The US Dollar traded up against most other major currencies with the US Dollar Index (USDX) trading 0.52% up. The Dollar was supported by increased optimism of another rate hike by the Federal Reserve this year and the weakness of the Euro following the election in Germany where Angela Merkel might face difficulties forming a new coalition government.
Gold further recovered on Monday following increased tensions between the United States in North Korea as the US is sending its bombers in North Korea’s direction.
Oil rallied on Monday continuing its recovery from the US hurricane season with WTI oil trading higher than its May high and Brent oil surging through many resistance levels trading at a highest level in over two years. The rally is supported by a bullish outlook after the OPEC meeting last Friday as the market expects OPEC and associated countries to extend production cuts beyond March 2018.
US equity indices were trading mostly down on Monday as technology stocks tanked. Especially social media stocks were down with Snapchat -3.65%, Facebook (NASDAQ:FB) -4.61% and Twitter -3.69%.
Cryptocurrencies significantly recovered on Monday with the Bitcoin gaining over 7% and taking aim again at the $4,000 level. Litecoin which lost from its September high almost 40% when the market fell, traded almost 10% up on Monday.
On Tuesday France publishes its business climate indicator. The US will release data from the S&P/Case-Shiller House Price Index Consumer Confidence (Conference Board), home sales statistics and consumer and manufacturing surveys.
EUR/USDThe EUR/USD traded significantly lower after the German election which brought uncertainty to the major European economy. The EUR/USD traded now below 1.185 which is lower after the bullish Dollar reaction following the Federal Reserve meeting last Wednesday.
Angela Merkel’s CDU/CSU lost the most percentage of votes in last Sunday’s vote and would need the liberal’s FDP and the Green’s support to form a government. Merkel has to handle friction with her Union party CSU in Bavaria, while some parts of the Green party are not too interested to govern together with the Conservatives. The current partner of the CDU the Social Democrats SPD categorically want to work in the opposition, even though Merkel indicated that she would very much like to talk to them about a possible coalition.
On Tuesday we will see from the United States a multitude of consumer, industry and housing market surveys published which could further determine the move of the Dollar.
Pivot: 1.189
Support: 1.182 1.178 1.1745
Resistance: 1.189 1.1915 1.194
Scenario 1: short positions below 1.1890 with targets at 1.1820 & 1.1780 in extension.
Scenario 2: above 1.1890 look for further upside with 1.1915 & 1.1940 as targets.
Comment: the RSI advocates for further downside.
Gold recovered on Monday following increased tensions between the United States and North Korea. As the United States is sending its bombers towards North Korea, North Korea claimed that they had the right to shoot down those bombers making markets nervous about an actual possibility of an escalation of the whole situation.
Gold was further supported by falling US bond rates on Monday. Gold is sensitive to interest rates as investors have to decide whether interest bearing government bonds or the not interest paying Gold is the better option for their portfolio.
Gold could move in the days to come depending on geo-political events. While tensions in North Korea are again flaring up, Kurdish North Iraq votes for an independence from the rest of the country. Turkey strongly opposes that move and left all options open.
Pivot: 1301
Support: 1301 1297 1291
Resistance: 1311 1316 1320
Scenario 1: long positions above 1301.00 with targets at 1311.00 & 1316.00 in extension.
Scenario 2: below 1301.00 look for further downside with 1297.00 & 1291.00 as targets.
Comment: the RSI broke above a declining trend line.
Oil traded significantly higher on Monday as markets expect the OPEC sooner to commit to further production cuts following their meeting in Vienna last Friday. OPEC members pledged to review a possibility of an extension of production cuts.
The vote in North of Iraq for an independent Kurdish state, an important oil production area of Iraq also brought uncertainty to the market as Turkey strongly opposed an independent Kurdish state and indicated that it has the discretion to not let Kurdish oil through its pipelines. North Iraq is connected with pipelines to Turkey.
The markets will continue watching the position of the OPEC countries and how the situation North Iraq develops with the independence referendum of a possible Kurdish state. Late on Tuesday the American Petroleum Institute (API) Weekly Crude Oil Stock statistic will be published.
Pivot: 51.4
Support: 51.4 50.75 50.3
Resistance: 52.55 53.17 53.73
Scenario 1: long positions above 51.40 with targets at 52.55 & 53.17 in extension.
Scenario 2: below 51.40 look for further downside with 50.75 & 50.30 as targets.
Comment: the RSI is bullish and calls for further advance.
US equity indices traded mostly down on Monday with the biggest losses in the technology sector as the NASDAQ (US Tech 100) closed 1.21% down in late trading. The markets were under pressure as the US sent bombers towards North Korea and North Korea stated that they see it as a war declaration and would be justified to shoot down US planes even outside its airspace, increasing worries about an actually possible military confrontation.
While most economic sectors traded almost unchanged or up the losses came clearly from the technological sector on Monday as the US Technology ETF was down 1.3%. The technological sector was already lagging behind the other sectors last week. Tesla (NASDAQ:TSLA) continued its losing streak closing 1.83% down but bigger losses were reported on Monday at Twitter -3.69%, Snapchat -3.65%, Netflix (NASDAQ:NFLX) -4.85%, Facebook -4.61% and Alibaba (NYSE:BABA) (listed on the NYSE) -5.05%.
On Tuesday the multiple statistics will be released showing the resilience of different sectors as consumer confidence, manufacturing (Richmond Fed Manufacturing Index) and housing (S&P/Case-Shiller House Price Index).
Pivot: 2500
Support: 2494.75 2492 2489
Resistance: 2500 2502 2504.5
Scenario 1: short positions below 2500.00 with targets at 2492.00 & 2489.00 in extension.
Scenario 2: above 2500.00 look for further upside with 2502.00 & 2504.50 as targets.
Comment: the RSI is mixed to bearish.