The dollar moved lower against most major currencies on Monday after Federal Reserve Board Governor Lael Brainard argued against a premature rate hike in the United States, comments that are likely to lower expectations for a rate hike next week, after Boston Fed President Eric Rosengren said that low interest rates are increasing the chance of overheating the U.S. economy. As the Fed enters a critical period ahead of the FOMC's next meeting on Sept. 20-21, Brainard’s comments are considered quite significant, as in the past he has been able to convince Fed Chair Janet Yellen to hold off on raising rates. The Fed Rate Monitor Tool shows a 15% possibility of a rate hike in September at the meeting, down from above 20% earlier on Monday. In China, fixed asset investment for August rose 8.1%, better than the 8.0% year-on-year gain seen, and industrial production gained 6.3%, also beating an expected 6.1% year-on-year rise, and retail sales increased 10.6%, ahead of the 10.3% boost seen. For today, Switzerland is to release data on producer prices, the U.K. is to report on consumer prices and the ZEW Institute is to publish a report German economic sentiment.
The euro gained against the dollar on Monday, having taken a hit after dovish comments from a Federal Reserve member reduced expectations that the Fed would raise interest rates this month. Governor Lael Brainard on Monday warned against the Fed removing support for the economy too quickly, urging investors to reassess their views on the future monetary policy of the Fed. CME Group's (NASDAQ:CME) FedWatch Tool is pricing in about a 15 percent chance of a rate hike at the Fed's next policy meeting on Sept 20-21, down from about 35 percent in late August. For today, investors will be focusing on the ZEW Institute report on German economic sentiment.
Pivot: 1.1285
Support: 1.1195 1.117 1.114
Resistance: 1.1285 1.1325 1.1365
Scenario 1: short positions below 1.1285 with targets @ 1.1195 & 1.1170 in extension.
Scenario 2: above 1.1285 look for further upside with 1.1325 & 1.1365 as targets.
Comment: as long as 1.1285 is resistance, look for choppy price action with a bearish bias.
Gold
Gold prices ended Monday’s session with a slight increase, as investors assess a fresh batch of comments from key Federal Reserve policymaker Lael Brainard, who argued against prematurely removing monetary policy accommodation in the United States. Brainard’s dovish remarks brought pressure onto the dollar and consequently supported gold, as the yellow metal is usually inversely correlated to interest rates. Market players are now shifting their attention to the highly anticipated policy meeting of the Fed on Sept 20-21.
Pivot: 1320
Support: 1320 1316 1309
Resistance: 1342 1348 1351.5
Scenario 1: long positions above 1320.00 with targets @ 1339.00 & 1349.00 in extension.
Scenario 2: below 1320.00 look for further downside with 1316.00 & 1309.00 as targets.
Comment: the RSI lacks downward momentum.
WTI Oil
Oil prices moved almost 1 percent higher on Monday as a weaker dollar and stronger U.S. equity markets helped crude futures rebound from an early drop caused by concerns on increased drilling activity for oil in the United States. Forecasts that U.S. oil production could fall for an 11th straight month in October also supported oil prices, although gains were limited by expectations that U.S. inventories may show a rise for last week after a sharp drop the previous week. Analyst polled by Reuters forecast a 4.5 million-barrel build in U.S. crude stockpiles for the last week, after an unexpected 14.5 million-barrel slump the previous week, the biggest drop since 1999. For today, investors are looking ahead to the API inventory report.
Pivot: 45.32
Support: 45.32 44.53 43.85
Resistance: 46.5 47.05 47.78
Scenario 1: long positions above 45.32 with targets @ 46.50 & 47.05 in extension.
Scenario 2: below 45.32 look for further downside with 44.53 & 43.85 as targets.
Comment: the RSI is mixed to bullish.
US 500
The main U.S. stock indices posted their strongest gains in two months on Monday after Federal Reserve Board Governor Lael Brainard displayed a dovish stance on interest rates and urged caution about removing monetary stimulus too quickly. Brainard's speech followed earlier comments by Atlanta Fed Bank President Dennis Lockhart and his Minneapolis counterpart Neel Kashkari in which they suggested there was no urgency to raise interest rates. Apple (NASDAQ:AAPL) rose 2.24 percent, giving the S&P 500 its largest boost. Fears of a September rate hike had sent the three main U.S. indices plunging on Friday, posting their worst decline since Britain's June 23 'Brexit' vote. In the week ahead, investors will be looking to U.S. economic reports on retail sales and inflation for possible indications on the future direction of monetary policy.
Pivot: 2100
Support: 2100 2085 2073
Resistance: 2166 2176 2183
Scenario 1: long positions above 2100.00 with targets @ 2166.00 & 2176.00 in extension.
Scenario 2: below 2100.00 look for further downside with 2085.00 & 2073.00 as targets.
Comment: the RSI is mixed with a bullish bias.