The dollar remained at seven-month highs against the other major currencies on Tuesday, after upbeat U.S. inflation data added to hopes that the Federal Reserve will raise interest rates at its meeting next month.
The U.S. Commerce Department reported that consumer prices increased by 0.2% last month, matching forecasts and following a fall of 0.2% in September. Year-over-year, consumer prices were 0.2% higher from the same month a year earlier, compared to expectations for a 0.1% increase.
Also core consumer prices, which exclude food and energy costs, increased by 0.2%, meeting expectations. While a separate report showed that that U.S. industrial production fell 0.2% last month, disappointing expectations for a gain of 0.1%.
Today Atlanta Fed President Dennis Lockhart is to speak at an event in New York; the U.S. is to release data on building permits and housing starts; and later in the day, the Fed is to publish the minutes of its latest policy setting meeting, that will be closely watched by investors for fresh indications on the prospects of a December rate hike.
On Tuesday the euro fell steadily remaining near seven-month lows, as optimistic U.S. inflation data augmented hawkish arguments for an interest rate hike by the Federal Open Market Committee, when it meets again next month.
Markets shrugged off a report by the ZEW Centre for Economic Research showing that its index of German economic sentiment rose by 8.5 points to 10.4 this month from October’s reading of 1.9, which was a 12-month low. Analysts had expected the index to rise by 4.1 points to 6.0 in November.
Investors focus will now be on today FOMC minutes, tomorrow ECB minutes and mainly on Friday’ speech from Mario Draghi at an event in Frankfurt, to gain more information on the next possible Central Banks policy decisions.
Pivot: 1.069Support: 1.0625 1.06 1.056Resistance: 1.069 1.0725 1.077Scenario 1: Short positions below 1.069 with targets @ 1.0625 & 1.06 in extension.Scenario 2: Above 1.069 look for further upside with 1.0725 & 1.077 as targets.Comment: The RSI lacks upward momentum.
Gold
Gold fell sharply on Tuesday to fresh five-year lows, as investors continued to brush off geopolitical concerns stemming from last week's terrorist attacks in Paris, dampening the precious metal's value as a safe haven asset.
Furthermore throughout the month of November, gold has been in freefall as investors continue to prepare for the increasing likelihood that the Federal Reserve will raise short-term interest rates when it meets again next month. Over the last month of trading, gold has plunged nearly 10%, falling to levels previously not seen since February, 2010.
Gold prices slipped also in Asia on Wednesday, as investors wound down risk positions and looked ahead to tonight Federal Reserve minutes.
Pivot: 1076Support: 1064 1059 1055Resistance: 1076 1082 1087Scenario 1: Short positions below 1076 with targets @ 1064 & 1059 in extension.Scenario 2: Above 1076 look for further upside with 1082 & 1087 as targets.Comment: As long as 1076 is resistance, likely decline to 1064.
WTI Oil
WTI fell sharply on Tuesday, erasing most of their gains from the previous session, as energy traders shifted their focus away from the Paris terrorist attacks back to longstanding concerns related to the supply glut on global energy markets.
But the Syrian bombing campaign continued on Tuesday, as Russia bombarded Raqqa with sea-launched cruise missiles.
Overnight, the U.S. also intensified its assault against the Islamic State, striking more than 100 tanker trucks used to transfer ISIS oil. In addition, France president Francois Hollande announced plans to travel to Moscow and Washington, in an effort to build a coalition against ISIS.
But crude prices rebounded in Asia on Wednesday, as industry data showed a drop in U.S. stockpiles last week. Infact the American Petroleum Institute said crude stocks last week fell by 482,000 barrels, the first drop in weeks.
Today’s focus will be on the government report, which could show an inventory build of 1.6 million barrels for the week ending on November 13. Last week, U.S. supply levels increased for the seventh straight week, pushing crude inventories high.
Pivot: 42.25Support: 40 39.2 38.3Resistance: 42.25 43.3 44.12Scenario 1: Short positions below 42.25 with targets @ 40 & 39.2 in extension.Scenario 2: Above 42.25 look for further upside with 43.3 & 44.12 as targets.Comment: As long as 42.25 is resistance, likely decline to 40.
U.S. stocks forfeited gains on Tuesday after the soccer match between Germany and the Netherlands was called off over fears of a bombing.
All three major U.S. indexes had ventured into positive territory following upbeat earnings reports from Wal-Mart (N:WMT) and Home Depot (N:HD), but they quickly relinquished those gains after the friendly match was canceled less than two hours before its start, due to indications of a planned attack with explosives at the stadium in Hanover.
That added to apprehension following last week's attacks in Paris that killed 129 people.
The Dow Jones industrial average ended up 0.04% at 17,489.5; the S&P 500 lost 0.13% to 2,050.44; while the Nasdaq Composite added 0.03% to finish at 4,986.02.
Data on Tuesday offered a mixed view of the health of the U.S. economy: consumer prices increased in October, after two straight months of declines, while industrial production fell. The modest rise in inflation could bolster chances of the Federal Reserve raising interest rates next month, but weak industrial output raised concerns about the robustness of fourth quarter economic growth.
Pivot: 2041 Support: 2041 2034 2022 Resistance: 2067 2075 2087 Scenario 1: Long positions above 2041 with targets @ 2067 & 2075 in extension. Scenario 2: Below 2041 look for further downside with 2034 & 2022 as targets. Comment: The RSI is badly directed.