The US Dollar traded noticeably stronger against other major currencies, especially after the announcement from the ECB to keep the interest rates unchanged well into next year, while also indicating an end to its asset purchase program.
Emerging market currencies continued to feel the pressure of the strong Dollar and geopolitical risk of intensifying tariffs from the US and corresponding countermeasures and broadly declined, with the South African Rand (ZAR) at a new low for 2018 and the Mexican Peso (MXN) to the lowest point in 16 months.
With an initial uptick towards $1,309 gold later retraced to the level seen over the last couple weeks, despite the developments in central bank policy and intensifying trade war concerns. Oil traded higher, as Saudi-Arabia voiced support to only moderately raise production quotas at the OPEC meeting next week.
US equity indices closed broadly higher as positive economic data, such as lower New Jobless Claims indicated economic resilience.
Cryptocurrencies managed overall to trade higher after a disastrous start in the week, with Bitcoin trading again above $6,500 and Ethereum above the $500 level. A spokesperson for the US SEC confirmed that they do not see Bitcoin, Ethereum and other decentralized cryptocurrencies as securities, but could apply that definition to token sales like ICOs.
On Friday in the European Union data on trade and inflation is set to be released. Canada is due to publish its Manufacturing Sales numbers and in the US data on consumer sentiment, business conditions and industrial data is due for publication.
The Euro sharply declined as the European Central Bank (ECB) indicated that it will keep the interest rates at their record low, well into the next year, despite signs that inflation was seen picking up pace closer towards the target of 2 percent set by the central bank.
Simultaneously it was announced that the asset purchase program, a key component of the Quantitative Easing (QE) strategy would wend by the end of this year.
Following these announcements the Euro had against the Dollar the worst trading day in two years with the intraday low more than 2.4 percent below the intraday high, putting the Euro on track for the worst performance in 19 months.
On Friday in the European Union is set to release data on Merchandise Trade, and the Harmonised Index of Consumer Prices (HICP), followed by the Consumer Price Index (CPI) from Italy.
Pivot:1.162Support:1.151.1461.138Resistance:1.1621.16751.173Scenario 1:short positions below 1.1620 with targets at 1.1500 & 1.1460 in extension.Scenario 2:above 1.1620 look for further upside with 1.1675 & 1.1730 as targets.Comment:the RSI shows downside momentum.
Oil traded again higher on Thursday, putting oil on track to end the 3 consecutive weeks of falling crude prices. Saudi-Arabian Oil Minister insisted ahead of the OPEC meeting next week, where the cartel is set to discuss possibly raising the production quota, that the increase in production would be reasonable and nothing ‘outlandish’.
On Friday the Baker Hughes Oil Rig count for the US is set to be released. The statistic, which indicates the number of operating oil rigs was not seen falling over the previous 10 consecutive weeks.
Pivot:66.35Support:66.3565.8565.5Resistance:67.3567.968.45
US equity indices settled higher on Friday with positive economic data coming in as Jobless New Claims were again lower at 218,000 (expected 225,000 / previous 222,000) and Retail Sales less Autos were up by 0.9% m/m (expected +0.5%).
Gains were seen especially in real estate (US Real Estate ETF +0.91%) and utilities (US Utilities ETF +1.27%) stocks. On the other hand financial (US Financials ETF -0.97%) and bank (US Banks ETF -0.58%) stocks were under pressure.
Tesla (NASDAQ:TSLA) (+3.89%) stocks continued to rise gaining more that 25% since the beginning of June. This week it was announced that CEO Elon Musk bought for himself additional shares of the company, while the company is going ahead in eliminating 9% of its workforce.
In a very volatile trading day, the online storage company Dropbox closed 13.82% higher. While analysts were unable to give a clear reason for this surge, there are speculations, whether Dropbox could be a target for a takeover.
On Friday in the US data on Industrial Production, Capacity Utilization and also the University of Michigan Consumer Sentiment level will be released.
Pivot:2782Support:278227722765Resistance:279628042810Scenario 1:long positions above 2782.00 with targets at 2796.00 & 2804.00 in extension.Scenario 2:below 2782.00 look for further downside with 2772.00 & 2765.00 as targets.Comment:the RSI lacks downward momentum. The index broke above the upper resistance line of symmetric triangle, call for a new upleg.
After an otherwise very mixed trading week, the German DAX 30 Future (Germany 30) closed 2.1 higher on Thursday in one of the best trading days for months after the ECB announcement that significantly weakened the Euro.
A weaker Euro makes it for the export focused Germany industry easier to sell their goods abroad. This helped German car makers which are accused of manipulating emission tests trade away from their recent lows for this year with Daimler (+1.93%) and Volkswagen (DE:VOWG_p) (+2.34%) trading higher despite recent fines and recalls.
German CPI was as expected at +0.5% m/m.
A cause for concern could be the developments in the German government coalition on how to deal with the flow of migrants. The Bavarian CSU made it clear that they are not prepared to wait any longer to reach a solution, putting Chancellor Merkel under severe pressure to keep her coalition together.
Pivot: 13040 Support: 13040 12960 12900 Resistance: 13195 13270 13350 Scenario 1: long positions above 13040.00 with targets at 13195.00 & 13270.00 in extension. Scenario 2: below 13040.00 look for further downside with 12960.00 & 12900.00 as targets. Comment: investors have to remain cautious since these levels may trigger profit taking.