The US Dollar weakened against other major currencies in Wednesday’s trading with the US Dollar Index (USDX) declining by 0.82%. With the new Federal Reserve Chairman Powell indicated that the central bank would increase the pace of interest rate hikes in 2019 and 2020, it was disappointing for the markets to hear that the three rate hike target for this year would remain untouched. The Mexican Peso (MXN) as well as the Canadian Dollar (CAD) gained over 1% against the USD over optimism surrounding the NAFTA deal progress.
Gold reached a two week high as the Dollar slumped and yields declined, following the FOMC meeting. Lower yields on high grade sovereign bonds make non-interest bearing gold more attractive as safe haven investment. Oil prices continued to climb to a 1.5-month high, as the EIA announced a draw on crude oil, gasoline and distillate stockpiles and the OPEC announced a record level compliance with the production cut deal.
Equities closed overall lower, while the Fed announcement let to some volatility in the market. The markets still face the scrutiny surrounding tech and social media companies, as fallout from the Facebook-Cambridge Analytica controversy.
Bitcoin pushed above $9,000 on Wednesday, however it later retreated below that level. Another legal concern for cryptocurrencies came into the spotlight as it was reported that the Bitcoin blockchain and other crypto blockchains may contain links to illegal content. As the blockchain is not supposed to be altered after an entry was created and confirmed, this content might be impossible to delete.
On Thursday Germany and the European Union are due to publish PMI numbers. In the United Kingdom the Bank of England is due to announce its interest rate policy. While markets expect no change at this March meeting, it is to some extent anticipated that rates could be increased at the meeting in May. The UK is also due to publish Retail Sales figures.
EUR/USDThe Dollar lost significant strength as the Federal Reserve at its meeting announced that it would stick to the proposed three rate hikes this year. However the Fed also hinted that for 2019 and 2020 a steeper increase than previously thought will be considered, referring to an improving economic outlook. The market appeared to have been disappointed that despite strong inflation close to the 2% target, the Federal Reserve seemed not to be considering a fourth rate hike this year.
On Thursday France releases its Business Climate Indicator data, followed by Germany with Manufacturing and Services PMI and IFO Survey results.
Pivot:1.231Support:1.2311.22951.226Resistance:1.2361.2381.24Scenario 1:long positions above 1.2310 with targets at 1.2360 & 1.2380 in extension.Scenario 2:below 1.2310 look for further downside with 1.2295 & 1.2260 as targets.Comment:the RSI is bullish and calls for further upside.
With falling US Treasury yields and a weaker Dollar, following the first FOMC meeting chaired for the first time by the new Chairman Jerome Powell, gold saw significant upside, reaching its highest point in two weeks. Also driving insecurity is the planned imposition of tariffs by the US, which is due to kick in shortly, as countries around the world face uncertainty whether they will or will not be exempted from the new tariffs.
On Thursday the U.S. Federal Reserve Bank will publish its Total Assets and Credit data as well as M2 monetary supply figures. The Jobless New Claims also due on Thursday could also drive Dollar markets.
Pivot:1327Support:13271320.251314.5Resistance:1340.251345.251350.5Scenario 1:long positions above 1327.00 with targets at 1340.25 & 1345.25 in extension.Scenario 2:below 1327.00 look for further downside with 1320.25 & 1314.50 as targets.Comment:the RSI is supported by a rising trend line.
Following the American Petroleum Institute (API) data released on Tuesday, indicating a draw on oil stockpiles, the data from the Energy Information Administration (EIA) matched that sentiment. The EIA reported a draw of -2.6 million barrels of crude oil (previously +5.0 million barrels) as well as a draw on gasoline (-1.7 million barrels) and distillates (-2.0 million barrels). The OPEC reported that OPEC countries and others part of the supply cut agreement managed to comply with the output reduction quotas at 138% in February, which is a higher level seen in January at 133%.
On Friday the US Baker Hughes Oil Rig Count will show the quantity of operating oil rigs in the United States.
Pivot:64Support:6463.462.9Resistance:65.66666.45Scenario 1:long positions above 64.00 with targets at 65.60 & 66.00 in extension.Scenario 2:below 64.00 look for further downside with 63.40 & 62.90 as targets.Comment:the RSI is bullish and calls for further upside.
US equity indices traded lower in Wednesday’s trading, while indices futures with extended trading hours closed mixed. Indices traded higher around the press conference with Fed Chair Jerome Powell, before soon again retreating. Especially non-cyclicals (US Non-cyclicals ETF -1.16%) and real estate (US Real Estate -0.70%) values traded lower, while basic materials (US Basic Materials ETF +1.22%) and especially energy (US Energy ETF (NYSE:XLE) +2.73%) stocks climbed higher, supported by surging commodity prices.
Facebook (NASDAQ:FB) (+1.02%) managed to close slightly higher and avoid another low point as its CEO Zuckerberg tried to reassure the public, that the breach of trust due to the data misuse by Cambridge Analytica will be fixed. Following the scandal receiving public attention Facebook’s share value is now roughly 4% lower than at the beginning of the year, which makes it lag visibly against the NASDAQ index (US Tech 100) as benchmark.
On Thursday Micron and Nike (NYSE:NKE) are due to release their quarterly earnings numbers. Also on Thursday, the FHFA House Price Index (HPI) and Leading Indicators is due for publication.
Pivot: 2712 Support: 2712 2697 2685 Resistance: 2745 2755 2766 Scenario 1: long positions above 2712.00 with targets at 2745.00 & 2755.00 in extension. Scenario 2: below 2712.00 look for further downside with 2697.00 & 2685.00 as targets. Comment: the RSI is mixed with a bullish bias.