The US Dollar had gained significantly in value against other major currencies, with the US Dollar Index (USDX) closing 0.68% higher. Amid an escalating confrontation on trade, the Chinese Yuan (Offshore – CNH) traded close to its low, previously seen last Tuesday. It is assumed that the Chinese could possibly use the depreciation of their currency as a measure to counter the effects of US tariffs.
The oil price had the biggest drop in two years on Wednesday, amid reports that Libya would again be able to export oil. Other possible factors could have been concerns about the fallout from the trade conflict between the US and other countries and expanding distillery activities. With the stronger Dollar, gold dropped to its lowest level in a week.
Equity indices in the US closed overall higher, while European stock indices traded mostly lower. The Indian Nifty 50 (India 50) managed to close higher for the seventh trading day in a row, while continuing to move higher early on Thursday.
Cryptocurrencies were trading mostly moderately lower, with Bitcoin falling to its lowest level in July.
On Thursday further the Consumer Price Index (CPI) is expected to be released in Germany, France and the United States. Other key data for the day includes the European Industrial Production (IP) and the US Jobless New Claims numbers. In Brazil the Retail Sales data will be released and Mexico publishes its Industrial Production data. The Russian Central Bank will disclose its reserves and the country’s Trade Balance for May.
In a volatile trading session the EUR/USD retreated below the 1.17 as the Dollar significantly gained against most other currencies, including the Euro. In the US overall economic data was again positive with Wholesale Trade up by 0.6% m/m (expected +0.5%) and the MBA Purchase Index up by 7% w/w (previous +1%). Inflation in form of the Producer Price Index (PPI) was reported also higher than expected at +0.3% m/m (expected +0.2%).
On Thursday further important inflation data in form of the Consumer Price Index (CPI) is expected to be released in Germany, France and the United States. Other key data for the day includes the European Industrial Production (IP) and the US Jobless New Claims numbers.
Pivot:1.1695Support:1.16551.16251.159Resistance:1.16951.17251.176Scenario 1:short positions below 1.1695 with targets at 1.1655 & 1.1625 in extension.Scenario 2:above 1.1695 look for further upside with 1.1725 & 1.1760 as targets.Comment:as long as 1.1695 is resistance, look for choppy price action with a bearish bias.
In a highly volatile trading session, the Turkish Lira hit a new all-time low against the US Dollar, declining beyond the weak level seen before the election, where President Erdogan secured another victory, which gave him even more powers. Due to those amendments, Erdogan was able to appoint his son-in-law as finance minister without seeking parliamentary approval.
Investors are concerned about the Turkish President’s new powers over monetary policy and opposition to high interest rates, while the central bank raised interest rates before the election to stop the plunge in the value of the Lira.
The Current Account Deficit as reported on Tuesday was at 5.89 billion USD for May and above expectations. Next week in Turkey quarterly Jobless numbers, Industrial Production and the CPI forecast will be released.
Pivot:4.856Support:4.8564.80264.7707Resistance:5.00155.03345.0653Scenario 1:as long as 4.8560 is support look for 5.0015.Scenario 2:the downside breakout of 4.8560 would call for 4.8026 and 4.7707.Comment:the RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The pair could retrace. Moreover, the pair is trading above both its 20 and 50 MAs (respectively at 4.8847 and 4.8128).
WTI Oil
Oil prices sharply retreated on Wednesday with WTI crude oil losing in an intraday move more than 5 percent of its value within just 5 hours. This most significant daily decline for oil in 2 years was attributed to news that Libya announced it would reopen its ports for oil export. Other concerns are that trade tensions between the US and China could lead to a downturn in economic growth and thus also demand for oil.
The Energy Information Administration (EIA) disclosed that crude oil stockpiles in the US fell by 12.6 million barrels within one week. Some analysts explained the fall in prices, despite the reducing crude oil supplies by pointing at expanding gasoline production and a higher than expected build in distillate stockpiles.
On Friday the US Baker Hughes Oil Rig Count will be released, showing the amount of operating oil rigs in the US.
Pivot:71.2Support:7069.468.7Resistance:71.272.172.7Scenario 1:short positions below 71.20 with targets at 70.00 & 69.40 in extension.Scenario 2:above 71.20 look for further upside with 72.10 & 72.70 as targets.Comment:the RSI is capped by a bearish trend line.
US 500
US equity indices overall shrugged off concerns about an escalation of the trade conflict with China and closed higher. Especially utilities stocks (US Utilities ETF +1.02%) closed higher, while chip makers (US Semiconductors ETF -2.62%) had overall to face steep losses.
Shares of American Airlines (-8.04%) fell to their lowest level in 21 months after the company surprisingly slashed its Q2 revenue outlook over lower pricing of domestic airfares.
Delta Air Lines (NYSE:DAL) will release its quarterly earnings on Thursday, and multiple banks like Citigroup (NYSE:C) and JP Morgan Chase (NYSE:JPM), are set to release their quarterly earnings on Friday.
On Thursday in the US CPI, Core CPI, Jobless New Claims, Treasury Budget and data from the Federal Reserve Bank is scheduled to be released. Then on Friday Import and Export Price data, as well as the University of Michigan Consumer Sentiment will be published.
Pivot: 2770 Support: 2770 2756.5 2747 Resistance: 2788 2798 2810 Scenario 1: long positions above 2770.00 with targets at 2788.00 & 2798.00 in extension. Scenario 2: below 2770.00 look for further downside with 2756.50 & 2747.00 as targets. Comment: the RSI advocates for further advance. A support base at 2770 should maintain the buying interest.