The dollar lost ground against most major currencies on Monday, as investors are more cautious ahead of the Federal Reserve and the Bank of Japan’s highly-anticipated policy meetings this week. On Tuesday investors appear to remain on the side-lines, ahead of this week's policy meetings of the Bank of Japan and Federal Reserve, with markets expecting that the Japanese central bank will make crucial changes to its easing program. BOJ officials have suggested in recent weeks that there is room to cut interest rates further and there is talk the BOJ could make negative interest rates the primary focus of its monetary policy at this week's review. Even so, currency traders appear uncertain as to whether this step would help to reverse the yen's rising trend this year. For the Fed, the overall consensus is to leave rates unchanged, however, investors are anticipating clearer hints on the timing of the next rate hike. The commodity currencies were supported by comments from Venezuelan officials who said that OPEC and non-OPEC producers were close to reaching a deal to curb production. Today, the U.S. is to report on building permits and housing starts while Bank of Canada Governor Stephen Poloz is to speak at an event in Quebec.
The dollar extended losses against most major currencies on Monday, as investors appear cautious ahead of the upcoming Federal Reserve and Bank of Japan policy meetings this week. The dollar fell against the yen by approximately 0.4 percent compared to last week though it remained in its trading range of the past weeks between 101.20 and 103.35. No changes are expected from the Fed’s upcoming policy meeting, however, BOJ officials have suggested in recent weeks that there is room to cut interest rates further despite criticism that they are hurting financial institutions and even damaging economic sentiment. For today, the U.S. is to report on building permits and housing starts.
Pivot: 102.15Support: 101.45 101.15 100.9Resistance: 102.15 102.45 102.75Scenario 1: short @ 101.80 with targets @ 101.45 & 101.15 in extension.Scenario 2: above 102.15 look for further upside with 102.45 & 102.75 as targets.Comment: The pair has validated a bearish flag.
Gold
Gold prices recovered from two week lows on Monday, as the U.S. dollar fell amid expectations of no rate change from the Federal Reserve this week. Even though no change is expected in the Fed’s monetary policy this week, investors will be anticipating Fed Chair Janet Yellen’s press conference 30 minutes after the Fed's statement, for any hints on the timing of future rate hikes. Markets are currently pricing in just a 12% chance of a rate hike this week, according to the Fed Rate Monitor Tool. For today, the U.S. is to report on building permits and housing starts.
Pivot: 1309Support: 1309 1305.75 1302Resistance: 1321.5 1326 1332Scenario 1: long positions above 1309.00 with targets @ 1321.50 & 1326.00 in extension.Scenario 2: below 1309.00 look for further downside with 1305.75 & 1302.00 as targets.Comment: the RSI broke above a bearish trend line.
WTI Oil
Oil prices gained almost 1 percent early on Monday after Venezuela hinted that OPEC members and other major oil producers could reach a deal to curb production in order to support prices, however the price of the fuel dropped eventually to end the day in negative territory as bearish sentiment triggered some profit taking from long positions. Recent weakness in the dollar also failed to support the dollar denominated commodity. Oil producers are due to meet in an industry conference in Algeria next week for talks on potentially freezing oil production, ahead of OPEC's important policy meeting in November. Later today, the market focus will be shifted towards the crude oil inventories report stocks from the American Petroleum Institute.
Pivot: 44.1Support: 42.7 42 41.2Resistance: 44.1 44.76 45.5Scenario 1: short positions below 44.10 with targets @ 42.70 & 42.00 in extension.Scenario 2: above 44.10 look for further upside with 44.76 & 45.50 as targets.Comment: the RSI calls for a drop.
US 500
The main U.S. stock indices moved lower on Monday, as losses in the Telecoms, Healthcare and Consumer Services sectors drove prices lower. Apple shares (NASDAQ:AAPL) fell by 1.2 percent after registering huge gains last week, but the drop was slightly offset by gains in big bank stocks. The Dow Jones industrial average fell 0.02 percent the S&P 500 lost 0.04 points and the Nasdaq dropped 0.18 percent. The Fed is expected to leave interest rates unchanged at the two-day meeting, but investors will assess Chair Janet Yellen's speech on Wednesday to see if the central bank plans to hike as soon as December. Traders are now focusing on the central bank monetary policy meeting outcome on Wednesday and they are betting that there is only a 12-percent chance the Fed will raise interest rates this week, but see a 55-percent chance the central bank will do so in December, according to the CME's FedWatch website.
Pivot: 2108 Support: 2108 2100 2085 Resistance: 2155 2169 2182 Scenario 1: long positions above 2108.00 with targets @ 2155.00 & 2169.00 in extension. Scenario 2: below 2108.00 look for further downside with 2100.00 & 2085.00 as targets. Comment: the RSI is mixed with a bullish bias.