The dollar showed mixed results against other major currencies on Wednesday with gains expected to remain limited as investors continue to digest the fact that the Federal Reserve is unlikely to raise interest rates this year. The dollar remained under pressure by diminished expectations for a rate hike by the Federal Reserve this year in the wake of last Fridays unexpectedly weak U.S. jobs report for September. In the European front the single currency came under pressure after data showed that German industrial production fell at the fastest rate in a year in August, adding to concerns that a slowdown in global growth is spreading to the euro area’s largest economy. In Japan, the central bank refrained from expanding its stimulus program on Wednesday but there is still speculation that it could ease monetary policy at its October meeting. For today, the Bank of England is to announce its monetary policy decision and publish the minutes of its meeting, the ECB is to publish the minutes of its most recent meeting, and later in the day the U.S. is to release the weekly report on initial jobless claims. However, the main focus for today remains on the Federal Reserve minutes from its September meeting, a report viewed as one of the most anticipated due to the uncertainty surrounding a potential interest rate hike.
The euro posted a slight drop against the dollar on Wednesday, as currency traders await the release of the minutes from the Federal Open Market Committee's September meeting for clues on whether the U.S. central bank will raise interest rates before the end of the year. The currency pair traded in a tight range between 1.1212 and 1.1284, before closing the day 0.32% lower. The FOMC has previously indicated that it had seen significant improvements in the U.S. economy since it last met in July, but also expressed concern that significant weakness in China and the global economy could restrain domestic growth. Nonetheless, Fed chair Janet Yellen still said it was likely the FOMC could hike rates by the end of the year. Prior to the minutes, market participants will be focusing on the Bank of England monetary policy decision, on ECB meeting minutes and on U.S. initial jobless claims.
Pivot:1.12
Support:1.121.1171.1145
Resistance:1.12851.1321.135
Scenario 1:Long positions above 1.12 with targets @ 1.1285 & 1.132 in extension.
Scenario 2:Below 1.12 look for further downside with 1.117 & 1.1145 as targets.
Comment:The RSI is mixed with a bullish bias.
WTI Oil
Crude oil prices posted a slight drop on Wednesday, after the U.S. Energy Information Administration said in its Weekly Petroleum Status Report that U.S. crude inventories rose by 3.1 million barrels last week. Analysts expected a more modest build of 2.2 million barrels for the week. Weak manufacturing figures from Japan add further pressure on the price of the fuel as core machinery orders plunged 5.7% in August, sharply missing the expected 3.2% gain. Oil traders will now be focusing on today’s FOMC minutes for further indications on the direction of the dollar and on Friday’s oil rig count by Baker Hughes (NYSE:BHI).
Pivot:49.7
Support:47.446.945.9
Resistance:49.750.851.66
Scenario 1:Short positions below 49.7 with targets @ 47.4 & 46.9 in extension.
Scenario 2:Above 49.7 look for further upside with 50.8 & 51.66 as targets.
Comment:As long as 49.7 is resistance, likely decline to 47.4.
The main stock market indices stocks ended higher on Wednesday, the day before the beginning of third-quarter earnings season. The S&P 500 was up 0.8%, the Dow Jones Industrial Average added 0.73%, and the Nasdaq gained 0.9%. Third-quarter earnings are expected to decline 4.2% from a year earlier, according to Thomson Reuters. Similar issues that plagued the second quarter such as a stronger U.S. dollar and lower energy prices are expected to carry over into this past quarter. International companies that derive a bulk of their sales overseas, for example, will likely take a hit on the currency exchange. For Thursday, investors will be focusing on the FOMC minutes for further indications on the future monetary policy of the Fed and the direction of the dollar.
Pivot:2044
Support:187518201798
Resistance:204421352180
Scenario 1:Short positions below 2044 with targets @ 1875 & 1820 in extension.
Scenario 2:Above 2044 look for further upside with 2135 & 2180 as targets.
Comment:The RSI lacks upward momentum.
Deutsche Bank (XETRA:DBKGn)
Deutsche Bank stock is under some strong pressures this week after announcing it would take a charge of 5.8 billion euros in the third quarter, due to higher regulatory requirements in the industry. The bank gave indications for a quarterly loss between 6 billion and 6.2 billion euros.
