The dollar traded higher on the last day of the year on Thursday, at the end of a year which saw the greenback post gains of almost 9% against the other major currencies, boosted by the diverging monetary policy stance between the Federal Reserve and other world central banks.
The U.S. dollar index, which measures the greenback’s strength against a trade weighted basket of six major currencies, rose to a more than one week high of 98.75 on Thursday. The index ended the month down 1.46%, the first monthly decline since August, but ended the year with gains of 8.96%.
A key factor in the dollar’s gains in 2015 was the belief that the start of a rate hike cycle by the Fed in conjunction with continuing loose monetary policy from the European Central Bank and the Bank of Japan would continue to underpin investor demand for the greenback.
In the week ahead, investors will be looking ahead to Friday’s U.S. jobs report for December, as well as reports on U.S. manufacturing and service sector activity. Tuesday’s euro zone inflation report will also be in focus.
Today in the euro zone, Germany is to release preliminary data on consumer inflation; the U.K. is to release survey data on manufacturing sector activity; while in the U.S., the Institute of Supply Management is to release data on manufacturing activity.
The euro fell to a one-week low of 1.0852 against the dollar on Thursday, as investors awaited the release of U.S. data later in the day and as trading volumes became increasingly thin ahead of the New Year holiday on Friday. The single currency ended the year down more than 10%, its second straight annual decline.
Investors also continued to focus on the oil market, amid ongoing concerns over a global supply glut after the U.S. Energy Information Administration reported an unexpected rise in crude oil inventories on Wednesday.
In the week ahead, investors will be looking ahead to: today Germany preliminary data on consumer inflation; tomorrow Germany and Spain data on the change in the number of people employed and euro zone preliminary data on consumer inflation; Thursday data from Germany on factory orders and retail sales and on euro zone report on unemployment rate.
Pivot: 1.0865Support: 1.0865 1.0845 1.082Resistance: 1.0915 1.094 1.096Scenario 1: long positions above 1.0865 with targets @ 1.0915 & 1.094 in extension.Scenario 2: below 1.0865 look for further downside with 1.0845 & 1.082 as targets.Comment: the RSI is well directed.
Gold
Gold edged higher on Thursday, on the last day of a year which saw the precious metal post its third straight yearly loss, as the start of a rate hike cycle by the Federal Reserve bolstered the dollar and pressured the metal.
For the year the metal was down almost 11%.
A key factor in golds losses in 2015 was the belief that the start of a rate hike cycle by the Fed in conjunction with continuing loose monetary policy from the European Central Bank and the Bank of Japan would continue to underpin investor demand for the greenback.
In the week ahead, investors will be looking ahead to Friday’s U.S. jobs report for December, as well as reports on U.S. manufacturing and service sector activity. Tuesday’s euro zone inflation report will also be in focus.
Pivot: 1063.3Support: 1063.3 1060 1058Resistance: 1074.3 1077 1081.5Scenario 1: long positions above 1063.3 with targets @ 1074.3 & 1077 in extension.Scenario 2: below 1063.3 look for further downside with 1060 & 1058 as targets.Comment: the RSI is well directed.
WTI Oil
Oil prices rose in light trade ahead of the New Year holiday on Thursday, but ended the year sharply lower, as an unprecedented global supply glut continued to weigh on the market.
Crude oil for delivery in February settled at $37.08 a barrel at the close, bringing monthly losses to 11% and yearly losses to 30%. It was the second straight annual loss for the first time since 1998.
Oil prices have been hit by robust U.S. shale output and a decision by the Organization of the Petroleum Exporting Countries not to cut production, leaving members pumping crude at near record levels into an already oversupplied market.
The U.S. has also repealed a 40-year ban on U.S. crude exports to countries outside Canada and markets are bracing for the return of Iranian crude exports after Western sanctions against Tehran are lifted.
Pivot: 37.16Support: 37.16 36.8 36.2Resistance: 38.31 38.87 39.42Scenario 1: long positions above 37.16 with targets @ 38.31 & 38.87 in extension.Scenario 2: below 37.16 look for further downside with 36.8 & 36.2 as targets.Comment: the RSI is mixed to bearish.
Wall Street dropped on Thursday, leaving the S&P 500 marginally lower for a year marked by record highs as well as a major selloff.
Much of the blame for this year's underwhelming stock market performance can be laid at the feet of crude oil prices, which lost a third of their value during an unprecedented global glut. The energy sector fell 24%, its worst annual performance since the global recession.
The S&P 500 hit a record high in May, only to slump 11% over eight days in August, over fears of a China-led global economic slowdown.
On the last trading day of 2015, the S&P 500 fell 0.94%, leaving it with a total loss of 0.71% for the year; while the Dow Jones industrial average lost 2.23% for the year, its first annual decline since 2008; and the Nasdaq Composite gained 5.73%, after surpassing levels not seen since the dot-com bubble in 2000.
This week investors will watch for a potential "January effect," when stocks that were sold in December for year-end tax purposes bounce back.
Pivot: 2081 Support: 2045 2025 2005 Resistance: 2081 2093 2105 Scenario 1: short positions below 2081 with targets @ 2045 & 2025 in extension. Scenario 2: above 2081 look for further upside with 2093 & 2105 as targets. Comment: the RSI is mixed to bearish.