The dollar continues to gain on Monday, still supported by Friday’s positive U.S. data on industrial output which increased at the fastest rate in eight months creating a positive outlook for third quarter growth. The dollar received some pressure on Monday by a weak reading of U.S. manufacturing activity in New York. The greenback showed little reaction after the report showed that manufacturing activity in the New York region fell to its lowest level since November 2009 as new orders fell sharply. In addition, concerns over the recent devaluation of the yuan start to ease as China's central bank on Monday set the midpoint rate slightly higher than at Friday’s close. The Australian dollar fell to six-year lows last week after the yuan depreciation and recovered slightly after China's central bank said there was no basis for further depreciation in the currency. The canadian dollar also remains under pressure as oil prices declined to yearly lows on Monday. The main U.S. indices received some strong support as stocks of high-momentum players such as Apple, Tesla, Disney, Netflix (NASDAQ:NFLX) and McDonalds moved higher. For today, the U.K. is to release data on consumer price inflation while the U.S. is to release data on building permits and housing starts.
The dollar received some strong pressures on Monday, Empire State Manufacturing Index fell to its lowest level in more than six years. In its monthly survey of manufacturers, the New York Fed said on Monday that its index for August fell to negative 14.92, far below analysts' forecasts for a reading of 3.00 to 6.00. However, the dollar rallied later on pushing the EUR/USD pair back into negative territory as the People’s Bank of China set the midpoint rate 0.1% higher against the dollar confirming its’ previous statement that there is no basis for further depreciation in the chinese currency. For today, the U.S. is to release data on building permits and housing starts while investors await for Wednesday’s minutes of the Fed July meeting for any hints on a possible rate hike by the Federal Reserve in September.
Pivot: 1.1125Support: 1.103 1.1098 1.094Resistance: 1.1125 1.1165 1.119Scenario 1: Short positions below 1.1125 with targets @ 1.103 & 1.098 in extension.Scenario 2: Above 1.1125 look for further upside with 1.1165 & 1.119 as targets.Comment: The RSI is badly directed.
Oil
Crude oil prices ended in negative once again on Monday, closing in on Thursday’s low, as commodity traders continue to worry about record levels of production and weak global demand. Analysts at Morgan Stanley (NYSE:MS) warned in a weekly report that they have concerns over the price of crude oil in the second half of 2015 as driving season demand begins to fade. West Texas Intermediate crude oil closed 1.5% lower at $41.87 a barrel. For this week, oil traders will be focusing on further economic releases indicating the status of the Chinese economy, one of the biggest buyers of the fuel, as well as the industrial inventory data on Tuesday from the API and the more closely watched government data from the EIA on Wednesday.
Pivot: 43Support: 41.33 40.9 40.4Resistance: 43 43.85 44.4Scenario 1: Short positions below 43 with targets @ 41.33 & 40.9 in extension.Scenario 2: Above 43 look for further upside with 43.85 & 44.4 as targets.Comment: As long as 43 is resistance, likely decline to 41.33.
Monday's action was driven primarily by individual stock moves as high-momentum players such as Apple, Tesla, Disney, Netflix and McDonalds pushed markets higher. The S&P rose by almost 0.5% as Apple shares (NASDAQ:AAPL) rose by 1% following reports that the company is working on a self-driving car. The company is reportedly seeking test centers in San Francisco as it works on what has been called "Project Titan," according to The Guardian. Tesla added more than 4% after Morgan Stanley boosted its price target by 66% to $465. Disney was also giving a boost to the main stock indices after Chairman Bob Iger confirmed the creation of two Star Wars theme parks. For today, the focus will be shifted towards earnings reports from two major retailers, Walmart (NYSE:WMT) and Home Depot (NYSE:HD), while a report on building permits and housing starts is also due later in the day. In the week ahead, investors will be awaiting the minutes of the Fed’s July meeting for any indications on its plans to hike interest rates for the first time since 2006.
Pivot: 2135 Support: 2038 2006 1972 Resistance: 2135 2180 2215 Scenario 1: Short positions below 2135 with targets @ 2038 & 2006 in extension. Scenario 2: Above 2135 look for further upside with 2180 & 2215 as targets. Comment: As long as 2135 is resistance, likely decline to 2038.