The dollar held steady against the other major currencies on Tuesday, even after the release of strong U.S. consumer confidence data as investors remained cautious ahead of the Federal Reserve’s policy statement on Wednesday for further signals on the U.S. central bank's course over the next 18 months, as it enters on its first tightening cycle in more than a decade. The interest rate decision will be the FOMC's first since it voted unanimously to abandon a seven-year Zero Interest Rate Policy at a historic meeting in December. The Conference Board said its index of consumer confidence rose to 98.1 this month from a reading of 96.3 in December, whose figure was revised from a previously reported 96.5. Analysts expected the index to rise to 96.5 in January. The Fed is expected to keep interest rates unchanged in the upcoming meeting on Wednesday. Also in Australia, CPI showed a 0.4% rise quarter-on-quarter, above the 0.3% gain seen, and rose 1.7% year-on-year, also above the 1.6% expected. The yuan holds steady early on Wednesday after the People's Bank of China set a stronger fixing for a fourth consecutive session to helped stabilise the market. For today, the Fed is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. Later in the trading day, the Reserve Bank of New Zealand is to announce trade data and its latest monetary policy decision.
EUR/USDThe euro gained slightly against the dollar on Tuesday extending gains from the previous session, despite the fact that U.S. consumer confidence data came out better than expected, ahead of the Federal Reserve's first interest rate decision on Wednesday afternoon since the U.S. central bank abandoned a seven-year zero interest rate policy at a historic meeting last month. The pair traded in a tight range between 1.079 and 1.0875, before settling 0.17% higher and after hitting a two-week low at 1.0797 late last week. No change is expected in monetary policy in upcoming FOMC meeting, as a wave of weak economic data in China and sluggish inflation forecasts might compel the Fed to slow its pace of tightening. In its latest median projections, the FOMC anticipates that the Fed Funds Rate will reach 1.4% by the end of 2016, before approaching 2.5% by the completion of 2017.
Pivot: 1.082Support: 1.082 1.08 1.0785Resistance: 1.0895 1.092 1.094Scenario 1: long positions above 1.082 with targets @ 1.0895 & 1.092 in extension.Scenario 2: below 1.082 look for further downside with 1.08 & 1.0785 as targets.Comment: the RSI is well directed.
Gold extended its sharp gains from the previous session on Tuesday surging to three-month highs, as equities in China plunged to their lowest level in more than a year renewing concerns on a potential global recession. Continued declines in oil weighed on Chinese stocks, as the Shanghai Composite index plummeted more than 6% to 2,749.79, its lowest level since December, 2014. Investors continued to digest bearish comments from billionaire investor George Soros on further weakness in China after the world's second-largest economy reported its slowest pace of economic growth last year in a quarter century. Investors await the completion of the Federal Open Market Committee's two-day January meeting on Wednesday for further signals on the U.S. central bank's path over the next 18 months, as it embarks on its first tightening cycle in more than a decade.
Pivot: 1114Support: 1114 1109.5 1104.5Resistance: 1124.75 1128 1130.5Scenario 1: long positions above 1114 with targets @ 1124.75 & 1128 in extension.Scenario 2: below 1114 look for further downside with 1109.5 & 1104.5 as targets.Comment: the RSI is mixed to bullish.
Crude oil prices surged nearly 4% on Tuesday reversing losses from the overnight session, as Kuwait's OPEC governor hinted that the world's largest oil cartel could be willing to slash production to curtail a persistent downturn in prices. Speaking at an energy forum in Kuwait, Al-Farzaia indicated that OPEC could be open to lowering its production if its rivals outside the cartel follow. While OPEC production tumbled by 211,000 bpd in December, amid declines from Saudi Arabia, Kuwait and Iraq, its production hovered near record-highs, remaining above 32 million barrels per day for the third consecutive month. On Wednesday, crude oil prices reverse their course after the American Petroleum Institute's weekly crude stockpile report showed an 11.4 million barrels build, well above the 3.5 million barrels seen. Separately, Wednesday's report from the U.S. Department of Energy could show that domestic crude inventories rose by 3.5 million barrels for the week ending on January 22.
Pivot: 29.95Support: 29.95 29.25 28.46Resistance: 32.4 32.75 33.3Scenario 1: long positions above 29.95 with targets @ 32.4 & 32.75 in extension.Scenario 2: below 29.95 look for further downside with 29.25 & 28.46 as targets.Comment: the RSI is mixed to bullish.
U.S. stocks were higher after the close on Tuesday, as gains in the Oil & Gas, Telecoms and Basic Materials sectors led shares higher. At the close in NYSE, the Dow Jones Industrial Average rose 1.78%, while the S&P 500 index gained 1.41%, and the NASDAQ Composite index added 1.09%. The top performers on the S&P 500 were Williams Companies Inc (N:WMB) which rose 11.52%, Range Resources Corporation (N:RRC) which was up 9.96% and Coach Inc which gained 9.82%. The worst performers were Huntington Bancshares Incorporated (O:HBAN) which was down 8.52%, Waters Corporation (N:WAT) which lost 3.97% and Harley-Davidson Inc (N:HOG) which was down 3.84%. The central bank was on investors' minds as members convened on Tuesday morning for a two-day Federal Open Market Committee meeting. While no change in policy is expected at this meeting, a statement to be released on Wednesday afternoon will be closely analyzed for clues as to the pace of future rate hikes.
Pivot: 1950 Support: 1821 1738 1650 Resistance: 1950 2010 2080 Scenario 1: short positions below 1950 with targets @ 1821 & 1738 in extension. Scenario 2: above 1950 look for further upside with 2010 & 2080 as targets. Comment: the RSI is mixed to bearish.