The dollar continues to lose ground against other major currencies on Monday, but still remains supported amid ongoing concerns over the outlook for global growth. Market sentiment was hit amid declining oil prices as hopes faded for a deal between major producers to reduce the excess in supply. Meanwhile, a report showing that euro zone investor confidence deteriorated sharply this month highlighted the problems in the global economy. The Sentix index of investor morale hit a 10-month low in February, dropping from 9.6 to 6.0. Stocks globally have had a rough start to 2016, hurt by weak U.S. growth, falling oil prices, and concerns regarding a China-led slowdown. But the greenback moved higher on Friday boosted by the largely upbeat U.S. employment report for January. In addition, a rise in wage growth to a one year high supported the outlook for inflation and increased the likelihood that the Fed could make further rate hikes in 2016. For today, markets in China will remain closed for the Lunar New Year holiday, Australia is to release private sector data on business confidence and the U.S. is to produce a report on the trade balance.
EUR/USD rose considerably on Monday, extending sharp gains from last week as bond yields in the euro zone fell deeper into negative territory amid continued declines in oil prices and a major sell-off in financial stocks on both continents. Since dropping nearly 1% on the final session of January, the euro has surged more than 3.25% versus the dollar over the first two weeks of the month. A number of stocks among prominent European financial firms, including Deutschebank, Commerzbank (DE:CBKG), HSBC and BNB Paribas, plummeted between 3 and 7% on Monday, amid mounting fears on the impact of negative interest rates and persistently low oil prices, several days after rising more than 8% last Wednesday on hopes of a dramatic reduction in OPEC crude oil production. In Europe, the sell-off in bank stocks dragged down the major indices, as the Stoxx Europe 600, France CAC 40 and Germany Dax all fell by more than 3% on Monday. For today, investors will be focusing on U.S. trade balance data for further indications on the strength of the U.S. economy.
Pivot: 1.115Support: 1.115 1.112 1.108Resistance: 1.124 1.131 1.14Scenario 1: long positions above 1.1150 with targets @ 1.1240 & 1.1310 in extension.Scenario 2: below 1.1150 look for further downside with 1.1120 & 1.1080 as targets.Comment: technically the RSI is above its neutrality area at 50.
Gold
Gold surged by more than 3% at session-highs on Monday, rising to its highest level since June, as investors piled into the safe-haven asset amid a continuing drop in major banking stocks throughout the world. Last month, JPMorgan Chase & Co (N:JPM), Citigroup Inc (N:C), and Wells Fargo (N:WFC) & Company all warned that they could incur credit losses in the range of hundreds of millions in oil and gas loans later this year if oil prices continued to weaken. On Monday, the People's Bank of China reported that its foreign currency reserves declined by $99.5 billion in January, falling to the lowest level since 2012 adding further support on the price of gold. Last month, the total amount of Chinese foreign reserves fell for a third consecutive month, as the PBOC continues to unload large amounts of the dollar in an effort to support the yuan. For today, investors will be focusing on U.S. trade balance data for further indications on the strength of the U.S. economy.
Pivot: 1127Support: 1127 1088 1046Resistance: 1225 1246 1273Scenario 1: long positions above 1127.00 with targets @ 1225.00 & 1246.00 in extension.Scenario 2: below 1127.00 look for further downside with 1088.00 & 1046.00 as targets.Comment: the RSI is well directed.
WTI Oil
U.S. crude oil prices slipped back below $30 a barrel on Monday, after a meeting between oil ministers from Saudi Arabia and Venezuela over the weekend reportedly accomplished little headway toward reaching an agreement that could reduce near-record high production by OPEC.
WTI crude oil prices crashed nearly 20% since the start of the new year. A meeting between Venezuela oil minister Eulogio Del Pino and Saudi Arabia counterpart Ali al-Naimi on Sunday concluded with very few indications that the OPEC members have moved closer to setting a date for an emergency summit, which could result in significant production cuts. Investors also digested comments from Iran oil minister Bijan Zangeneh that the National Iranian Oil Company (NIOC) is close to finalizing a deal with France's Total to sell 160,000 barrels per day. For today, the focus remains on the API inventory data.
Pivot: 30.72Support: 31.9 31.35 30.72Resistance: 29.2 28.5 27.85Scenario 1: short positions below 30.72 with targets @ 29.20 & 28.50 in extension.Scenario 2: above 30.72 look for further upside with 31.35 & 31.90 as targets.Comment: the RSI lacks upward momentum.
U.S. stocks fell sharply on Monday, extending losses from late last week as a major sell-off on European markets spilled across the Atlantic amid persisting concerns related to dropping energy prices and the talk of negative interest rates among the world's largest central banks. At the same time, U.S. crude oil prices tumbled below $30 a barrel at Monday's close, placing further pressure on major banks who warned that they could incur credit losses of hundreds of millions in oil and gas loans later this year if oil prices continued to weaken. The Dow Jones Industrial Average fell by 1.10% while the NASDAQ and the S&P 500 also fell to their lowest intraday levels since 2014, while suffering one of their worst two-day declines since the August. The S&P 500 Composite index, meanwhile, dipped 26.61 or 1.42% to 1,853.44, as all 10 sectors closed in the red. Stocks in the Financials, Basic Materials and Technology sectors lagged, each falling by more than 1.5% on the session. For today, investors will be focusing on U.S. trade balance data.
Pivot: 1950 Support: 1821 1738 1650 Resistance: 1950 2010 2080 Scenario 1: short positions below 1950.00 with targets @ 1821.00 & 1738.00 in extension. Scenario 2: above 1950.00 look for further upside with 2010.00 & 2080.00 as targets. Comment: the RSI is capped by a declining trend line.