The US Dollar traded weaker against other major currencies as the US Dollar Index (USDX) closed 0.34% lower. The stronger Euro, supported by hawkish ECB comments and the relief about the EU and UK reaching an interim agreement following the time Brexit would take place, which pushed the Pound (GBP) higher, made the USD lose by comparison.
The Turkish Lira (TRY) continued its decline, trading lower against the USD for every day since the previous Monday, as well as reaching an all-time low against the Euro as the EUR/TRY surpassed the 4.85 level. Turkey is under pressure following the sovereign rating downgrade by Moody’s to the level Ba2, which is now two steps below the highly sought-after ‘Investment-grade’ rating. Turkey faces a rising external debt as well as rising budget deficit and inflation.
Gold was trading higher on a weaker Dollar as well as rising geopolitical tensions in the Middle-East as Saudi-Arabia throws terrorism accusations towards Iran and threatens to develop its own nuclear weapons, should Iran come into possession of an atomic bomb. Oil closed only slightly lower ahead of US API stockpile numbers due on Tuesday, while recovering most of the intra-day losses.
Equity indices settled lower with tech stocks leading the decline as Facebook (NASDAQ:FB) is facing a scandal regarding the use of its users’ data by an unauthorized third party, supposedly supporting the Trump presidential campaign in 2016.
Bitcoin and most other cryptocurrencies saw a limited upside movement, while Ethereum still declined and lost now more than 20% over the course of the last week. Bitcoin was reportedly supported by a statement of the Bank of England governor Carney, that “crypto-assets do not pose risks to global financial stability at this time”.
On Tuesday Australia publishes its Housing Price Index (HPI), followed by Japan with Leading Indicators data. Germany and the UK will release PPI data, with the UK also releasing CPI numbers. In Germany also the results of the influential ZEW survey are due to be released.
EUR/USDAfter the drop in the previous week the EUR/USD managed to recover. Monthly statistics from the European Union indicated rising imports by 1.1% and falling exports by 0.7% for January. Italian Industrial Production (IP) m/m for January fell unexpectedly by 1.9% (-0.5% expected). The Euro received support by European Central Bank (ECB) policymakers openly discussing ending the bond buying program and possible rate hikes for 2019 despite the sluggish inflation.
On Tuesday Germany will publish Producer Price Index (PPI) and ZEW Survey - Current Conditions/ Business Expectations data, while in the US the Redbook Store Sales statistic will be shown.
Pivot:1.232Support:1.2321.231.2275Resistance:1.23651.23851.2415Scenario 1:long positions above 1.2320 with targets at 1.2365 & 1.2385 in extension.Scenario 2:below 1.2320 look for further downside with 1.2300 & 1.2275 as targets.Comment:the RSI broke above a bearish trend line.
The Pound (GBP) was one of the strongest currencies in Monday’s trading. The Pound was supported by the United Kingdom and the European Union reaching a transitional agreement so that after Brexit would formally take place in March 2019 the relations won’t abruptly end between the UK and the EU. However this deal is said to depend on further agreements, one of which is the handling of the border between the UK and Ireland on the Irish Island.
On Tuesday the UK is set to release Consumer Price Index (CPI), Producer Price Index Output, and Producer Price Index Input data. On Wednesday employment data will follow.
Pivot:1.399Support:1.3991.3951.391Resistance:1.411.41451.419Scenario 1:long positions above 1.3990 with targets at 1.4100 & 1.4145 in extension.Scenario 2:below 1.3990 look for further downside with 1.3950 & 1.3910 as targets.Comment:the RSI advocates for further upside.
Oil experienced an intraday dip but closed almost unchanged towards the end of Monday’s trading session. Last week data from the US indicated an increase in producing oil rigs which could have fueled again concerns about oversupply in the market. However Venezuelan production woes as well as mounting tensions between Iran and Saudi-Arabia, as Saudi’s crown prince announced that if Iran would make a nuclear bomb, Saudi-Arabia would follow, limited the downside.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot:61.5Support:62.3562.7563.25Resistance:61.561.1560.9Scenario 1:long positions above 61.50 with targets at 62.35 & 62.75 in extension.Scenario 2:below 61.50 look for further downside with 61.15 & 60.90 as targets.Comment:the RSI is mixed to bullish.
US equity indices closed significantly lower, showing the highest losses in more than 1.5 weeks. The scandal surrounding Facebook (-6.85%) allowing user data get into hands of Cambridge Analytica, which was said to be actively engaged in supporting US President Trump’s election bid, could have also led to other tech values falling during trading on Monday. There are concerns that this data breach could lead to a significant fine being imposed on Facebook.
Biotech (US Biotech ETF -2.10%) values also performed poorly on Monday, while losses in bank (US Banks ETF -0.71%) and utilities (US Utilities ETF -0.76%) were more restrained.
Oracle (NYSE:ORCL) (-0.59%) stocks plunged in after-hours trading as earnings results, as revenue figures did not match expectations. The company was under pressure as the recent tax reform cost it a one-time charge of $6.9 billion.
Among others Nike (NYSE:NKE) and Micron are due to release their earnings results on Thursday. On Wednesday the US Federal Reserve is scheduled to announce the results of its policy meeting and their rate decision, with analysts being 95% confident about a rate hike announcement.
Pivot: 2733 Support: 2697.5 2685 2670 Resistance: 2733 2745 2766 Scenario 1: short positions below 2733.00 with targets at 2697.50 & 2685.00 in extension. Scenario 2: above 2733.00 look for further upside with 2745.00 & 2766.00 as targets. Comment: as long as 2733.00 is resistance, expect a return to 2697.50.