The dollar gained slightly against most major currencies on Monday, amid good manufacturing data, however, gains were limited as investors worry about the slowdown in inflation that weighs on market sentiment.
The Federal Reserve Bank of New York says that its Empire State manufacturing index rose to 30.2 in October, after reaching 24.4 the previous month. Any reading below zero points to contraction.
In the U.K., Brexit negotiations are headed for a "catastrophic breakdown," unless the EU agrees this week to move on to trade agreements, according to Bloomberg.
The price of oil moved higher on Monday as conflicts between Iraqi and Kurdish forces broke out in the oil-rich city of Kirkuk raising concerns over supply disruptions in the region.
In cryptocurrency markets Bitcoin was almost unchanged on Monday, a day after reaching its highest level in nine-years, right below $6000. On October 25, Bitcoin Gold will split off from Bitcoin to create a new cryptocurrency which seeks to ease the current mining monopolies present in Bitcoin.
Etherium lost ground after the latest upgrade called Byzantium went live yesterday. The upgrade is designed to enhance the network’s privacy, scalability and security.
Today, the UK is to release inflation data, Germany will be releasing the ZEW Institute report on German economic sentiment and the euro zone is to release revised inflation data. Later in the day, the U.S. is to release figures on industrial production and import prices.
The euro remains weak against the dollar on Monday after the positive manufacturing data from the U.S., however, concerns about a slowdown in inflation limit dollar strength.
Weakness in the euro meanwhile, provided further support to the dollar, as political tensions in Spain remain elevated after the Spanish government said Catalan authorities must end a bid for independence by Thursday.
Investors are waiting for the ECB to present a plan later this month for tapering its bond buying program.
For today, the focus is on Eurozone’s inflation data as well as industrial production and import prices from the U.S.
Pivot: 1.18
Support: 1.174 1.1715 1.1695
Resistance: 1.18 1.1815 1.1835
Scenario 1: short positions below 1.1800 with targets at 1.1740 & 1.1715 in extension.
Scenario 2: above 1.1800 look for further upside with 1.1815 & 1.1835 as targets.
Comment: the RSI is bearish and calls for further downside.
Gold
Gold prices fell slightly, still remaining above $1300 on Monday following a rise in the dollar and om treasury yields.
Geopolitical tensions in the Middle East and in Spain combined along with the Brexit negotiations and weak inflation indications from the U.S. create a steady environment for the precious metal and other safe haven assets as markets present a low appetite for risk.
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: 1299
Support: 1290 1284 1279.5
Resistance: 1299 1306 1310
Scenario 1: short positions below 1299.00 with targets at 1290.00 & 1284.00 in extension.
Scenario 2: above 1299.00 look for further upside with 1306.00 & 1310.00 as targets.
Comment: the RSI calls for a new downleg.
WTI Oil
The price of oil moved higher on Monday as conflicts between Iraqi and Kurdish forces broke out in the oil-rich city of Kirkuk raising concerns over supply disruptions in the region.
Also supporting the rise in crude oil prices were concerns over renewed U.S. sanctions against Iran after President Donald Trump on Friday refuse to certify to Congress that Tehran is complying with the 2015 Iran nuclear agreement.
Later Tuesday the American Petroleum Institute (API) will release its estimates of U.S. crude and refined product stocks to be followed by official data on Wednesday from the Energy Information Administration (EIA).
Pivot: 51.5
Support: 51.5 50.95 50.55
Resistance: 52.4 52.85 53.2
Scenario 1: long positions above 51.50 with targets at 52.40 & 52.85 in extension.
Scenario 2: below 51.50 look for further downside with 50.95 & 50.55 as targets.
Comment: the RSI lacks downward momentum. A strong support base has formed around 51.50, which should limit any downward attempts. The next key resistance is at 52.40 (Oct 16 top).
US 500
The main U.S. stock index rose to record highs on Monday, ahead of a long list of earnings this week.
In the banking sector JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) led gains, following an increase in U.S. Treasury yields, which benefits banks.
Netflix (NASDAQ:NFLX) gained 1.6 percent during the session and rose another 2 percent after the bell following the release of its results. Apple shares (NASDAQ:AAPL) gained 1.8 percent following a bullish brokerage call on the iPhone maker.
The earnings reporting is in the spotlight this week, and with the S&P 500 already up 14 percent so far this year, investors are hoping results and guidance will justify the relatively high valuation of stocks.
Pivot: 2550
Support: 2550 2547 2542
Resistance: 2558 2562 2565
Scenario 1: long positions above 2551.00 with targets at 2558.00 & 2560.00 in extension.
Scenario 2: below 2551.00 look for further downside with 2548.00 & 2546.00 as targets.
Comment: the RSI advocates for further upside. The prices remain supported by an intraday rising trend line. The horizontal level at 2551 acts as a strong support role.