The dollar was broadly higher on Friday and the euro weakened amid expectations that the Federal Reserve may still raise interest rates this year while the European Central Bank could scale up its quantitative easing program.
In the week ahead, investors will be focusing on the outcome of Thursday’s ECB meeting, but also US data on building permits, housing starts, initial jobless claims and existing home sales will be closely watched, for further information on the strength of the global economy.
The euro fell against the dollar on Friday as the diverging monetary policy stance between the European Central Bank and the Federal Reserve pressured the single currency lower.
Data on Friday confirmed that the rate of inflation in the euro area turned negative in September for the first time since the ECB launched its trillion euro asset purchase program in March, with the consumer price index down 0.1% on a year-over-year basis.
The euro’s losses were held in check following the release of mixed U.S. economic reports.
The University of Michigan’s survey of consumer sentiment rebounded in October following 4 months of declines. The preliminary reading of the consumer sentiment index came in at 92.1, compared to forecasts of 89 and up from 87.2 in September. But another report showed that U.S. industrial production declined 0.2% in September, pressured lower by weakness in the oil and gas sector.
In the week ahead, investors will be focusing on the outcome of Thursday’s ECB meeting.
Pivot: 1.1395Support: 1.1305 1.1265 1.123Resistance: 1.1395 1.145 1.1495Scenario 1: Short positions below 1.1395 with targets @ 1.1305 & 1.1265 in extension.Scenario 2: Above 1.1395 look for further upside with 1.145 & 1.1495 as targets.Comment: The pair is capped by a declining trend line.
Gold
Gold prices fell in Asia on Monday after mixed economic data from China showed lower than expected industrial output, but higher than expected GDP gains.
In China, third quarter GDP rose 1.8%, a tad better than the 1.7% gain seen and at an annual pace of 6.9%, also beating the expected 6.8% rise expected. The data amid fears that a China-led slowdown in global growth could prompt the Fed to delay hiking rates for longer.
Earlier, Bank of Japan Governor Haruhiko Kuroda on Monday said the Central Bank will make necessary adjustments to its aggressive easing while monitoring risks to growth and inflation.
In the week ahead, the outcome of Thursday’s European Central Bank meeting will be in focus, amid speculation that the Central Bank could ramp up its monetary stimulus program.
Pivot: 1184.5Support: 1163 1158 1151.5Resistance: 1184.5 1190 1196Scenario 1: Short positions below 1184.5 with targets @ 1163 & 1158 in extension.Scenario 2: Above 1184.5 look for further upside with 1190 & 1196 as targets.Comment: As long as 1184.5 is resistance, likely decline to 1163.
WTI Oil
Oil prices dipped on Monday as China's economic growth eased in the third quarter to grow at the slowest pace since the start of the global financial crisis.
China's GDP figures showed growth slowed to 6.9% between July-September, beating analysts' expectations for 6.8% growth, but down on a 7% rise in the second quarter.
Data from the U.S. Energy Information Administration (EIA) last week showed U.S. crude inventories rose by 7.6 million barrels, even as the U.S. rig count fell for a seventh week in a row last week, fueling concerns over global oversupply.
Investors were also eyeing moves on Sunday by the United States and the European Union to take formal legal steps to lift sanctions on Iran once Tehran meets the conditions tied to a landmark nuclear agreement with major world powers.
All the focus this week will be on October 21 meeting of technical experts in Vienna where will be discussed the Venezuela’s plan: progressive production cuts to control prices, with a "first floor" of $70 per barrel and a later target of $100 per barrel.
Pivot: 46Support: 46 45.23 44.6Resistance: 47.85 48.46 49.2Scenario 1: Long positions above 46 with targets @ 47.85 & 48.46 in extension.Scenario 2: Below 46 look for further downside with 45.23 & 44.6 as targets.Comment: The RSI is mixed to bullish.
U.S. stocks ended higher on Friday, notching a third week of gains, lifted by a jump in General Electric (N:GE) shares and upbeat consumer sentiment data.
The S&P 500's three weeks of gains marked its longest winning streak since May and extended a rebound from the market's August selloff.
Consumer sentiment data helped. The University of Michigan's preliminary index on consumer sentiment rebounded strongly in early October, suggesting that the economic recovery remained on track.
For the week, the Dow rose 0.8% and the Nasdaq gained 1.2%, both also registering a third week of gains, while the S&P 500 was up 0.9%.
In the week ahead, investors will be focusing on Tuesday data on building permits and housing starts and on Thursday ones on initial jobless claims and existing home sales, for further information on the US strength.
Pivot: 2044 Support: 1867 1820 1798 Resistance: 2044 2135 2180 Scenario 1: Short positions below 2044 with targets @ 1867 & 1820 in extension. Scenario 2: Above 2044 look for further upside with 2135 & 2180 as targets. Comment: As long as 2044 is resistance, look for choppy price action with a bearish bias.