The dollar rose to fresh seven-month highs against the other major currencies on Tuesday, as growing expectations for a December rate hike by the Federal Reserve continued to support demand for the greenback.
Today the U.K. is to publish the monthly employment report; meanwhile, Bank of England Governor Mark Carney is to hold a press conference about the quarterly inflation report; while later in the day, European Central Bank President Mario Draghi is to speak at an event in London.
But investors will be mainly looking ahead to Friday’s U.S. data on retail sales, producer prices and consumer sentiment, for fresh indications on the likelihood of a December rate hike; as well as on Friday’s preliminary data on economic growth in the euro area.
The euro fell to fresh six-month lows against the dollar on Tuesday, as the diverging monetary policy stance between the Federal Reserve and the European Central Bank pressured the single currency lower.
The single currency weakened after Reuters reported on Monday that the ECB could cut its deposit rate deeper into negative territory at its December meeting. The ECB lowered its deposit rate to minus 0.2% in September 2014. In October ECB President Mario Draghi indicated that the bank could enlarge its monetary stimulus program next month, to combat persistently low levels of inflation in the single currency bloc.
The euro dropped at 1.07 for the first time since late-April, as currency traders awaited comments from several influential policymakers on the Federal Reserve later in the week, for further indications on whether the U.S. central bank could raise short-term interest rates next month.
Pivot: 1.079Support: 1.0705 1.067 1.0625Resistance: 1.079 1.083 1.086Scenario 1: Short positions below 1.079 with targets @ 1.0705 & 1.067 in extension.Scenario 2: Above 1.079 look for further upside with 1.083 & 1.086 as targets.Comment: The upward potential is likely to be limited by the resistance at 1.079.
Gold
Gold prices remained under pressure on Tuesday, as market players prepared for a hike in interest rates by the Federal Reserve next month.
The precious metal has been pushed lower also by the latest inflation figures out of China, which added to concerns over the health of the world's second-biggest economy. The disappointing reports reinforced the view that the economy remains in the midst of a gradual slowdown, which will require policymakers in Beijing to roll out more measures to boost growth in coming months.
Gold prices trended flat also in early Asia on Wednesday, in a light data day, ahead of more data released from China, for any further monetary easing on soft consumer prices.
China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
Pivot: 1096Support: 1085 1079 1072Resistance: 1096 1103 1111Scenario 1: Short positions below 1096 with targets @ 1085 & 1079 in extension.Scenario 2: Above 1096 look for further upside with 1103 & 1111 as targets.Comment: As long as 1096 is resistance, look for choppy price action with a bearish bias.
WTI Oil
Oil prices were steady on Tuesday and closed slightly higher, after the International Energy Agency noted unprecedented declines in investment, and warned on the possible ramifications of severe investment cutbacks in the industry.
The International Energy Agency said oil was unlikely to return to $80 a barrel before the end of the decade, despite unprecedented declines in investment, as annual demand growth struggles to top 1 million barrels per day. In its World Energy Outlook, the IEA also estimated that investment in oil would decline more than 20% this year and the trend would continue into 2016.
Until now oil majors have canceled 80 projects across the world this year because of low oil prices and cut capital spending by as much as $22 billion.
But WTI prices fell again in Asia on Wednesday, as U.S industry estimates showed another sharp build in stockpiles.
Now investors are looking ahead to Thursday’s OPEC monthly assessment of oil markets, as well as the weekly government report on crude oil inventories; and Friday’s EIA monthly report on global oil supply and demand.
Pivot: 61.5Support: 33 25 20Resistance: 61.5 70 77Scenario 1: Short positions below 61.5 with targets @ 33 & 25 in extension.Scenario 2: Above 61.5 look for further upside with 70 & 77 as targets.Comment: As long as 61.5 is resistance, likely decline to 33. The 20-week and 50-week moving averages are declining and act as resistance roles. The RSI is capped by a descending trend line (since 2011).
U.S. stocks were mixed on Tuesday, on a volatile day of trading, as a sell-off in Apple (O:AAPL), driven by weak supply chain orders, weighed on all three of the major indices and as investors worried about China's economic health and braced for an interest rate hike by the Federal Reserve next month.
Apple's shares fell more than 3% after Credit Suisse (VX:CSGN) said the iPhone maker had lowered component orders by as much as 10%. The stock was the biggest drag on the three major indexes. The report on Apple added to fears of a slowdown in global growth, especially in China, a key market for many U.S. companies including Apple, ahead of the crucial holiday shopping season.
Furthermore China's October inflation data on Tuesday showed persisting, if not intensifying, deflationary pressure.
The Dow Jones Industrial Average and the S&P 500 closed the day slightly up, erasing some of their losses from the previous session, while the NASDAQ index fell slightly, to continue its retreat from near-record highs.
Pivot: 1990 Support: 2116 2135 2180 Resistance: 1990 1900 1867 Scenario 1: Long positions above 1990 with targets @ 2116 & 2135 in extension. Scenario 2: Below 1990 look for further downside with 1900 & 1867 as targets. Comment: The RSI is mixed and calls for caution.