries about global growth, while oil prices dropped for a second day, dragging down energy shares.
Bucking the day's trend, Apple (NASDAQ:AAPL) rose 1.6%, breaking an eight-session streak of losses.
Activity in China's factories shrank for the 14th straight month in April as demand stagnated, a private survey showed. Britain's manufacturing output also unexpectedly shrank last month to its lowest level in three years. U.S. oil prices settled down 2.5% as rising output from the Middle East renewed concerns about global oversupply.
The S&P energy index, down 2.2%, led declines in the benchmark index.
For the day the Dow Jones industrial average closed down 0.78%, the S&P 500 lost or 0.87% and the Nasdaq Composite dropped 1.13%.
The biggest economic release on the agenda this week is monthly U.S. payrolls, due on Friday, which will be closely watched by all the investors.
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.