The US Dollar closed stronger on Friday against other major currencies with the US Dollar Index (USDX) closing 0.61% higher. The Dollar was driven by the better than expected NFP report, showing 200 thousand new jobs.
Gold settled lower on Friday pressured by a stronger Dollar and optimistic key economic data, with again higher US Treasury yields putting additional pressure on the safe haven precious metal. The Baker Hughes Oil Rig Count in the US revealed an again expanding production with 6 oil rigs adding production capacities and thus putting pressure on the oil price.
Equity markets closed significantly lower on Friday amid concerns over steady rising bond yields and uncertainty about future monetary policy as central banks are increasingly considering tightening measures. US equity indices futures traded noticeably lower when markets reopened on Sunday night as former Federal Reserve chair Yellen noted in an interview on Friday that stock prices and price-earnings ratios are relatively high.
Cryptocurrencies continued a steady decline with the Bitcoin touching a level below 8,000 for the first time in months on Sunday. Multiple major US banks, such as JP Morgan, Citi and Bank of America (NYSE:BAC) announced that they will not allow to purchase cryptocurrencies with their credit cards.
Central banks in multiple countries are due to decide on their monetary policy this week, with decisions due from Australia, New Zealand, the Bank of England and emerging market countries, such as Brazil, India and Russia.
On Monday in the European Union the PMI Composite and Retail Sales data will be released. In the United Kingdom the CIPS/PMI Services Index data will be published.
EUR/USD
EUR/USD was pushed initially higher to over the level of 1.25 but retraced later as the Non-Farm Payroll (NFP) number was significantly higher than predicted at 200 thousand (expected 175 / previous 148). Other economic indicators in the US, such as Consumer Sentiment (95.7 / expected 95.0 / previous 94.4) were also better than expected and could have had an effect of the EUR/USD settling only slightly higher that week. However it has to be noted that this was the 7th week in a row for the EUR/USD to settle higher, which is a record on upside seen last time in 2004.
On Monday in the European Union the PMI Composite and Retail Sales data will be released, followed by the ISM Non-Manufacturing Index in the US.
Pivot:1.242Support:1.2421.23851.2335Resistance:1.2491.2521.256Scenario 1:long positions above 1.2420 with targets at 1.2490 & 1.2520 in extension.Scenario 2:below 1.2420 look for further downside with 1.2385 & 1.2335 as targets.Comment:the RSI is mixed to bullish.
Gold was in decline on Friday, especially after the US economy was seen as resilient with better than expected NFP results and other economic indicators. Further advances in US Treasury and bond market yields put additional pressure on the precious metal. Gold can be sensitive to bond yields, as high grade bonds are seen as another safe-haven, but compared to gold they do bear interest.
Further moves in the bond market and the Dollar could influence the direction gold will take. In regards of US data, markets will be closely watching the announcement of Trade Balance deficit numbers in the US on Tuesday.
Pivot:1337.5Support:1325.513201316Resistance:1337.513461351Scenario 1:short positions below 1337.50 with targets at 1325.50 & 1320.00 in extension.Scenario 2:above 1337.50 look for further upside with 1346.00 & 1351.00 as targets.Comment:the RSI broke below a rising trend line.
Oil retraced from recent highs and settled lower. The Baker Hughes Oil Rig Count numbers were up by 6 to 745 operating oil rigs. This level of producing oil rigs was not seen since August 2017. On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday. Traders could also be interested how expanding US production affects the spread between Brent and WTI oil prices.
Pivot:64.65Support:64.6564.263.75Resistance:65.766.2566.58Scenario 1:long positions above 64.65 with targets at 65.70 & 66.25 in extension.Scenario 2:below 64.65 look for further downside with 64.20 & 63.75 as targets.Comment:the RSI is mixed to bullish.
Equities sharply declined on Friday, erasing most of this year’s gains so far. Rising bond market rates, with the US Treasury yields racing towards 2.85% (were at 2.41% at the beginning of January), are blamed in part for the downturn, even though employment, consumer confidence and other economic data in the US remains strong. The NASDAQ (US Tech 100) was particularly under pressure as its key component Apple (NASDAQ:AAPL) (-4.45%) also experienced a correction. However not only technology stocks had a bad day, energy stocks (US Energy ETF (NYSE:XLE) -4.37%) had even higher losses.
On Tuesday more blue-chip companies are due to release earnings data, with among others General Motors (NYSE:GM), SNAP (chat) and BP (LON:BP) releasing earnings.
