The dollar showed little movement against the other major currencies on Monday, as trading activity was expected to remain low with U.S. markets closed for the Labor Day holiday and investors focused on the Federal Reserve's upcoming policy meeting. Friday’s jobs report from the U.S. failed to provide much clarity on when the U.S. central bank will decide to raise short term interest rates causing the dollar to fluctuate between gains and losses against other currencies. The European Central Bank indicated last week that it could increase its quantitative easing program in order to tackle a weak inflation outlook from slowing growth in China and falling oil prices. Data early on Tuesday showed that Japan's second quarter gross domestic product fell 0.3%, less than the 0.4% expected drop. A separate report showed that Japan's current account for July came in at a surplus of ¥1.809 trillion, above the expected surplus of ¥1.715 trillion. In the week ahead, investors’ attention will be shifted towards Bank of Canada’s rate statement, China’s consumer and producer price inflation data, jobless claims from the U.S. and European Union finance minister’s talks in Brussels.
EUR/USDThe dollar moved lower against the euro on Tuesday, as uncertainty over the timing of a rate hike by the Federal Reserve peaked ahead of the central bank's policy meeting scheduled next week. Sentiment on the greenback remained vulnerable after Friday's U.S. jobs report failed to provide much clarity on when the Fed will decide to raise short term interest rates. The Labor Department reported that the U.S. economy added 173,000 jobs last month, the smallest increase in employment in five months while the unemployment rate fell to 5.1%, its lowest level since April 2008. Prior to next week’s monetary policy meeting by the Fed, investors are now focusing on upcoming data on initial jobless claims from the U.S. on Thursday, European Union finance minister talks in Brussels and producer price and consumer sentiment data from the U.S on Friday.
Pivot:1.115
Support:1.1151.11151.1085
Resistance:1.1261.12951.132
Scenario 1:Long positions above 1.115 with targets @ 1.126 & 1.1295 in extension.
Scenario 2:Below 1.115 look for further downside with 1.1115 & 1.1085 as targets.
Comment:Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
WTI OilCrude oil prices fell on Monday and continue to drop early on Tuesday as China reported disappointing export and import figures from August with importing goods such as oil getting hit hard. August exports fell 6.1%, slightly lower than the 6% expected and imports slumped 14.3%, compared to an expected 8.2% drop. The trade surplus came in at $60.24 billion, better than the $48.2 billion seen. Weak imports suggest exports in the coming months aren't likely to improve given that half of China's foreign trade is in importing raw materials and parts from abroad for assembly before exporting them again. In the U.S. industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. decreased by 13 last week posting the first weekly decline in seven weeks. Oil traders will be focusing on Wednesday’s inventory data from the U.S. along with economic data from the U.S. that could indicate the future direction of the dollar.
Pivot:45.15
Support:43.241.7540.45
Resistance:45.154647.25
Scenario 1:Short positions below 45.15 with targets @ 43.2 & 41.75 in extension.
Scenario 2:Above 45.15 look for further upside with 46 & 47.25 as targets.
Comment:As long as 45.15 is resistance, likely decline to 43.2.
DAX 30Germany stocks were higher after on Monday, as gains in the Telecoms, Chemicals and Utilities sectors led shares higher. At the close in Frankfurt, the DAX rose by more than 0.50%, with the best performers of the session being K&S AG (XETRA:SDFGn) NA which rose 4.14%, Bayer AG (XETRA:BAYGN) NA which added 1.53% and Thyssenkrupp AG (XETRA:TKAG) which was up 1.51%. The worst performers of the session were Merck (NYSE:MRK) KGAA which fell 0.73% RWE AG ST (XETRA:RWEG) which declined 0.20% and Deutsche Post AG (XETRA:DPWGn) NA which was up 0.08%. The index remains pressured by a slowdown in China and global markets as well as by declining oil prices.
Pivot: 10440
Support: 9700 9545 9315
Resistance: 10440 10650 10735
Scenario 1: Short positions below 10440 with targets @ 9700 & 9545 in extension.
Scenario 2: Above 10440 look for further upside with 10650 & 10735 as targets.
Comment: As long as the resistance at 10440 is not surpassed, the risk of the break below 9700 remains high.