The dollar extended losses against the other major currencies on Thursday, as Federal Reserve Chair Janet Yellen reaffirmed comments made on Wednesday, sparking uncertainty over the timing of future rate hikes.
Yellen repeated to the Senate Banking Committee on Thursday that the U.S. economy is recovering while acknowledging that a weakened global economy and drop in U.S. equity markets is tightening financial conditions faster than the Fed wants. In testimony before a congressional committee on Wednesday, Yellen said there are good reasons to believe the U.S. will stay on a path of moderate growth that will allow the Fed to pursue "gradual" adjustments to monetary policy.
The dollar had mildly strengthened earlier, after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending February 6 decreased by 16,000 to 269,000 from the previous week’s total of 285,000. Analysts expected jobless claims to fall by 4,000 to 281,000 last week.
Today markets in China will still be closed for the Lunar New Year holiday; the euro zone is to publish preliminary data on fourth quarter economic growth and the U.S. is to round up the week with data on retail sales and consumer sentiment.
The euro rose modestly to close above 1.13 for the first time in 2016, as investors digested further indications of potential divergence between the Federal Reserve and the European Central Bank, as banking stocks in the euro zone continued to suffer one of their worst weeks since the Financial Crisis.
The currency pair traded in a broad range between 1.1274 and 1.1376 before settling up 0.35% on the session.
In Europe a host of major banking stocks fell precipitously, extending heavy losses from earlier in the week, after Sweden's Central Bank unexpectedly lowered its repo rate deeper into negative territory on Thursday. The move exacerbates concerns that other central banks in the euro zone could follow suit, amid low employment, weak economic growth and stubbornly low inflation. More broadly, numerous indices throughout Europe closed down between 2 and 3%, while the Euro Stoxx 50 fell to its lowest since late 2013.
Today investors will be looking to U.S. retail sales data, for further indications on the strength of the world’s largest economy, and to the euro zone fourth quarter growth preliminary report, amid heightened expectations for more easing by the European Central Bank in the coming months.
Pivot: 1.1265Support: 1.1265 1.122 1.116Resistance: 1.1375 1.14 1.146Scenario 1: long positions above 1.1265 with targets @ 1.1375 & 1.1400 in extension.Scenario 2: below 1.1265 look for further downside with 1.1220 & 1.1160 as targets.Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold
Gold skyrocketed more than $60 an ounce at session highs on Thursday, surging to its highest level in more than a year, as sharp declines in European banking stocks sent tremors through global markets, pushing investors to seek shelter in the safe-haven asset.
Gold for April delivery wavered between $1,196.40 and $1,259.90 an ounce, before closing up 4.50% on the session. With the massive gains, gold posted its strongest one-day gains since December 1, 2014 when it soared nearly 7% to eclipse $1,220.
The precious metal is now up by approximately 18% on the quarter and is on pace for its strongest three-month period in 30 years.
Today investors will be looking to U.S. retail sales data, for further indications on the strength of the world’s largest economy.
Pivot: 1170Support: 1170 1142 1088Resistance: 1278 1300 1345Scenario 1: long positions above 1170 with targets @ 1278 & 1300 in extension.Scenario 2: below 1170 look for further downside with 1142 & 1088 as targets.Comment: the RSI is supported by a bullish trend line.
WTI Oil
U.S. crude futures fell sharply to fresh 12-year lows on Thursday, amid a bearish monthly supply report from OPEC and further indications that a deal between Russia and the world's largest oil cartel on potential cuts in production will not materialize.
WTI crude for March delivery traded between $26.12 and $27.48 a barrel, before settling down 4.54% on the day. The front month contract for U.S. crude has closed lower in six straight sessions and eight of the last nine.
U.S. crude fell deeply, as investors reacted to significant increases in OPEC production last month. In January, the 13-member cartel ramped up production by 131,000 bpd to 32.33 million bpd, bolstered by increases from Saudi Arabia, Iraq, Iran and Nigeria.
Saudi Arabia, the world's top exporter, rose output by 44,000 bpd in January to 10.091 bpd, near all-time record highs. In addition, the cartel upwardly revised Non-OPEC supply for 2015 by 90,000 barrels per day to 1.32 million bpd, driven by higher than expected fourth-quarter data. Furthermore the Paris-based International Energy Agency estimated that supply will outstrip demand by an average of 1.75 million bpd in 2016, slightly above forecasts of 1.5 million bpd last month.
Pivot: 43Support: 25 20 16.5Resistance: 43 51 61.5Scenario 1: short positions below 43 with targets @ 25 & 20 in extension.Scenario 2: above 43 look for further upside with 51 & 61.50 as targets.Comment: the RSI is capped by a bearish trend line. Crude oil is under pressure below its declining 20-week and 50-week moving averages, which act as resistance roles. The weekly RSI is capped by a descending trend line (since 2011). Below 43, look for a further d
U.S. stocks closed in red on Thursday infact, even if they staged a late rally, amid reports that OPEC members could consider slashing record high crude production as a way of rescuing plunging oil prices, they were unable to erase earlier losses triggered by continuing weakness in the financial sector.
For the day the Dow Jones Industrial Average lost 1.62%, while the NASDAQ Composite index inched down 0.39%, as investors digested a flurry of market-moving comments throughout the day, and the S&P 500, meanwhile, fell 1.24%, as nine of 10 sectors closed in the red.
Stocks in the Financials, Basic Materials and Industrials sectors lagged, each falling by more than 1.75%. Stocks in the Consumer Services industry led.
Today investors will be looking to U.S. retail sales data, for further indications on the strength of the world’s largest economy.
Pivot: 1950 Support: 1738 1650 1580 Resistance: 1950 2010 2080 Scenario 1: short positions below 1950 with targets @ 1738 & 1650 in extension. Scenario 2: above 1950 look for further upside with 2010 & 2080 as targets. Comment: the RSI is capped by a declining trend line.