The dollar fluctuated between gains and losses on Friday after mixed consumer inflation data gave no signs on whether another rate increase will take place by the Federal Reserve in the coming months.
Consumer prices rose 0.5% last month after advancing 0.4% in August the Labor Department reported Friday. Economists had forecast a 0.6% increase. It was the largest increase in eight months, but was mainly driven by soaring gasoline prices after hurricanes hit the southern U.S.
The euro was slightly lower, after European Central Bank President Mario Draghi said the euro zone still requires substantial monetary stimulus as inflation remains weak.
Sterling was stronger ending the week 1.7% higher, after suffering its worst week in a year, on hopes that Britain could be offered a two-year Brexit transition deal.
Instability and concerns arise once more in the oil markets as Iraq, the second biggest oil producer within the Organization of the Petroleum Exporting Countries (OPEC) began moving toward oil fields and an important air base held by Kurdish forces near the oil-rich city of Kirkuk.
The price of bitcoin soared, approaching the $6,000 level on Friday, however, criticism against it continues. Jamie Dimon, chief executive of JP Morgan Chase (NYSE:JPM), unleashed another statement saying that he believes blockchain technology is useful but that non-fiat cryptocurrency “has no value.”
Later in the week, investors will be watching closely on data from the U.S. housing sector to assess the economic impact of the hurricanes which hit the southern U.S. last month. Third quarter GDP data from China will also be closely watched together with UK inflation amid speculation over a possible rate hike by the Bank of England as soon as next month.
EUR/USDThe euro is under pressure on Monday on concerns over Catalonia's confrontation with Madrid, however, the dollar is also weakened after the weak U.S. inflation data.
Catalan leader Carles Puigdemont has until 10:00 a.m. local (0800 GMT) on Monday to clarify whether he is calling for the region's independence. Prime Minister Mariano Rajoy has given him the Monday deadline to clarify his position.
The drop in the single currency was limited as investors expect the ECB to present a plan later this month for tapering its bond buying program.
Today, the U.S. is to release data on manufacturing activity in the New York region.
Pivot: 1.1835
Support: 1.1775 1.176 1.1735
Resistance: 1.1835 1.185 1.1875
Scenario 1: short positions below 1.1835 with targets at 1.1775 & 1.1760 in extension.
Scenario 2: above 1.1835 look for further upside with 1.1850 & 1.1875 as targets.
Comment: the RSI shows downside momentum.
Gold prices gained on Friday as weaker-than-expected U.S. inflation data added to doubts over the Federal Reserve’s plans to raise interest rates this year.
The precious metal is also supported by political uncertainty in Spain as Spanish Prime Minister Mariano Rajoy gave the Catalan government a deadline to abandon its independence bid.
In the week ahead, investors will focus on U.S. housing data to assess the economic impact of the hurricanes which hit the southern U.S. last month.
Thursday’s data on third quarter Chinese growth will also be closely watched.
Pivot: 1295
Support: 1295 1290 1284
Resistance: 1310 1315 1310
Scenario 1: long positions above 1295.00 with targets at 1310.00 & 1315.00 in extension.
Scenario 2: below 1295.00 look for further downside with 1290.00 & 1284.00 as targets.
Comment: the RSI lacks downward momentum.
Crude oil prices rose to a two-week high on Friday, as geopolitical uncertainty in the Middle East creates worries of supply disruptions, particularly after U.S. President Donald Trump refused to certify Iran’s compliance with the nuclear deal.
Meanwhile, investors are shifting their focus at the situation in Iraq following an independence referendum in Iraq’s Kurdistan region last month that threatens to disrupt the operation of a major pipeline.
In the week ahead, investors will monitor weekly information on U.S. inventories of crude oil due on Tuesday and Wednesday.
Pivot: 50.25
Support: 50.25 49.75 49.2
Resistance: 51.1 51.4 51.75
Scenario 1: long positions above 51.35 with targets at 52.40 & 52.85 in extension.
Scenario 2: below 51.35 look for further downside with 50.95 & 50.55 as targets.
Comment: the RSI is bullish and calls for further upside. The prices remain bullish above the rising 20-period and 50-period moving averages.
The majority of U.S. stocks gained on Friday, with a rise in the sectors of Basic Materials, Technology and Consumer Services. Some of the best performers in the session were American Express Company (NYSE:AXP) which rose 1.36%, Intel Corporation (NASDAQ:INTC) which added 1.22% and Procter & Gamble Company (NYSE:PG) that was up 0.97%.
With crude price stabilizing, the energy sector and related exchange traded funds are finally returning to positive trend. The Energy Select Sector SPDR, the largest equity-based ETF, has gained 10% since its mid-August lows and is now trading at 2.2% above its long-term simple moving average.
The earnings season remains in focus, as the recovering oil prices may help support revenue and earnings growth in the energy sector.
Pivot: 2550
Support: 2550 2547 2542
Resistance: 2558 2562 2565
Scenario 1: long positions above 2550.00 with targets at 2558.00 & 2562.00 in extension.
Scenario 2: below 2550.00 look for further downside with 2547.00 & 2542.50 as targets.
Comment: the RSI is bullish and calls for further advance. The prices are heading upward, backed by an intraday rising trend line. A strong support base has formed around 2550, which should also limit any downside room.