The dollar slipped lower against the euro on Friday, but overall the greenback strengthened broadly in May as stronger U.S. economic data prompted investors to bring forward expectations on the timing of an initial rate hike by the Federal Reserve. Upbeat reports on inflation, new home sales, business investment and consumer confidence during the month all indicated that the economy is gaining momentum after a weak first quarter.
Today China released official data on manufacturing and service sector growth as well as the final reading of the HSBC manufacturing index. Australia produced data on building approvals. Germany is to release preliminary data on consumer prices, and the euro zone is to release final data on manufacturing sector growth. Later in the day, the Institute of Supply Management is to release data on U.S. manufacturing activity.
But the main focus for this week will be on Friday's Non-Farm Payrolls that will be closely watched by investors to gain more information on the status of the American economy.
The euro moved higher against the dollar on Friday, after data showed that the U.S. economy contracted in the first quarter, but continued expectations for a rate hike later this year continued to underpin dollar demand.
The single currency remained under pressure as Athens continued long-running negotiations with its lenders on a cash-for-reforms deal ahead of a €305 million payment to the International Monetary Fund due on June 5. Even if the Greek government expressed confidence on Friday that a deal with creditors is close.
In the week ahead, Friday's U.S. employment report will be closely watched for signs of improvement in the labor market.
But also Tuesday's preliminary data on euro zone consumer prices and Wednesday's European Central Bank monetary policy announcement will be in focus.
Pivot: 1.092
Support: 1.092; 1.086; 1.082
Resistance: 1.1005; 1.106; 1.11
Scenario 1: Long positions above 1.092 with targets @ 1.1005 & 1.106 in extension.
Scenario 2: Below 1.092 look for further downside with 1.086 & 1.082 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold prices remained just in positive territory on Monday in Asia after a slew of data that painted a reasonable regional performance.
The China HSBC Manufacturing PMI for May met expectations at 49.2, a slight tick up from 49.1 in April, with the official CFLP at 50.2, a mild improvement from the previous month but just short of the expected 50.3.
All economic data released in the past week, including reports on inflation, new home sales, business investment and consumer confidence, indicated that the economy is gaining momentum after a slowdown in the first quarter, supporting the case for higher interest rates later this year.
This week investors will focus on all the data released in the U.S. like: manufacturing activity, factory orders, ADP non-farm payrolls report, trade and service sector activity reports, initial jobless claims, and especially on Friday's Non-Farm Payrolls, to gain more information on gold possible trends.
Pivot: 1183.5
Support: 1183.5; 1180; 1178
Resistance: 1198; 1204; 1209
Scenario 1: Long positions above 1183.5 with targets @ 1198 & 1204 in extension.
Scenario 2: Below 1183.5 look for further downside with 1180 & 1178 as targets.
Comment: The RSI is mixed to bullish.
OIL/USD
Crude oil prices held weaker in Asia on Monday as a mostly upbeat set of readings on the regional economy failed to spur investor excitement on demand prospects.
On Friday, the Baker Hughes (NYSE:BHI) announced the loss of 10 more rigs since 15 of May. The price rise was also supported by the conflict in the Middle East.
Energy traders are also waiting for a critical OPEC meeting in Vienna on Friday.
The oil cartel is largely expected to keep production levels steady above 30 million barrels per day, despite ongoing concerns over ample global supplies.
Pivot: 58.95
Support: 58.95; 57.8; 57.35
Resistance: 60.9; 61.4; 61.7
Scenario 1: Long positions above 58.95 with targets @ 60.9 & 61.4 in extension.
Scenario 2: Below 58.95 look for further downside with 57.8 & 57.35 as targets.
Comment: Technically the RSI is above its neutrality area at 50.
DOW/USD
U.S. stocks closed lower on Friday as data showed the economy contracted in the first quarter, but the indexes still posted gains for the month.
Transportation shares also weighed on the market, extending recent losses.
For the week, stocks posted losses, however for the month, the Dow was up 1 percent, the S&P 500 was up 1.1 percent and the NASDAQ gained 2.6 percent.
In the week ahead, Friday's U.S. employment report will be closely watched for signs of improvement in the American economy.
Pivot: 17730
Support: 17730; 17360; 17040
Resistance: 18900; 19230; 19500
Scenario 1: Long positions above 17730 with targets @ 18900 & 19230 in extension.
Scenario 2: Below 17730 look for further downside with 17360 & 17040 as targets.
Comment: The RSI is mixed with a bullish bias.
INTEL
Intel Corp (NASDAQ:INTC) today is expected to announce plans to buy semiconductor chip designer Altera Corp (NASDAQ:ALTR) for about $17 billion, as reported by the Wall Street Journal on Sunday.
The acquisition would continue a wave of semiconductor consolidations as companies seek to boost revenues and profits while defending market share.
The deal follows an earlier round of talks between the two Silicon Valley companies that began March 27 and ended in April.
If the acquisition goes through, it will likely be the biggest in Intel's 47-year history.
By acquiring this technology, Intel can generate more value from its server ventures and the acquisition would also allow Intel to protect its stronghold in the server-system chip business as Altera and rival Xilinx Inc (NASDAQ:XLNX). grow their market share.
