The dollar was broadly weaker against most major currencies on Friday after data showing that U.S. economic growth accelerated in the second quarter, but wage growth remained weak.
The Commerce Department said Friday that gross domestic product increased at an annual rate of 2.6% in the three months to June, which included a boost from consumer spending. That was more than double the 1.2% growth seen in the first quarter.
In addition, the Labor Department said wages and salaries increased 0.5% after accelerating 0.8% in the first quarter and, the personal consumption expenditures (PCE) price index, a major gauge of inflation increased at a 0.9% rate, the slowest increase in over two years.
In the week ahead, investors will be focusing on Friday’s U.S. jobs report for fresh indications on the possible direction of Federal Reserve policy through the end of the year.
Central bank meetings in the UK and Australia will also be in focus. Meanwhile, the euro zone is to release preliminary data on inflation and second quarter growth.
Today, the euro zone is to publish a preliminary estimate of inflation, while Germany is to report on retail sales. The U.S. is to release data on pending homes sales and business activity in the Chicago area.
The euro rose by almost 0.6% against the dollar on Friday, with EUR/USD at 1.1749, not far from the two-and-a-half year highs of 1.1775 seen on Thursday.
The euro has risen 2.84% against the dollar so far this month and has gained around 11% for the year to date, making it the best performing major currency against the dollar.
Friday’s move was triggered by a strong US GDP report which was offset by two other reports showing that wage growth and inflation remained subdued in the second quarter.
For today, the euro zone is to publish a preliminary estimate of inflation, while Germany is to report on retail sales. The U.S. is to release data on pending homes sales and business activity in the Chicago area.
Pivot: 1.1705 Support: 1.1705 1.167 1.165Resistance: 1.1775 1.18 1.1835 Scenario 1: long positions above 1.1705 with targets at 1.1775 & 1.1800 in extension. Scenario 2: below 1.1705 look for further downside with 1.1670 & 1.1650 as targets. Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold
Gold prices rose to one-and-a-half month highs on Friday as weak inflation data lowered expectations that the U.S. Federal Reserve will raise interest rates again this year, supporting demand for the precious metal.
For the week, the precious metal was up 1.08%, its third consecutive weekly gain after data showing that wage growth and inflation remained weak in the three months to June offsetting another report showing that U.S. economic growth accelerated in the second quarter.
For today, gold traders will be focusing on U.S. pending homes sales and business activity in the Chicago area.
Pivot: 1264 Support: 1264 1260.5 1257.5Resistance: 1275 1280 1285 Scenario 1: long positions above 1264.00 with targets at 1275.00 & 1280.00 in extension. Scenario 2: below 1264.00 look for further downside with 1260.50 & 1257.50 as targets. Comment: the RSI is supported by a rising trend line.
WTI Oil
Oil prices finished higher for the fifth session in a row on Friday to log its biggest weekly gain this year as investors cheered signs that rising demand will offset excess supplies in the second half of the year.
For the week, WTI gained $3.94, or about 8.5%, while Brent rose $4.46, or roughly 9.3%, the largest such jump since early December, as fresh pledges from Saudi Arabia and Nigeria to respectively pull back on exports and output boosted sentiment.
Still, weekly figures from energy services company Baker Hughes showed that the number of active rigs drilling for oil edged higher by two to 766 last week.
In the week ahead, market participants will be watching closely on new inventory reports in order to gauge the strength of US demand for energy.
Pivot: 48.85 Support: 48.85 48.25 47.7Resistance: 50.17 50.7 51.05 Scenario 1: long positions above 48.85 with targets at 50.17 & 50.70 in extension. Scenario 2: below 48.85 look for further downside with 48.25 & 47.70 as targets. Comment: the RSI broke above a declining trend line.
US 500
The main US indices were mixed on Friday, as gains in the Healthcare, Industrials and Financials sectors led shares higher while losses in the Consumer Goods, Consumer Services and Telecoms sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average rose 0.15% to hit a new all time high, while the S&P 500 index fell 0.13%, and the NASDAQ Composite index lost 0.12%.
The best performers of the session were Chevron Corporation (NYSE:CVX) which rose 1.89%, UnitedHealth Group (NYSE:UNH) which added 1.18% and American Express Company (NYSE:AXP) that was up 1.13%.
The worst performers of the session were Exxon Mobil Corporation (NYSE:XOM) which fell 1.52% and General Electric Company (NYSE:GE) which declined 1.01%.
Stock traders will be watching closely on Friday’s NFP data to further gauge the health of the US employment sector.
Pivot: 2461 Support: 2461 2457 2451 Resistance: 2473 2476.5 2480 Scenario 1: long positions above 2461.00 with targets at 2473.00 & 2476.50 in extension. Scenario 2: below 2461.00 look for further downside with 2457.00 & 2451.00 as targets. Comment: the RSI broke above a declining trend line.