The dollar pushed slightly lower against the other major currencies on Tuesday, after data showed that U.S. manufacturing activity entered contraction territory last month, but hopes for a December rate hike by the Federal Reserve continued to support the greenback.
The Institute of Supply Management reported yesterday afternoon that its manufacturing PMI fell to a six-year low of 48.6 in November, from 50.1 for the previous month, confounding expectations for a rise to 50.5.
Markets were jittery also on Tuesday morning, after data showed that China's manufacturing purchasing managers' index ticked down to 49.6 last month, from 49.8 in October. Analysts had expected the index to remain unchanged in November. The disappointing data fueled fresh concerns over the outlook for growth in the world's second largest economy.
Today: the U.K. is to publish survey data on construction activity; the euro zone is to publish preliminary data on consumer price inflation; and the U.S. is to publish the ADP report on private sector jobs creation, as well as weekly data on crude oil stockpiles. But investors’ focus will be on Fed Chair Janet Yellen’ speech about the U.S. economic outlook at The Economic Club of Washington D.C.
The euro rose considerably on Tuesday, halting a four-day losing streak, as currency traders await a pivotal European Central Bank meeting for further signals of divergence between central banks in the U.S. and the euro zone.
The unique currency was supported also by data released, infact Eurostat reported on Tuesday that the euro zone’s unemployment rate fell to 10.7% in November, from 10.8% a month earlier. This is the lowest rate recorded in the euro area since January 2012. The report came shortly after research group Markit said its German manufacturing PMI rose to 52.9 in November, from 52.6 the previous month. Also in Germany, data showed that the number of unemployed people declined by 13.000 last month, compared to expectations for a 5.000 drop.
But sentiment on the euro remained vulnerable, as the European Central Bank has been signaling over the past weeks that it is ready to implement additional easing measures in order to boost inflation in the euro zone and support growth.
Now traders are looking ahead to this ECB meeting, scheduled for the 3rd of December, for further signals of potential divergence in monetary policies in the U.S. and the euro zone.
Pivot: 1.059Support: 1.059 1.0555 1.052Resistance: 1.064 1.068 1.071Scenario 1: Long positions above 1.059 with targets @ 1.064 & 1.068 in extension.Scenario 2: Below 1.059 look for further downside with 1.0555 & 1.052 as targets.Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold
Gold prices rose on Tuesday, after data showed that manufacturing activity in the U.S. contracted at the fastest pace since July 2009 in November.
The downbeat data dampened optimism over the strength of the economy and fanned hopes the Federal Reserve could delay raising interest rates until next year.
This week investors will be focusing on: today speech by Fed Chair Janet Yellen and congressional testimony on Thursday; the outcome of Thursday’s European Central Bank meeting, amid speculation the central bank could ramp up its monetary stimulus program; and mainly on Friday’s U.S. nonfarm payrolls report for November, that will be the last jobs report before the Fed decides on interest rates at its December 15-16 meeting.
Pivot: 1063.5Support: 1063.5 1058 1052.5Resistance: 1074.7 1080 1085Scenario 1: Long positions above 1063.5 with targets @ 1074.7 & 1080 in extension.Scenario 2: Below 1063.5 look for further downside with 1058 & 1052.5 as targets.Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
WTI Oil
Oil prices swung between gains and losses on Tuesday, as market players weighed the likelihood that the Organization of the Petroleum Exporting Countries will cut output to support prices, when it meets in Vienna this Friday.
Yesterday afternoon the American Petroleum Institute said that crude stocks rose 1.6 million barrels last week, well above the fall of 1.2 million barrels seen.
Today investor’s focus will be on US crude oil government report, which could show that crude stockpiles fell by 1.2 million barrels in the week ended November 27. Last week, U.S. crude stockpiles rose for the ninth straight week, to remain at their highest level in at least the last 80 years.
Pivot: 41.84Support: 41.08 40.8 40.43Resistance: 41.84 42.24 42.6Scenario 1: Short positions below 41.84 with targets @ 41.08 & 40.8 in extension.Scenario 2: Above 41.84 look for further upside with 42.24 & 42.6 as targets.Comment: As long as 41.84 is resistance, likely decline to 41.08.
Wall Street kicked off the last month of the year on a positive note, but pared early gains after data showed the U.S. manufacturing sector contracted in November, falling to its worst levels since June 2009.
However, other data showed U.S. construction spending rose to a near 8-year high, suggesting the economy remains on firmer ground, despite some slowing in consumer spending and persistent weakness in manufacturing.
So in the end U.S. stocks started December stronger on Tuesday, as health and consumer shares bounced back while auto sales suggested upbeat growth in November.
The Dow Jones industrial average rose 0.95% to 17,888.35, the S&P 500 gained 1.07% to 2,102.63 and the Nasdaq Composite added 0.93% to 5,156.31
Investors are keeping an eye on this week data, especially on Friday’s NFP, for clues regarding the health of the U.S. economy that might enable the Federal Reserve to raise interest rates for the first time in nearly a decade.
Pivot: 1990 Support: 1990 1928 1867 Resistance: 2116 2135 2180 Scenario 1: Long positions above 1990 with targets @ 2116 & 2135 in extension. Scenario 2: Below 1990 look for further downside with 1928 & 1867 as targets. Comment: The RSI is above its neutrality area at 50%.