The US Dollar considerably declined against other currencies with the US Dollar Index (USDX) closing 0.96% lower. Statements from members of the US government, which were positive on the economic effects of a weak Dollar, as well as the introduction of tariffs on Chinese and South Korean imports made the USDX fall to a new 3-year low. The British Pound Sterling (GBP) appreciated by over 1.6% against the Dollar reaching a price range it held shortly before the Brexit vote. UK unemployment rate remained virtually unchanged and within expected levels.
Gold, oil and other commodities with few exceptions (like natural gas) closed higher on the weak US Dollar. Gold was possibly supported by uncertainty about US trade policy and also as government bond yields in many investment grade countries advanced.
US equity indices closed mixed. While a weak Dollar is positive for US exports, concerns about US trade policy conflicts make traders uneasy.
Volatility in cryptocurrencies reduced in Wednesday’s trading as Bitcoin, Ethereum and other major cryptocoins traded mostly within a +/- 3% range. Cryptocurrency traders will carefully listen to world leaders’ statements at the Davos World Economic Forum as traders fear additional regulatory measures. Meanwhile the payment provider Stripe announced an end to their of support for Bitcoin payments, citing high volatility and being unpractical due to long confirmation times and uncompetitive fees of the Bitcoin network.
On Thursday the ECB meeting will take place where further announcements about interest and monetary stimulus policy could be expected. In Germany results of the GFK Consumer Sentiment survey and IFO surveys will be released. In the US new home sales and jobless claim data will be published. Canada releases retail sales statistics.
The US Dollar was under significant pressure after US Treasury Secretary Steven Mnuchin’s statement that a weak Dollar would be good for the US as it would drive trade and opportunities. European and German manufacturing PMI level was below expectations, while service PMI numbers surpassed expectations. In the US existing home sales were lower than expected at 5.57 million (expected 5.75 million / previous 5.81 million).
The much anticipated European Central Bank (ECB) meeting will take place on Thursday, where markets will carefully listen not only to the interest rate decision but also to its stance on future policy and its bond purchase program.
Pivot:1.235Support:1.2351.23251.229Resistance:1.2421.2451.25Scenario 1:long positions above 1.2350 with targets at 1.2420 & 1.2450 in extension.Scenario 2:below 1.2350 look for further downside with 1.2325 & 1.2290 as targets.Comment:the RSI is supported by a bullish trend line.
Gold
Gold reached a new 17-months high supported by a significantly weaker Dollar. The markets were also concerned about protectionist measures by the United States, as President Trump signed new orders to impose new tariffs on some imports from China. Higher government bond yields – not only in the US – further helped gold to push higher.
In the US key economic data is scheduled for release on Friday with Durable Goods New Orders and the Gross Domestic Product (GDP).
Pivot:1350Support:135013421338Resistance:136613711377Scenario 1:long positions above 1350.00 with targets at 1366.00 & 1371.00 in extension.Scenario 2:below 1350.00 look for further downside with 1342.00 & 1338.00 as targets.Comment:the RSI is bullish and calls for further upside.
WTI Oil
WTI oil raced towards a new 3-year high as the weak Dollar pushed commodity prices higher. EIA Crude Oil Inventories data showed a draw of 1.1 million barrels in the previous week, which was a slightly higher draw than expected and also contrary to the significant increase in stockpiles reported by the API on Tuesday. The rise comes despite US oil production rising again to now 9.9 million barrels per day. The Baker Hughes oil rig count for the US will be released on Friday.
Pivot:64.71Support:64.7164.1463.7Resistance:66.566.8867.5Scenario 1:long positions above 64.71 with targets at 66.50 & 66.88 in extension.Scenario 2:below 64.71 look for further downside with 64.14 & 63.70 as targets.Comment:the RSI shows upside momentum.
US 500
The US equity indices markets closed mixed with the Dow Jones Industrial Average (US 30) and S&P 500 (US 500) reaching a new all-time record, while the NASDAQ (US Tech 100) slightly retreated. While equities are said to benefit from the weak US Dollar and the optimism of this earning season, markets are concerned about the protectionist actions the US administration is taking now by imposing tariffs on Chinese products and threats of further restrictive trade policies. Financial (US Financials ETF +0.7%) stocks were among the strongest equities of this trading session, while technology (US Technology ETF -0.81%) and biotech (US Biotech ETF -0.87%) values were among the weakest.
Delta Air Lines (NYSE:DAL) (-5.4%) and other US airlines closed lower as United Airlines revealed a new growth strategy, which investors fear would lead more competition and lower margins.
On Thursday among others Caterpillar (NYSE:CAT), Celgene (NASDAQ:CELG), 3M, Fiat Chrysler, Intel (NASDAQ:INTC) and Starbucks (NASDAQ:SBUX) are due to release their earnings reports.
Pivot: 2828.5 Support: 2828.5 2822 2813 Resistance: 2856 2865 2877 Scenario 1: long positions above 2828.50 with targets at 2856.00 & 2865.00 in extension. Scenario 2: below 2828.50 look for further downside with 2822.00 & 2813.00 as targets. Comment: the RSI broke above a declining trend line.