On Thursday morning and early afternoon the dollar slid lower against the other major currencies, even after data showed that U.S. jobless claims fell more than expected last week, as sentiment remained vulnerable ahead of the conclusion of the Federal Reserve two days meeting.
U.S. data showed that the number of people who filed for unemployment assistance fell by 11,000 reaching 264,000, a two-month low last week, remaining in territory consistent with a strengthening labor market. At the same time data showed that the number of new U.S. housing starts fell by 3% in August, but the number of building permits increased by 3.5%, indicating that the housing market remains robust.
But the greenback weakened broadly after the Federal Reserve kept interest rates unchanged on Thursday evening, but left open the possibility of a rate hike later this year. Speaking after the rate statement, Fed Chair Janet Yellen said global economic developments played a major part in the central bank's decision. In deciding when to raise interest rates, the Fed repeated it wanted to see "some further improvement in the labor market" and be "reasonably confident" that inflation will increase. Investors' focus is now turned to the next Fed meeting on October 27-28, to figure out the timing for the Fed's first benchmark rate increase since 2006.
On Thursday morning and early afternoon EUR/USD gained ground against a softer dollar, as investors awaited the outcome of the closely watched Federal Reserve policy setting meeting later in the day.
After the decision of the Federal Open Market Committee to held its benchmark interest rate at its current near-zero level, citing the negative effects of global economic weakness on U.S. inflation, the euro surged above 1.14, reaching its highest closing level in the month of September.
Yellen also noted that large drags from falling energy and import prices should dissipate in the near future allowing long-term inflation to move back toward its long-term target.
Over the last month of trading, the euro is now up by nearly 3% on American counterpart.
Pivot: 1.134
Support: 1.134 1.129 1.1255
Resistance: 1.144 1.1495 1.153
Scenario 1: Long positions above 1.134 with targets @ 1.144 & 1.1495 in extension.
Scenario 2: Below 1.134 look for further downside with 1.129 & 1.1255 as targets.
Comment: The RSI lacks downward momentum.
Gold
On Thursday gold prices were trading close to their highest level in a week, ahead of the conclusion of the closely watched Fed policy setting meeting, as weak U.S. inflation data weighed on the dollar and raised hopes that the Federal Reserve would hold off hiking interest rates.
While, after the Federal Reserve kept its benchmark interest rate steady in the face of global economic volatility, gold jumped in Asia on Friday.
Investors' focus is now turned to the next Fed meeting on October 27-28, to figure out the timing for the Fed's first benchmark rate increase since 2006, in order to decide whether to turn to gold as “safe heaven” or to invest in the greenback.
Pivot: 1123
Support: 1123 1119 1115
Resistance: 1136.5 1140 1143
Scenario 1: Long positions above 1123 with targets @ 1136.5 & 1140 in extension.
Scenario 2: Below 1123 look for further downside with 1119 & 1115 as targets.
Comment: The RSI is mixed to bullish.
WTI Oil
Crude oil gained on Thursday with investors looking ahead to the Federal Reserve's view on interest rates and noting lower stocks in the U.S.
Later on, oil prices eased in early Asia on Friday, as investors took stock of the Federal Reserve decision to hold rates and comments on global economic weakness.
Today investors’ focus will be on industry research group Baker Hughes (NYSE:BHI) that will release its latest estimates of the number of rigs drilling for oil in the U.S. It decreased by 10 last week to 652, the second straight weekly decline.
Pivot: 47.6
Support: 45.9 45.1 44.6
Resistance: 47.6 48.4 48.8
Scenario 1: Short positions below 47.6 with targets @ 45.9 & 45.1 in extension.
Scenario 2: Above 47.6 look for further upside with 48.4 & 48.8 as targets.
Comment: The RSI broke below a rising trend line.
Dow Jones
U.S. stocks were marginally higher in thin late-morning trading on Thursday, with investors reluctant to trade aggressively ahead of the Federal Reserve's interest rate decision later in the day.
While in the final hours of the afternoon session, after the Federal Open Market Committee held short-term interest rates at its current near-zero level upon the completion of its two-day September meeting, U.S. stocks were mixed.
The Dow initially shot up 50 points after the release of the statement, before quickly turning negative minutes later. It then rallied toward the end of the session, after Fed chair Janet Yellen said in a press conference that the majority of the FOMC is still in favor of a rate hike before the end of the year.
At one point, the Dow rallied nearly 200 points, before falling back sharply again to close in negative territory.
Investors' focus is now turned to the next Fed meeting on October 27-28, to figure out the timing for the Fed's first benchmark rate increase since 2006.
Pivot: 16630
Support: 16630 16550 16410
Resistance: 16980 17080 17180
Scenario 1: Long positions above 16630 with targets @ 16980 & 17080 in extension.
Scenario 2: Below 16630 look for further downside with 16550 & 16410 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.