The dollar remained lower against other major currencies in subdued trade on Monday, after data showed that manufacturing conditions in the New York region contracted for the first time in three months in May, as new orders and shipments turned negative. The Federal Reserve Bank of New York said that its general business conditions index fell to -9.0 this month from 9.6 in April. Analysts had expected the index to decline to 6.5. The safe haven yen gained after data showed that China’s factory output slowed to 6% in April, against expectations of 6.5%. Investments and retail sales also grew more slowly than expected last month, adding to concerns over a slowdown in the world's second-largest economy. The Reserve Bank of Australia released the minutes of its May policy meeting in which it lowered the cash rate by 25 basis points to 1.75%, highlighting labour costs and China as factors that led to this decision. For today, the U.K. is to produce a report on consumer inflation, Canada is to report on manufacturing sales and the U.S. is to release a batch of data, including figures on consumer prices, building permits, housing starts and industrial production. Later this week the focus will be shifted towards inflation data from the Eurozone and on the Fed minutes of its April meeting.
The euro gained against the dollar in a quiet day on Monday, as the dollar was pressured by weak manufacturing data and ahead of a critical release of monthly consumer prices in the U.S. which could provide clearer indications on the strength of the world's largest economy. The dollar continued its recent decline on Monday morning after the Federal Reserve Bank of New York said its Empire State Manufacturing Index in May has fallen 9.02 points, halting a brief run of monthly gains over the prior two months. Investors now, await for Tuesday's release of the Consumer Price Index for April and for further indications on the timing of the Federal Reserve's first interest rate hike in 2016.
Pivot: 1.1365Support: 1.128 1.1245 1.1215Resistance: 1.1365 1.139 1.1415Scenario 1: short positions below 1.1365 with targets @ 1.1280 & 1.1245 in extension.Scenario 2: above 1.1365 look for further upside with 1.1390 & 1.1415 as targets.Comment: as long as the resistance at 1.1365 is not surpassed, the risk of the break below 1.1280 remains high.
Gold
Gold gained on Monday to reach a one-week high, ahead of the release of key consumer price data in the U.S., as the Federal Reserve Bank of New York said its Empire State Manufacturing Index in May has fallen 9.02 points, halting a brief run of monthly gains over the prior two months. This combined with soft producer prices in Japan lowered expectations for a rebound in the global economy. The precious metal is also approaching 15-month highs from the start of May when it surged above $1,300 an ounce on May 2. Investors now await for Tuesday's release of the Consumer Price Index (CPI) for April for further indications on the timing of the Federal Reserve's first interest rate hike in 2016. Analysts are predicting a mild increase of 0.3% in April CPI.
Pivot: 1289Support: 1270 1265 1261.5Resistance: 1289 1295 1302Scenario 1: short positions below 1289.00 with targets @ 1270.60 & 1265.00 in extension.Scenario 2: above 1289.00 look for further upside with 1295.00 & 1302.00 as targets.Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
WTI Oil
Crude oil prices rose to fresh six-month highs on Monday as investors reacted to a string of production outages in Nigeria and Venezuela, as well as a positive call on prices from Goldman Sachs Group Inc (NYSE:GS) providing some signals that the persistent supply glut on global energy markets may be on the verge of easing. Goldman Sachs said in a note to investors that it sees a re-balance in energy markets in the second half of the year pushing prices to near $50 a barrel. In Nigeria, meanwhile, Exxon Mobil Corporation (NYSE:XOM) halted exports from the nation's largest crude stream after a wave of attacks by an insurgent militant group on oil pipelines. Venezuela's state-run oil company PDVSA will honor all debt commitments this year while acknowledging the need for new debt restructuring in the coming months. Venezuela, which derives 95% of its total exports from oil, has seen its deficits rise due to crashing oil prices over the last two years. For today, oil traders will be focusing on the industrial crude oil inventory report by the API.
Pivot: 46.75Support: 46.75 45.8 44.92Resistance: 48.8 49.4 50.06Scenario 1: long positions above 46.75 with targets @ 48.80 & 49.40 in extension.Scenario 2: below 46.75 look for further downside with 45.80 & 44.92 as targets.Comment: the RSI is well directed.
US 500
U.S. stocks rose sharply on Monday gaining from their third straight week of declines last Friday, as oil prices hit 6-month highs and billionaire investor Warren Buffett's company Berkshire Hathaway (NYSE:BRKa) Inc provided a boost to the major indices by declaring a major stake in Apple Inc (NASDAQ:AAPL). The S&P 500 index, meanwhile, rose by 0.98% as all 10 sectors closed in the green. Stocks in the Energy, Basic Materials and Technology industries led the rise, each gaining more than 1%. Stocks in the Utilities sector lagged, as interest-rate sensitive stocks fell. Apple finished as the top performer on the Dow, jumping 3.77%. Investors also kept a close eye on Tim Cook's visit to China, where state media outlets reported that the Apple CEO will meet with high-level government officials and internet companies later this week. Investors now, await for Tuesday's release of the Consumer Price Index for April and for further indications on the timing of the Federal Reserve's first interest rate hike in 2016.
Pivot: 2035 Support: 2035 2006 1970 Resistance: 2085 2100 2130 Scenario 1: long positions above 2035.00 with targets @ 2085.00 & 2100.00 in extension. Scenario 2: below 2035.00 look for further downside with 2006.00 & 1970.00 as targets. Comment: A head-and-shoulders pattern is taking shape (not confirmed yet).