The dollar lost ground against most major currencies on Monday, after data showed that manufacturing activity in the Chicago-area expanded at a slower pace than expected in August, however, expectations for an upcoming U.S. rate hike continue to support to the U.S. currency. Market research group Kingsbury International said its Chicago purchasing managers’ index declined by 0.3 points to 54.4 this month from a reading of 54.7 in July. Analysts had expected the index to hold steady at 54.7 in August. Asian shares extended losses on Tuesday and European markets look set to follow after surveys showed China's manufacturing sector is on course of its worst drop in several years, raising fresh fears about the health of its economy. China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three years. Separately, the private Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) showed a final reading of 47.3 in August, the lowest since March 2009. For today the euro zone is to publish the unemployment rate, while Germany is to report on the change in the number of people unemployed. The U.K. is to publish reports on manufacturing activity and net lending and Canada is to release its monthly report on economic growth. In the U.S., the Institute of Supply Management is to report on manufacturing growth. For the week ahead, Investors were looking ahead to Friday’s U.S. jobs report for August for more clues on the timing of the long awaited rate hike.
EUR/USDEUR/USD posted moderate gains yesterday after data showed that manufacturing activity in the Chicago-area expanded at a slower pace than expected in August. The pair gained more than 2.5% for the month, in spite of a four-day losing streak last week when it fell below 1.12. The euro still remains down by more than 7% against the dollar on the calendar year. On Monday, investors reacted to market-moving comments from European Central Bank Vice President Vitor Constancio, Bank of England Governor Mark Carney and Fischer regarding global developments in inflation over the weekend. Fischer indicated that there is good reason to believe that inflation will move higher as the temporary forces restraining it continue to "dissipate further." For today, market focus is on euro zone unemployment rate, Germany’s report on the change in the number of people unemployed and in the U.S., the Institute of Supply Management is to report on manufacturing growth.
Pivot: 1.12Support: 1.12 1.1155 1.11Resistance: 1.131 1.135 1.141Scenario 1: Long positions above 1.12 with targets @ 1.131 & 1.135 in extension.Scenario 2: Below 1.12 look for further downside with 1.1155 & 1.11 as targets.Comment: The RSI is bullish and calls for further upside.
Crude oil prices surged on Monday, after new data that showed U.S. crude oil production was at a lower-than-expected rate. Estimates for U.S. production over the first five months of 2015 have been lowered by between 40,000 and 130,000 barrels a day each month, according to the Energy Information Administration. U.S. crude, also known as West Texas Intermediate, had climbed 27.5 percent by the end of three days of gains, the largest three-day increase since February 2011. West Texas Intermediate crude rose 8.8% on Monday to $49.20 a barrel and added 4.4% over August. Further support on prices came by OPEC commentary that the cartel was willing to talk to other producers to achieve reasonable oil prices. Investors will be watching key U.S. data, including oil stocks, manufacturing and vehicle sales figures, later on Tuesday to give further direction to prices.
Pivot: 45Support: 45 41.75 40.55Resistance: 50 52 54Scenario 1: Long positions above 45 with targets @ 50 & 52 in extension.Scenario 2: Below 45 look for further downside with 41.75 & 40.55 as targets.Comment: The RSI is mixed with a bullish bias.
Stocks closed sharply lower on Monday as benchmark indexes finished with their worst monthly losses since May 2012. The S&P 500 ended with a monthly loss of 6.3% while the Nasdaq lost 6.9%. The Dow Jones Industrial Average fell substantially on Monday to close August down more than 1,000 points or 6.6% posting the worst month for the Dow in more than five years. Fears that China's stock market will continue to stumble intensified after a report that China's government won't make additional large stock purchases to support its market, according to The Financial Times. Over the past two months, China's government-owned investment funds and private institutions have invested $200 billion to support its equity markets. The jobs report for August, to be released on Friday, will be crucial to any decision in September on rates Economists expect 223,000 jobs to have been added to nonfarm payrolls in the U.S. over the month compared to 215,000 jobs added in July. The unemployment rate is forecast to fall to 5.2% from 5.3%.
Pivot: 16055Support: 16055 15580 15330Resistance: 16790 16945 17115Scenario 1: Long positions above 16055 with targets @ 16790 & 16945 in extension.Scenario 2: Below 16055 look for further downside with 15580 & 15330 as targets.Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Apple shares (NASDAQ:AAPL) were supported and remain on watch after the company agreed to partner with Cisco in a deal which helps Apple move further into the enterprise market. As part of the collaboration, Apple devices will work more effectively on corporate networks utilizing Cisco technology.
Pivot: 117.6 Support: 102.1 92.35 86.5 Resistance: 117.6 125 134.4 Scenario 1: Short positions below 117.6 with targets @ 102.1 & 92.35 in extension. Scenario 2: Above 117.6 look for further upside with 125 & 134.4 as targets. Comment: The RSI is below its neutrality area at 50% The 20-day moving average (red) is heading down and is possible area of resistance.