The Dollar continued to see an upside against other major currencies, with the US Dollar Index (USDX), which represents the Dollar against a basket of other major currencies gaining 0.13% on Wednesday and extending gains in early trading on Thursday. The Chinese Yuan (offshore) – CNH further declined against the Dollar, trading above 6.5 USD/CNH for the first time in over 5 months. Analysts attribute this to further likely rate hikes by the US Fed and an escalation in the US-China trade conflict.
Gold extended its losses to a 6 months low on Thursday over expectations of further rate hikes in the US and a strong Dollar. Oil traded higher, following data from the EIA indicating a draw of 5.9 million barrels on US stockpiles.
Equity indices mostly recovered in trading on Wednesday, while the Dow Jones Industrial Average (US 30) declined as there are concerns that China will especially target large US corporations as part of its retaliatory measures.
Major cryptocurrencies such as Bitcoin and Ethereum continued to recover on Wednesday despite the news that the Bithumb exchange announced that it was hacked and crypto coins were stolen. Analysts attribute the lack of significant drawdown in cryptocurrencies to the fast action of the exchange and promise to pay back investor losses.
On Thursday the Swiss National Bank (SNB) is set to announce whether it intends any changes to its monetary policy. Later the Bank of England (BoE) is set to announce its highly anticipated decision on interest rates and monetary policy ahead of Brexit. In Canada data on Wholesale Trade is due to be released. In the Asian-Pacific trading session Japan will publish its Consumer Price Index (CPI) data.
The EUR/USD showed only moderate downside on Wednesday, staying above the lows seen on Tuesday. In Germany the Producer Price Index (PPI) was reported at +2.7% y/y (expected +0.5%). The US mortgage market showed positive data with the MBA Composite Index at +5.1% w/w (previous -1.5%). Data on the US Current Account Deficit for Q1 was better than expected at a deficit of $124.1B (expected deficit $129.3B).
On Thursday in France the Business Climate Indicator is set to be released. Later statistics on Consumer Confidence for the European Union is set to be released. The US Federal Reserve Bank will publish M2 Monetary Supply, Total Assets and Credit data.
Pivot: 1.16 Support: 1.153 1.15 1.145Resistance: 1.16 1.1625 1.1645 Scenario 1: short positions below 1.1600 with targets at 1.1530 & 1.1500 in extension. Scenario 2: above 1.1600 look for further upside with 1.1625 & 1.1645 as targets. Comment: the RSI is mixed to bearish.
Gold
Gold prices continued to slide lower, reaching a 6-months low early on Thursday. Analysts see the strong Dollar and higher interest rates putting pressure on the precious metal. This was especially supported by a statement from Federal Reserve Chairman Jerome Powell saying, that the case for continuing to raise interest rates is strong due to solid economic growth and the unemployment rate at the lowest level since 1969 in the United States.
A strong Dollar makes gold more expensive in countries, where the US currency is not used for normal transactions, while higher interest rates especially on other safe-haven assets, such as US Treasury Notes, make it harder for gold to compete for investors’ favor, since it does not bear any interest.
Pivot: 1269.5 Support: 1261 1255.5 1249Resistance: 1269.5 1276.5 1280.5 Scenario 1: short positions below 1269.50 with targets at 1261.00 & 1255.50 in extension. Scenario 2: above 1269.50 look for further upside with 1276.50 & 1280.50 as targets. Comment: the RSI advocates for further downside.
WTI Oil
Oil settled higher on Wednesday with data from the Energy Information Administration (EIA) indicating, that stockpiles for crude oil in the US decreased by 5.9 million barrels in the previous week, which was a considerably higher draw on supplies than expected.
Meanwhile it appears that the OPEC cartel might find a consensus to moderately increase oil production quota at their meeting on Friday and Saturday, with Iran now seemingly available for a compromise to increase production targets and Ecuador’s Minister for Hydrocarbons expecting the increase to be at around 0.6 million barrels per day, lower than the 1.5 million barrels per day, that were proposed by Russia.
On Friday the US Baker Hughes Oil Rig Count is going to be released and will show the amount of operating oil rigs in the US. The statistic was never negative for the previous 11 consecutive reporting weeks.
Pivot: 64.95 Support: 64.95 64.4 64Resistance: 65.8 66.35 66.95 Scenario 1: long positions above 64.95 with targets at 65.80 & 66.35 in extension. Scenario 2: below 64.95 look for further downside with 64.40 & 64.00 as targets. Comment: the RSI is supported by a rising trend line. Crude oil is supported by a bullish trend line.
US 30
US equity indices traded mostly higher, with some analysts commenting that the lack of new threats from President Trump on tariffs, gave hope that an actual trade war might still be averted. However futures on the Dow Jones Industrial Average (US 30) continued to fall, as some expect that as countermeasure to US actions, the Chinese side could especially go after the biggest US companies doing business in China as there was also an article detailing such possible action in the Chinese state-controlled ‘Global Times’ paper.
Some losses were seen in basic materials (US Basic Materials ETF -0.39%) stocks, while gains were seen in biotech (US Biotech ETF +1.62%) and real estate (US Real Estate ETF +1.00%) stocks.
Micron (-0.42%) traded higher in after-hours trading, as the company’s quarterly earnings narrowly exceeded investors’ expectations due to “healthy industry conditions”. Oracle (NYSE:ORCL) (-7.54%) plunged to its lowest level in over 15 months as investors were concerned about the company not publishing numbers about its cloud business in its latest earnings, fearing that this might be due to slowing growth in that segment.
On Thursday in the US the Philadelphia Fed General Business Conditions level statistic, Jobless New Claims and the FHFA House Price Index are set to be released.
Pivot: 24570 Support: 24570 24500 24420 Resistance: 24860 24950 25020 Scenario 1: long positions above 24570.00 with targets at 24860.00 & 24950.00 in extension. Scenario 2: below 24570.00 look for further downside with 24500.00 & 24420.00 as targets. Comment: the RSI calls for a rebound.