The dollar extended losses against the other major currencies on Tuesday, as dampened expectations for a U.S. rate hike before the end of the year continued to weigh on the greenback.
Furthermore, official data released on Tuesday showed that the U.S. trade deficit widened by the most in five months in August reaching $48.33 billion from $41.81 billion in July, as exports dropped falling 2% to the lowest level since October 2012, while imports rose 1.2%.
Today financial markets in China will be closed for holidays. The Bank of Japan announced its benchmark interest rate and published its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. During the day the Swiss National Bank is to produce data on foreign currency reserves, the U.K. is to publish data on industrial production, and Canada is to report on building permits.
But investors’ focus will be mainly on Thursday U.S weekly report on initial jobless claims and on ECB and Fed publications of the minutes of their September meetings.
The euro pushed higher against the weaker dollar on Tuesday, even if German factory orders declined by 1.8% in August, confounding expectations for a 0.5% gain.
EUR/USD surged more than 0.75%, amid downbeat forecasts from the International Monetary Fund on global economic growth over the next year and a widening of the U.S. trade deficit in August.
Citing weakness in China and soft commodity prices, the IMF estimated that the world's economy will grow at 3.1% this year and 3.6% in 2016; both estimates are 0.2% below the IMF's July forecasts.
The greenback remained on the back foot after Friday’s unexpectedly weak U.S. jobs report prompted investors to abandon expectations for a rate hike by the Fed before the end of 2015.
Now investors are waiting for Thursday ECB and Fed publications of the minutes of their most recent meetings.
Pivot:1.12
Support:1.121.1171.1145
Resistance:1.1321.1351.14
Scenario 1:Long positions above 1.12 with targets @ 1.132 & 1.135 in extension.
Scenario 2:Below 1.12 look for further downside with 1.117 & 1.1145 as targets.
Comment:The RSI is mixed to bullish.
Gold
Gold prices were holding just below one week highs on Tuesday, as the chances of a rate hike by the Federal Reserve this year diminished after last week’s unexpectedly weak U.S. jobs report.
Gold would benefit from any delay in raising U.S. interest rates, as the precious metal would struggle to compete with yield-bearing assets.
Gold prices rose in Asia on Wednesday, in light trade with China market shut and holding steady from overnight, ahead of Federal Reserve meeting minutes for September.
Pivot:1135.5
Support:1135.511301122.5
Resistance:115711651170
Scenario 1:Long positions above 1135.5 with targets @ 1157 & 1165 in extension.
Scenario 2:Below 1135.5 look for further downside with 1130 & 1122.5 as targets.
Comment:The RSI is mixed to bullish.
WTI Oil
Crude prices jumped about 4% on Tuesday after the United States cut output forecasts and Russia, Saudi Arabia and other big producers signaled joint action to support the market.
A weakening dollar added support for oil, aside from bets that the U.S. oil rig count could tumble again this week after last week's unexpectedly sharp decline of 26 rigs.
Yesterday the U.S. Energy Information Administration projected in its monthly forecast that the country's crude output will fall through mid 2016. The EIA also raised its 2016 world oil demand growth forecast to 100,000 barrels per day to 1.41 million bpd.
Furthermore Russia's energy minister said Russia and Saudi Arabia had discussed the oil market in a meeting last week and would continue to consult each other.
The market is possibly moving on speculation that OPEC and non-OPEC countries will find an agreement to cooperate to reduce the global supply glut.
Today’s focus will be on the data from the U.S. Department of Energy.
Pivot:47.8
Support:5050.851.66
Resistance:47.846.945.7
Scenario 1:Long positions above 47.8 with targets @ 50 & 50.8 in extension.
Scenario 2:Below 47.8 look for further downside with 46.9 & 45.7 as targets.
Comment:The RSI is well directed.
Dow Jones
U.S. stocks fell on Tuesday, ending a five-day winning streak, as investors focused on upcoming quarterly reports, that are expected to reflect a dip in corporate earnings.
A surge in DuPont (NYSE:DD)'s stock helped keep the Dow Jones industrial average in positive territory, but the S&P 500 and Nasdaq lost ground, with a sharp drop in biotech stocks. DuPont rose 7.6% after CEO Ellen Kullman said she would step down.
S&P 500 companies are expected to report a 4.2% fall in earnings in the third quarter, the biggest decline in six years, according to Thomson Reuters data.
Investors are going to keep a keen eye on U.S. earnings reports over the next several weeks, for evidence of strong second-quarter performance trickling down to the third.
Pivot: 17570
Support: 15370 14765 14200
Resistance: 17570 18350 18650
Scenario 1: Short positions below 17570 with targets @ 15370 & 14765 in extension.
Scenario 2: Above 17570 look for further upside with 18350 & 18650 as targets.
Comment: The RSI is capped by a declining trend line.