The dollar was roughly unchanged against a basket of global currencies on Thursday, as the flight to safety haven trades continued in the wake of rising geopolitical friction between the U.S. and North Korea while weak inflation data added to downside movement.
The producer price index fell by 0.1% in July, the Labor Department announced on Thursday - the first drop since last August. The core rate, which excludes volatile categories of food, energy and trade, was unchanged in the month.
Initial claims for state unemployment benefits in the U.S. increased by 3,000 to a seasonally adjusted 244,000 for the week ended August 5, the Labor Department announced on Thursday.
Oil prices were down as an OPEC report fueled fears that OPEC and its allies may not be able to fight the excess in supplies by only curbing production, offsetting optimism from the prior session, when crude prices snapped a two-day losing streak, following bullish U.S. inventory data.
The situation with North Korea will be carefully watched by investors as to measure its impact on global economic stability. Inflation figures from Euro countries and the U.S. released today could be interesting for understanding future central banks’ decisions.
EUR/USDThe dollar lost some of its gains of the previous days in the Thursday trading session against the other major currencies, as the release of disappointing U.S. producer price data and jobless claims reports that initial jobless claims increased unexpectedly rose in the week ending August 5.
The reports came after a series of positive U.S. employment reports had fueled expectations the Federal Reserve will stick to its plans for a 3rd interest rate hike this year. The Euro received mixed impulses with a negative industrial production figure of -1.1% in France while the merchandise trade statistic in Italy showed improvement.
Traders will be looking at today’s inflation data being published in the U.S. and for the Euro Germany, France and Italy.
Pivot: 1.1775
Support: 1.169 1.1665 1.1645
Resistance: 1.1775 1.18 1.1825
Scenario 1: short positions below 1.1775 with targets at 1.1690 & 1.1665 in extension.
Scenario 2: above 1.1775 look for further upside with 1.1800 & 1.1825 as targets.
Comment: the RSI is mixed and calls for caution.
Gold prices jumped to two-month highs Thursday, due to geopolitical tensions between the U.S. and North Korea remained. The release of inflation and initial jobless claims data failed to offset the flight to safety as both reports undershot expectations, stoking uncertainty over the Fed’s ability to raise rates later this year.
The unexpected fall in producer prices has the market increasingly assuming a slower speed of interest rate hikes from the Federal Reserve. Gold had in recent weeks support by the waning expectations for another Fed rate hike this year due to weak inflation combined with deepening political instability in the White House improved the appeal of the precious metal.
Gold is sensitive to moves in U.S. rates, which raise the opportunity cost of holding non-yielding assets such as precious metals, so investors will looking at the price index figures released today which could impact central banks’ policy planning.
Pivot: 1278
Support: 1278 1274.5 1270
Resistance: 1288.5 1297 1300
Scenario 1: long positions above 1278.00 with targets at 1288.50 & 1297.00 in extension.
Scenario 2: below 1278.00 look for further downside with 1274.50 & 1270.00 as targets.
Comment: the RSI advocates for further advance. Prices are ranging within a bullish channel.
Crude futures settled lower on Thursday, because market participants questioned OPEC’s commitment to curb production in the wake of a report showing crude output among the group’s members rose in July.
The rise in OPEC production comes a few days after the group met in Abu-Dhabi to address concerns of ailing compliance. The outcome of the meeting however, failed to lift sentiment as the group offered no genuine solutions to increase output compliance.
Oil traders will look at today’s Baker Hughes rig count data today, while keeping an eye on the economic sentiment from the inflation figures and further insight into the U.S. dealing with the North Korea situation.
Pivot: 49.5
Support: 47.9 47.05 46.47
Resistance: 49.5 49.94 50.22
Scenario 1: short positions below 49.50 with targets at 47.90 & 47.05 in extension.
Scenario 2: above 49.50 look for further upside with 49.94 & 50.22 as targets.
Comment: the RSI broke below a rising trend line.
The S&P 500 index had its first daily drop of more than 1 percent in almost three months on Thursday as investors grew cautious over mounting tensions between the U.S. and North Korea after Donald Trump said his warning of bringing “fire and fury” to North Korea may not have gone far enough to limit the communist regime from developing its nuclear and missiles programmes.
The rising geopolitical tensions sparked risk off sentiment, lifting the Volatility Index (VIX), widely considered the best barometer of fear in the market, more than 30%.
Apple (NASDAQ:AAPL) was one of the biggest losers this trading session as an industry statistic showed that its wearable products came in only 3rd in terms of sales last quarter.
Investors will look into further signals how the conflict between North Korea and the Trump administration will develop and also keep an eye on the price index data published today.
Pivot: 2458
Support: 2435 2422 2414
Resistance: 2458 2463 2469
Scenario 1: short positions below 2458.00 with targets at 2435.00 & 2422.00 in extension.
Scenario 2: above 2458.00 look for further upside with 2463.00 & 2469.00 as targets.
Comment: the RSI is capped by a bearish trend line.