The U.S. dollar posted a rise against most majors on Wednesday after a White House tax reform announcement was announced, while the peso and Canadian dollar fell on reports that the U.S. is considering withdrawing from the North American Free Trade Agreement.
Treasury Secretary Steven Mnuchin and Economic Council Director Gary Cohn said Wednesday, that President Donald Trump’s tax reform plan would slash the U.S. corporation tax to 15% while introducing tax repatriation for businesses that have sizeable investments overseas.
The Canadian dollar and Mexican peso, which had slumped earlier on reports the United States is considering withdrawing from the North American Free Trade Agreement (NAFTA), bounced sharply after Trump said he would not scrap the pact but renegotiate instead.
In the european front, the ECB is due to announce its policy decision later on Thursday and the focus is on whether the recent French election results, which favor a pro-euro centrist, had any impact in the ECB's stance.
For Thursday, markets attention will turn first to the euro zone where Germany is to release preliminary inflation data and the ECB is to announce its latest monetary policy decision.
The announcement is to be followed by a press conference with President Mario Draghi.
Later in the day, U.S. is to release data on initial jobless claims, durable goods orders and pending home sales.
The euro gave away some of its recent gains as investors moved to profit taking after gains that followed the French elections.
The EUR/USD fell by 0.6 percent on Wednesday, receiving further selling pressures from hopes that Trump’s tax announcement would boost the dollar.
However, the details of the announcement lacked clarity, something that capped the rise in the dollar.
For this week investors attention is shifted towards, Thursday’s European Central Bank policy meeting, Friday’s euro zone inflation data and preliminary estimates of first quarter growth from the U.S.
In addition, Trump is facing a deadline in Washington on Friday where he needs to pass a spending bill to avoid a government shutdown. The president is also expected to provide a more detailed plan for tax reforms.
Pivot:1.092Support:1.0871.0841.0815Resistance:1.0921.0951.0975Scenario 1:short positions below 1.0920 with targets at 1.0870 & 1.0840 in extension.Scenario 2:above 1.0920 look for further upside with 1.0950 & 1.0975 as targets.Comment:the RSI is mixed to bearish.
Gold
Gold prices traded slightly below their opening price on Wednesday, pressured by a shift in sentiment towards riskier assets, as investors awaited for a tax reform update from President Donald Trump.
Gold had earlier dropped to its lowest level in two-weeks, as risk on sentiment continued to dominate the markets, offsetting geopolitical tensions in North Korea, after recent polls pointed to an easy victory for pro-EU candidate Emmanuel Macron in the runoff vote for the French presidency, scheduled for May 7.
Investors’ attention is now shifted towards Thursday’s European Central Bank policy meeting, on preliminary estimates of first quarter growth from the U.S and Trump’s deadline on Friday, to pass a spending bill funding the government through September.
Pivot:1261.5Support:1261.51257.51252Resistance:127112751278Scenario 1:long positions above 1261.50 with targets at 1271.00 & 1275.00 in extension.Scenario 2:below 1261.50 look for further downside with 1257.50 & 1252.00 as targets.Comment:the RSI is mixed with a bullish bias.
WTI Oil
Crude oil prices edged higher on Wednesday, after the Energy Information Administration (EIA) reported that U.S. crude inventories fell more than expected.
Prices soared above $50 a barrel, after the EIA said that for the week ending April 19, crude oil inventories fell by 3.641 million, when forecasts showed a drop of only 1.661 million barrels.
Meanwhile, gasoline inventories grew by 3.369 million against expectations for a drop of 1.020 million barrels.
The surprise build in gasoline inventories came against expectations of a drop, as the month of April usually signals the start of the US summer driving season.
In the week ahead, traders will focus on the next oil rig count report from Baker Hughes.
Pivot:48.9Support:48.948.447.9Resistance:49.8550.250.5Scenario 1:long positions above 48.90 with targets at 49.85 & 50.20 in extension.Scenario 2:below 48.90 look for further downside with 48.40 & 47.90 as targets.Comment:the RSI is supported by a rising trend line.
US 500
The main U.S. indices closed lower on Wednesday, reversing gains from earlier in the session, as investors appear skeptical over President Donald Trump's tax reform plan amid a batch of first quarter corporate earnings reports.
The three main U.S. indexes were on track to end the session in positive territory, as both the Dow and S&P 500 traded close to all-time highs but gains were short-lived, after top White House officials unveiled President Donald Trump’s tax reform plan which lacked details.
Following the news, the Dow Jones Industrial Average closed 0.10% lower, the S&P 500 lost 0.05% and the Nasdaq Composite closed almost unchanged.
Investors’ attention is now shifted towards Thursday’s European Central Bank policy meeting, on preliminary estimates of first quarter growth from the U.S and Trump’s deadline on Friday, to pass a spending bill funding the government through September.
Pivot: 2377 Support: 2377 2365 2356 Resistance: 2395 2400 2405 Scenario 1: long positions above 2377.00 with targets at 2395.00 & 2400.00 in extension. Scenario 2: below 2377.00 look for further downside with 2365.00 & 2356.00 as targets. Comment: the RSI is mixed to bullish.