After a brief pause on Friday, the US Dollar continued to gain against other major currencies, with the US Dollar Index (USDX) pushing further above the 95 level.
WTI oil closed lower on Friday over concerns about an extensive trade standoff between the US and China, while the Baker Hughes Oil Rig Count was reported lower by two oil rigs. Gold managed to push back moderately higher, despite the CFTC reporting in its COT data, that speculative net long positions in gold futures further declined to 35.3 thousand (previous 48.6 thousand).
US equity indices managed to close higher in spite of disappoint economic data, with the ISM Non-Manufacturing Index reported at 55.7 (expected 58.8) for July and the Trade Balance deficit level higher at $46.3 bn. (expected $45.6 bn.).
Bitcoin and other cryptocurrencies sharply extended their losses on Saturday, with Bitcoin falling below the $7,000 level for the first time in more than two weeks. Other cryptocurrencies such as Ethereum and Ripple also traded lower, however only by a smaller margin, given that they did not experience such a strong growth as Bitcoin in recent weeks. Traders were relieved to hear that the biggest cryptocurrency exchange in South Korea – Upbit – was confirmed to have a sound balance sheet, as there were speculations of a manipulation.
On Monday Germany releases Manufacturers’ Orders data, followed by the Retail Sales PMI for the EU. Then in the Asian-Pacific trading session on Tuesday, the Reserve Bank of Australia (RBA) is due to announce its interest rate decision, which a majority of analysts expect to stay unchanged at 1.5%. In Japan Household Spending data will be released.
EUR/USDThe EUR/USD continued facing pressure amid a strong Dollar, falling towards a new one month low. The Dollar continued its strong performance in the wake of disappointing economic data from the US on Friday, such as the Non-Farm Payrolls at 157 thousand (expected 190 thousand) and fears of an escalating trade war with China, as the Chinese side vowed retaliatory measures, should Washington go through with its latest tariff proposals.
However European data also lagged behind expectations with EU wide Retail Sales only at +0.3% m/m (expected +0.4%) for June and Italy reporting stagnation in its Retails Sales statistics with -0.2% m/m (expected +0.1%).
This week in the US on Tuesday the Redbook Store Sales and Consumer Credit statistics will be released. Later on Thursday Jobless New Claims come out and on Friday the Consumer Price Index (CPI) and Treasury Budget level will be released.
Pivot: 1.158 Support: 1.154 1.151 1.148Resistance: 1.158 1.16 1.163 Scenario 1: short @ 1.1558 with targets @ 1.1540 & 1.1510 in extension. Scenario 2: above 1.1580 look for further upside with 1.1600 & 1.1630 as targets. Comment: the RSI shows downside momentum.
Oil settled lower on Friday, thus also ending the week at a loss. Even the lower Baker Hughes Oil Rig Count at now 859 operating oil rigs (previously 861) was unable to stop the downwards movement. One of the key reasons given by analysts for this move, were increased fear of a further trade escalation by the US, which could lead to lower economic growth and thus also demand for oil.
Oil prices somewhat stabilized early on Monday over reports that Saudi Arabia pumped 200 thousand barrels per day less in July than in the previous month. Saudi Arabia currently faces problems exporting oil through the red sea, following attacks on its oil tankers by Yemen based Houthi rebels.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot: 68.25 Support: 68.25 67.85 67.4Resistance: 69.23 69.9 70.4 Scenario 1: long positions above 68.25 with targets at 69.23 & 69.90 in extension. Scenario 2: below 68.25 look for further downside with 67.85 & 67.40 as targets. Comment: the RSI is mixed to bullish. The prices are trading above the 20-period and 50-period moving averages.
While the DAX (Germany 30) managed to close higher after two straight days of losses, it was again under pressure on Monday after Manufacturers’ Orders for June were reported sharply lower at -4.0% (-0.4%). German car manufacturers such as Volkswagen (DE:VOWG_p) are reported to be facing delays delivering their vehicles over the delay certifying their cars according to the new Worldwide Harmonized Light Vehicles Test Procedure standard for emissions.
Industrial gas company Linde opened sharply lower after reports that its merger with Praxair (NYSE:PX) could be threatened by the position of the US antitrust authority, as the FTC is putting forward additional demands to authorize the merger.
On Tuesday in Germany data on Industrial Production and Merchandise Trade is due. On Tuesday the Commerzbank (DE:CBKG) and Deutsche Post (DE:DPWGn) are due to release their quarterly earnings. The Munich Re and E.ON will release earnings on Wednesday.
Pivot: 12550 Support: 12550 12485 12415Resistance: 12641 12730 12770 Scenario 1: long positions above 12550.00 with targets at 12641.00 & 12730.00 in extension. Scenario 2: below 12550.00 look for further downside with 12485.00 & 12415.00 as targets. Comment: the RSI is mixed.
Despite disappointing economic data, US equity indices closed higher on Friday, with the exception of the small-cap index Russell 2000 (US 2000). Especially utilities (US Utilities ETF +1.08%) and non-cyclical (US Non-Cyclicals ETF +1.14%) stocks closed overall higher, while biotech (US Biotech ETF -0.96%) values were some of the worst performers of the day.
Fintech payment company Square (NYSE:SQ) (-6.14%) lost a significant part of its post-earnings gains on Friday. Investors were earlier happy to see the company beat the earnings estimates due to higher transaction volumes.
Kraft Heinz (+8.51%) was one of the best performing stocks on Friday, after Q2 financial results showed higher profits than expected, despite lower sales. The company is still considering mergers and some analysts speculate that it could be in talks with Campbell Soup Co.
Many blue-chip companies already reported their quarterly earnings, however next week still companies such as Snap, CVS and Marriot are due to release their quarterly earnings.
Pivot: 2828.25 Support: 2828.25 2822 2816.75 Resistance: 2853.75 2864.5 2871.25 Scenario 1: long positions above 2828.25 with targets at 2853.75 & 2864.50 in extension. Scenario 2: below 2828.25 look for further downside with 2822.00 & 2816.75 as targets. Comment: the RSI advocates for further advance. The rising 20-period moving average should push the prices higher.