The dollar gave away some of its recent gains on Monday, as investors moved on to some profit taking. Recent gains were built on expectations of increased fiscal spending and higher inflation under a Trump administration.
Trump said on Monday that he will withdraw the United States from the Trans-Pacific Partnership trade deal on his first day in office, dashing hopes that he may soften his protectionist stance on international trade.
While stock markets have benefited from Trump's promises of deregulation and fiscal spending, his protectionism alarms many investors and could eventually hurt the currencies of countries with large trade deficits such as the United States.
An earthquake of magnitude 7.4 and the subsequent tsunami warning in northern Japan prompted selling of the dollar for safe-haven yen in early trade.
While the earthquake briefly disrupted cooling functions at a nuclear plant, there were no reports of deaths in the hours after the earthquake hit.
The euro held steady at $1.0627, recovering from Friday's low of $1.0569, its lowest since last December.
The British pound remained higher on Monday as the market assesses Prime Minister Theresa May's latest comments on the way Britain will exit from the European Union.
May pledged to address concerns that Britain could fall off a "cliff edge" into uncertain trading conditions when it leaves the bloc.
Today, the UK is to report on public sector borrowing, Canada is to release data on retail sales and the U.S. is to produce a report on existing home sales.
On Monday, the dollar had reached close to a six-month high of 111.36 yen, following a rise of 10 percent from its Nov. 9 low near 101 yen.
Before its streak ended on Monday, the dollar had risen for 10 straight trading days, as investors bet that increased fiscal spending by the incoming Trump administration would boost inflation and move interest rates higher. An earthquake of magnitude 7.4 and the subsequent tsunami warning in northern Japan prompted some selling of the dollar for safe-haven yen in early trade.
While the earthquake briefly disrupted cooling functions at a nuclear plant, there were no reports of deaths in the hours after the earthquake hit.
Market participants evaluated the impact of the earthquake, saying the dollar had been due for some selling against the yen after rallying sharply over the past two weeks.
Today, the U.S. is to produce a report on existing home sales.
Pivot: 111.35Support: 109.8 109.2 108.5Resistance: 111.35 112 112.65Scenario 1: short positions below 111.35 with targets at 109.80 & 109.20 in extension.Scenario 2: above 111.35 look for further upside with 112.00 & 112.65 as targets.Comment: the RSI is mixed to bearish.
Gold
Gold prices moved higher in European hours on Monday, but remained close to the lowest level since May on expectations for a Federal Reserve rate hike and fiscal stimulus by President-elect Donald Trump.
Gold prices were fluctuating around $1,214.85 a troy ounce by 08:33GMT. Market analysts warned that the outlook for gold remains cloudy in the near-term, given a U.S. interest rate hike in December is now a near-certainty.
Prices of the yellow metal are down more than 7% so far this month amid optimism that increased U.S. fiscal spending under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates.
Today, the U.S. is to produce a report on existing home sales.
Pivot: 1209Support: 1209 1200 1184Resistance: 1222 1233 1245Scenario 1: long positions above 1209.00 with targets at 1222.00 & 1233.00 in extension.Scenario 2: below 1209.00 look for further downside with 1200.00 & 1184.00 as targets.Comment: the RSI is supported by a rising trend line.
WTI Oil
Oil prices were up by almost 2% on Monday on renewed hopes OPEC will agree to cut output.
Prices were up by 92 cents, or 1.98%, at $47.28 at 06:45 ET, while Brent crude added 1.94% to $47.77.
OPEC members are currently negotiating to deliver a planned cut in output to 32.5-33 million barrels a day. Russian President Vladimir Putin commented on Sunday that he sees a “high probability” of a deal being reached expressing Russia’s willingness to freeze production at current levels. Oil prices rose to their highest level since late October on Tuesday with investors now focusing on inventory data from the U.S. ahead of the upcoming oil producers meeting in Vienna on November 30th.
Pivot: 47.9Support: 47.9 47.15 46.38Resistance: 49.79 50.22 50.79Scenario 1: long positions above 47.90 with targets at 49.79 & 50.22 in extension.Scenario 2: below 47.90 look for further downside with 47.15 & 46.38 as targets.Comment: the RSI is mixed to bullish.
US 500
U.S. stocks ended the day higher, reaching new records Monday, supported by a jump in oil prices and a pullback in the dollar, giving the Dow industrials, S&P 500 and Nasdaq their third simultaneous all-time closing highs this year.
The S&P 500 surged by 0.8%, to close at a record high, with its previous record reached on Aug. 15. Ten of the 11 main S&P 500 sectors finished in the green with energy sector leading the gains, up 2.2%, and the materials sector gaining 1.3%.
The real-estate sector was the only decliner, finishing down 0.2%. The Dow Jones Industrial Average DJIA gained 0.5%, led by a +1.79% rise in DuPont (NYSE:DD), by a +1.52% gain in Apple Inc (NASDAQ:AAPL)., and by a +1.48% gain in IBM (NYSE:IBM). Stronger oil prices and a moderation of dollar strength appear to be a relief for stocks, and with the market pricing in a December interest-rate hike, positive economic data is adding pressure for stocks.
Pivot: 2176 Support: 2176 2162 2150 Resistance: 2216 2247 2270 Scenario 1: long positions above 2176.00 with targets at 2216.00 & 2247.00 in extension. Scenario 2: below 2176.00 look for further downside with 2162.00 & 2150.00 as targets. Comment: the RSI is bullish and calls for further advance.