The dollar moved slightly lower against most major currencies on Wednesday following comments by European Central Bank President Mario Draghi which provided a boost to the euro, although the dollar remained supported by hopes for an upcoming U.S. rate hike before the year end. The euro rallied from two-and-a-half week lows on Wednesday, after Mario Draghi suggested a downturn in the global economy which has left the European Central Bank uncertain on whether to extend the its asset-purchasing program. Earlier Wednesday, research group Markit reported on Wednesday that Germany's manufacturing purchasing managers' index fell to 52.5 in September from 53.3 the previous month, while the services PMI fell down to 54.3 from 54.9. For the entire euro zone, the composite PMI, which includes both manufacturing activity and services, slipped to 53.9 in September, Markit reported, from a reading of 54.3 in August. The data added to worries over a global economic slowdown. For today, in the euro area, the Ifo Institute is to report on German business climate, while the U.S. is to release data on durable goods orders, initial jobless claims and new home sales. For the week ahead the U.S. Bureau of Economic Analysis will release its third estimate of U.S. GDP in the second quarter.
The EUR/USD rallied from two-and-a-half week lows on Wednesday, after Mario Draghi suggested a downturn in the global economy, something that has left the European Central Bank uncertain on whether to extend its asset-purchasing program. Draghi indicated that a slowdown in the Chinese economy and crashing oil prices have made it difficult to forecast the long-term path of inflation throughout the euro zone. After falling to its lowest level since early-September, the euro covered earlier losses against the dollar to end a four-session drop and closed the day in positive territory. For today, in the euro area, the Ifo Institute is to report on German business climate, while the U.S. is to release data on durable goods orders, initial jobless claims and new home sales.
Pivot:1.1105
Support:1.11051.1021.097
Resistance:1.12551.1321.1385
Scenario 1:Long positions above 1.1105 with targets @ 1.1255 & 1.132 in extension.
Scenario 2:Below 1.1105 look for further downside with 1.102 & 1.097 as targets.
Comment:The RSI has just landed on its neutrality area at 50% and is turning up.
Gold
Gold prices gained after news that Chinese manufacturing fell to fresh six-and-a-half year lows raising concerns of an upcoming recession in the world's second-largest economy. In overnight trading, the Flash China Caixin Manufacturing Purchasing Index, an indicator of Chinese factory activity, fell to 47.0 in September, marking its lowest level in 78 months. New orders fell by to 46.0, while new export orders plummeted to 45.8. Analysts expected the index to rise slightly to 47.5 from a final reading of 47.3 in August. Manufacturing activity in September represents the seventh straight month of monthly declines. Investors will be focusing on the release of employment and housing data from the U.S. while the U.S. GDP estimate on Friday will be the main event of the week.
Pivot:1136
Support:112111161109
Resistance:113611421148
Scenario 1:Short positions below 1136 with targets @ 1121 & 1116 in extension.
Scenario 2:Above 1136 look for further upside with 1142 & 1148 as targets.
Comment:Intraday technical indicators are mixed and call for caution.
WTI Oil
A sharp drop in crude oil prices pressured the energy sector. West Texas Intermediate crude oil fell by almost 4% a barrel despite the Energy Information Administration posting a decline in weekly inventories. Crude oil inventories fell by 1.9 million barrels over the week ended September 18, more than double the estimated drop of 700,000. However, a considerable build in gasoline inventories offset the positive impact of the inventories decrease. Prices received further pressure after weak Chinese manufacturing data was reported and now energy traders will now be shifting their focus towards Friday’s U.S. growth data and oil rigs count by Baker Hughes (NYSE:BHI) company.
Pivot:45.55
Support:45.5544.2443.55
Resistance:4747.6448.26
Scenario 1:Short positions below 46.1 with targets @ 43.85 & 43.3 in extension.
Scenario 2:Above 46.1 look for further upside with 46.9 & 47.4 as targets.
Comment:The RSI broke below a bullish trend line.
Dow Jones
Stocks had their first relatively calm session in weeks on Wednesday. Stocks moved within a narrow range with little indication of moving to any direction after crude oil prices fell. The S&P 500 was down 0.2%, the Dow Jones Industrial Average fell 0.2%, and the Nasdaq slid 0.08%. The Volatility Index, commonly referred to as the 'fear index,' was down 1.8% to 22.06. A slump in crude oil prices pressured the energy sector which was the worst performer for the day. The best performers of the session on the Dow Jones Industrial Average were Pfizer Inc (NYSE:PFE) which rose 1.12% and Visa Inc (NYSE:V) which added 1.00% and the worst performers were Caterpillar (NYSE:CAT) Inc which fell 2.06% and Boeing Company (NYSE:BA) which declined 1.73%. For today, the U.S. is to release data on durable goods orders, initial jobless claims and new home sales while Friday’s U.S. growth data remain in focus.
Pivot: 17570
Support: 15370 14765 14200
Resistance: 17570 18350 18650
Scenario 1: Short positions below 17570 with targets @ 15370 & 14765 in extension.
Scenario 2: Above 17570 look for further upside with 18350 & 18650 as targets.
Comment: The RSI is capped by a declining trend line.