The dollar gained against most major currencies on Monday, after data showing that U.S. manufacturing activity returned to expansion in September and boosted optimism over the strength of the economy. The Institute for Supply Management said its index of manufacturing activity rose to 51.5 last month from August’s reading of 49.4. Analysts had forecast a lesser increase to 50.3.
The reports added to hopes for a U.S. rate hike before the end of the year following positive U.S. consumer sentiment data released on Friday. Investing.com's Fed Rate Monitor Tool shows investors estimate a 10.3% chance of a rate hike in November, and a 61.6% figure for December. Investors remain cautious after U.K. Prime Minister Theresa May said on Sunday that she would initiate the process of leaving the European Union by the end of March. The dollar also gained against the yen because of a reduction in risk aversion, as concerns over Deutsche Bank (DE:DBKGn) have eased for now. Tuesday is quiet in terms of financial news with the spotlight mainly on the U.K. construction activity data. Ahead in the week investors will shift their focus on the ECB minutes and on the U.S. non-farm payrolls.
The pound fell on Monday reaching 31-year lows against the dollar and to a three-year lows against the euro after a March deadline was set for the start of the formal process that will depart Britain from the European Union. The dollar strengthened against most major currencies on a private report that showed the U.S. manufacturing sector returned to expansion territory in September. The pound had dropped more than 1 percent against the dollar to as low as $1.2818 before trimming losses in late U.S. trading. For today, investors will be focusing on the U.K. construction activity data.
Pivot:1.2915Support:1.2791.2761.272Resistance:1.29151.2951.298Scenario 1:short positions below 1.2915 with targets @ 1.2790 & 1.2760 in extension.Scenario 2:above 1.2915 look for further upside with 1.2950 & 1.2980 as targets.Comment:as long as 1.2915 is resistance, look for choppy price action with a bearish bias.
Gold
Gold prices continue to trade near two-week lows on Monday, with market sentiment being supported as concerns over Deutsche Bank’s health continued to ease. Recent strength in the dollar added significant pressure on the precious metal, together with reports late last week that Deutsche Bank is nearing a deal to settle mortgage-securities investigation by paying a $5.4 billion fine, well below the Justice Department’s original proposal of $14 billion. Ahead in the week gold traders will shift their focus on the ECB minutes and on the U.S. non-farm payrolls.
Pivot:1318.5Support:1304.513021300Resistance:1318.513221325Scenario 1:short positions below 1318.50 with targets @ 1304.50 & 1302.00 in extension.Scenario 2:above 1318.50 look for further upside with 1322.00 & 1325.00 as targets.Comment:the RSI lacks upward momentum.
WTI Oil
U.S. West Texas Intermediate crude oil posted a rise of 57 cents, or 1.2 percent reaching $48.81 on Monday its highest since July 5, after Iranian President Hassan Rouhani expressed the need for need for other oil producers to join OPEC in supporting the market. Iran's call to non-OPEC members brought optimism in market sentiment and raised expectations that this deal will bring results. For today, markets will be focused on the American Petroleum Institute and its estimates of refined product and crude oil inventories.
Pivot:47.75Support:47.7547.146.2Resistance:49.349.7550.23Scenario 1:long positions above 47.75 with targets @ 49.30 & 49.75 in extension.Scenario 2:below 47.75 look for further downside with 47.10 & 46.20 as targets.Comment:the RSI lacks downward momentum.
US 500
The main U.S. indices started off weak in the fourth quarter pulled down by financials, consumer goods and utilities sectors. Investors appear to be worried about the outcome of the Nov. 8 election as well as the fact that big banks are extending their recent declines. Market sentiment was shaken by Deutsche Bank and Wells Fargo (NYSE:WFC) & Co's handling of sales abuses adding significant pressure on the financial sector. The S&P 500 financial index declined 0.43 percent as Wells Fargo slid 1.02 percent to its lowest since December 2013. Investors are now shifting their focus on the ECB minutes and on the U.S. non-farm payrolls reports that are due later in the week.
Pivot: 2146 Support: 2146 2138 2133 Resistance: 2163 2168 2172 Scenario 1: long positions above 2146.00 with targets @ 2163.00 & 2168.00 in extension. Scenario 2: below 2146.00 look for further downside with 2138.00 & 2133.00 as targets. Comment: the RSI is mixed with a bullish bias.