The dollar rose to three-week highs against the yen on Friday, amid growing expectations that the Federal Reserve could raise interest rates as soon as next month, but slid against the euro as investors took profits in the wake of a recent rally.
The dollar was boosted after Wednesday minutes of the Federal Reserve’s April meeting indicated that interest rates could rise as soon as June and the greenback received an additional boost as comments by Fed officials suggested that a rate hike could be in the offing; New York Fed President William Dudley said Thursday the U.S. economy could be strong enough to warrant a rate increase in June or July.
In Japan, Finance Minister Taro Aso on Friday reiterated Tokyo’s commitment to refraining from competitive currency devaluation during a meeting of finance chiefs from the Group of Seven industrialized nations. Elsewhere the pound was down amid uncertainty over the upcoming June 23 referendum on Britain’s European Union membership.
In the week ahead, investors will be looking at today’s reports on euro zone private sector activity and Tuesday’s German ZEW data, for indications on the strength of the region’s economy. The U.S. is to publish a revised estimate of first quarter growth on Friday, with analysts expecting an upward revision to GDP.
The euro pushed higher against the dollar on Friday, pulling back from seven-week lows hit in the previous session, as investors took profits following a rally in the greenback.
EUR/USD was up 0.19% at 1.1223 in late trade, not far from Thursday’s more than seven-week lows of 1.1179. The euro still ended the week down 0.84%.
Today the euro zone is to release survey data on private sector business activity; while Financial markets in Canada will remain closed for the Victoria Day holiday.
Pivot: 1.1255Support: 1.1195 1.1175 1.114Resistance: 1.1255 1.129 1.1325Scenario 1: short positions below 1.1255 with targets @ 1.1195 & 1.1175 in extension.Scenario 2: above 1.1255 look for further upside with 1.1290 & 1.1325 as targets.Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
Gold
Gold prices edged lower on Friday to end near a three-week low, as markets factored in the possibility of another interest rate hike by the Federal Reserve as early as June.
The precious metal shed $1.90, or 0.15%, to close at $1,252.90 a troy ounce. For the week, futures lost $20.40, or 1.53%, the second straight weekly decline.
On Thursday, gold tumbled to $1,244.60, a level not seen since April 28, after New York Federal Reserve President William Dudley said the U.S. economy could be strong enough to warrant a rate increase in June or July. The hawkish comments came after the minutes of the Federal Reserve's latest policy meeting suggested a rate hike could come as early as June.
In the week ahead, investors will continue to focus on U.S. economic reports to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016, with Friday’s revised first quarter growth data in the spotlight.
Pivot: 1261.5Support: 1244 1237 1231Resistance: 1261.5 1269 1276Scenario 1: short positions below 1261.50 with targets @ 1244.00 & 1237.00 in extension.Scenario 2: above 1261.50 look for further upside with 1269.00 & 1276.00 as targets.Comment: the RSI lacks upward momentum.
WTI Oil
Oil futures ended lower on Friday, but still posted a second consecutive week of gains, amid mounting concerns over global supply disruptions.
Oilfield services provider Baker Hughes said late Friday the number of rigs drilling for oil in the U.S. was unchanged at 318 in the latest reporting week, after eight straight weeks of declines. However, analysts warned that market conditions remained weak due to an ongoing glut. According to the U.S. Energy Information Administration, crude oil inventories unexpectedly rose by 1.31 million barrels last week to 541.3 million.
In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for fresh supply-and-demand signals. Market players will also continue to monitor supply disruptions across the world for further indications on the rebalancing of the market.
Pivot: 48.85Support: 47.56 47.56 46.9Resistance: 48.85 49.28 49.56Scenario 1: short positions below 48.85 with targets @ 47.56 & 47.25 in extension.Scenario 2: above 48.85 look for further upside with 49.28 & 49.56 as targets.Comment: the RSI shows downside momentum.
US 500
U.S. stocks were higher after the close on Friday, as gains in the Technology, Healthcare and Financials sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average gained 0.38%, while the S&P 500 index climbed 0.60%, and the NASDAQ Composite index climbed 1.21%.
The top performers on the S&P 500 were Applied Materials Inc (NASDAQ:AMAT), Micron Technology Inc (NASDAQ:MU) and L Brands Inc (NYSE:LB); while the worst performers were Foot Locker (NYSE:FL) Inc, Campbell Soup Company (NYSE:CPB) and Deere & Company (NYSE:DE).
In the week ahead, investors will continue to focus on U.S. economic reports to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016, with Friday’s revised first quarter growth data in the spotlight.
Pivot: 2034 Support: 2034 2006 1970 Resistance: 2085 2100 2130 Scenario 1: long positions above 2034.00 with targets @ 2085.00 & 2100.00 in extension. Scenario 2: below 2034.00 look for further downside with 2006.00 & 1970.00 as targets. Comment: the RSI lacks downward momentum. Thanks to a hammer candlestick, the head-and-shoulders pattern is still not confirmed.