The dollar climbed against most currencies on Monday on renewed optimism among investors that the Federal Reserve would stay on track to raise interest rates this year. A surprise decision by Singapore's central bank not to ease policy gave a boost to emerging currencies in the region and urged investors to some profit-taking on their U.S. dollar positions. In contrast, China's central bank continued to ease its policy by dropping short-term interest rates lower for the fifth time since the Lunar New Year in February. Japan's Nikkei swings around 19,900, managing recently to break just above the 20,000 level. On Wall Street, investors remain worried that a strong dollar would constrain earnings at multinational corporations causing all the main indices to end Monday in negative territory. Eyes are also on U.S. retail sales data due later Tuesday for evidence that spending is picking up after a sluggish start of the year.
The dollar's sharp recovery on Monday pushed the euro to 12 year lows as markets remain optimistic that the Federal Reserve will stay on track to raise interest rates this year. The renewed dollar strength was also helped by earnings season, as many U.S. corporations convert their overseas revenues into dollars, driving up the demand for the U.S currency. Despite the recent pause in the dollar's ascent due to recent disappointing U.S. economic data, growth in other major economies also seems to be slowing down. The dollar maintained its strength before a report on Tuesday forecast to show U.S. retail sales increased by the most in a year, supporting the case for the Federal Reserve to raise interest rates in 2015.
Pivot
1.0635
Support
1.052
1.046
1.04
Resistance
1.0635
1.0685
1.073
Scenario 1: Short positions below 1.0635 with targets @ 1.052 & 1.046 in extension.
Scenario 2: Above 1.0635 look for further upside with 1.0685 & 1.073 as targets.
Comment: As long as the resistance at 1.0635 is not surpassed, the risk of the break below 1.052 remains high.
Recent strength in the dollar continues to cap an increase on gold prices as dollar-denominated commodities become more expensive for foreign purchasers. In addition, the metal received further pressure as Chinese imports for March fell by 12.7%, after declining by 20.5% in February.Gold prices were slightly weaker on Tuesday in early Asia with the focus on upcoming data where analysts expect a rise of 1.1% in Tuesday's U.S. Retail Sales Report, as well as a modest increase in the Producer Price Index, which will also be released on Tuesday.
Pivot
1192.4
Support
1192.4
1185
1180
Resistance
1213.1
1215.8
1224.45
Scenario 1: Long @ 1200.85 with targets @ 1209.5 & 1215.8 in extension.
Scenario 2: Below 1192.4 look for further downside with 1185 & 1180 as targets.
Comment: A support base at 1192.4 has formed and has allowed for a temporary stabilisation.
OIL/USD
Crude oil prices rose after the U.S. Energy Information Administration said it expected U.S. oil production to record its first monthly decline in over four years. The EIA expects U.S. production to fall by 45,000 barrels to 4.98 million barrels per day in May from April adding some support on prices. While elevated geopolitical risks in the market also provide some support to prices, however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise. Oil traders will be focusing on inventory data from the U.S, while manufacturing data from the U.S will also be in focus.
Pivot
51.45
Support
51.45
50
48.2
Resistance
53.1
54.2
55.7
Scenario 1: Long positions above 51.45 with targets @ 53.1 & 54.2 in extension.
Scenario 2: Below 51.45 look for further downside with 50 & 48.2 as targets.
Comment: A support base at 51.45 has formed and has allowed for a temporary stabilisation.
U.S. stocks fell on Monday as fears increased that the strong dollar and lower oil prices will hurt U.S. first-quarter earnings. Nine of the 10 S&P 500 sectors fell, led by a 1.1 percent decline in S&P industrials. Estimates for first-quarter S&P 500 results have fallen sharply since Jan. 1, with earnings for the period expected to have declined 2.9 percent from a year ago, Thomson Reuters data showed.U.S. crude oil prices have posted a small rise on Monday, but their sharp decline since last year has weighed on energy companies' results. Economists are looking ahead to banking earnings this week, with JPMorgan Chase & Co (NYSE:JPM). and Wells Fargo & Company (NYSE:WFC) reporting quarterly results Tuesday, followed by Bank of America Corporation (NYSE:BAC) on Wednesday and Goldman Sachs Group Inc (NYSE:GS). on Thursday.Investors will also be eyeing U.S. retail sales for March, released Tuesday.
Pivot
2039
Support
2039
1972
1904
Resistance
2119
2180
2215
Scenario 1: Long positions above 2039 with targets @ 2119 & 2180 in extension.
Scenario 2: Below 2039 look for further downside with 1972 & 1904 as targets.
Comment: The RSI is above its neutrality area at 50%.
INTEL
Reuters reported last week that discussions on a takeover of Altera by Intel had ended as the companies were unable to agree on price. Several shareholders of chipmaker Altera Corp (NASDAQ:ALTR), including Cadian Capital Management and TIG Advisors, have urged the company to resume talks with Intel Corp (NASDAQ:INTC) but shareholders have raised concerns about the company's ability to create value on its own that matches Intel's offer. Right now Intel stock is close to $32 and is down nearly 13% for the year to date and is the second-worst performing component in the Dow Jones Industrial Average.
