The dollar rose to a near three-week high against most major currencies on Monday, supported by hopes of U.S. tax cuts that will benefit corporate profits and investments as well as bets on whether the Federal Reserve might raise interest rates more quickly.
The dollar last week booked its strongest gain since mid-December after U.S. President Donald Trump on Thursday promised a "phenomenal" tax plan that the White House said would include tax cuts for businesses and individuals.
Investors hope that the focus of day-to-day remarks by Trump and his aides is shifting away from trade protectionism and security, and toward economic growth.
The dollar also gained momentum against the yen following reports that Trump did not even discuss the currency or its strength during weekend talks with visiting Japanese Prime Minister Shinzo Abe.
The outcome of their meeting was an affirmation for Japan in the face of challenges such as China's maritime expansion and North Korea's nuclear weapons and missile development.
For today, Germany is to put out a preliminary estimate of fourth quarter growth, while the euro zone is to release a revised estimate of fourth quarter growth and the ZEW Institute is to report on German economic sentiment.
Later in the day, the U.K. is to publish data on consumer price inflation and the U.S. is to release data on producer price inflation.
Fed Chair Janet Yellen is due to appear before the Senate Banking Committee, in Washington to testify on the bank’s latest monetary policy report.
The euro fell against the stronger dollar on Monday, with EUR/USD down by approximately 0.39% for the day.
Markets were continuing to watch events in Greece as efforts continued to reach a deal on its next bailout payment before February 20th.
The European Commission on Monday upped its growth forecasts for the euro zone over the next two years, but warned that uncertainty about U.S. policies, Brexit and elections in Germany and France would take their toll on the economy.
For today, Germany is to put out a preliminary estimate of fourth quarter growth, while the euro zone is to release a revised estimate of fourth quarter growth and the ZEW Institute is to report on German economic sentiment.
Later in the day the U.S. is to release data on producer price inflation and Fed Chair Janet Yellen is due to appear before the Senate Banking Committee, in Washington to testify on the bank’s latest monetary policy report.
Pivot: 1.063Support: 1.059 1.057 1.054Resistance: 1.063 1.065 1.067Scenario 1: short @ 1.0620 with targets @ 1.0590 & 1.0570 in extension.Scenario 2: above 1.0630 look for further upside with 1.0650 & 1.0670 as targets.Comment: as long as 1.0630 is resistance, look for choppy price action with a bearish bias.
Gold
Gold prices were slightly lower as recent actions by U.S. President Donald Trump helped soothe investor worries about uncertainty surrounding the new administration’s controversial policies.
Markets are displaying a shift towards higher risk assets, with the main U.S. stock indices posted new record levels after Trump’s comments that he will move ahead with the promised tax cuts and deregulation, promising a "phenomenal" tax plan in the next few weeks.
The U.S. will take the center stage later in the day with data on producer price inflation and Fed Chair Janet Yellen is due to appear before the Senate Banking Committee, in Washington to testify on the bank’s latest monetary policy report.
Pivot: 1224.5Support: 1224.5 1219 1215Resistance: 1234 1237 1244Scenario 1: long positions above 1224.50 with targets at 1234.00 & 1237.00 in extension.Scenario 2: below 1224.50 look for further downside with 1219.00 & 1215.00 as targets.Comment: the RSI shows upside momentum.
WTI Oil
Oil settled weaker in the U.S. on Monday after a forecast by the government showed an expected higher production level from U.S. shale drillers in response to higher prices.
Shale oil output in the U.S. is expected to grow by 79,000 barrels per day by March, the U.S. Energy Information Administration (EIA) said on Monday, taking the overall output levels in the U.S. to 4.83 million bpd.
However, the drop remains limited as OPEC said earlier Monday that overall output by the cartel members in the pact in January fell 890,000 barrels per day (bpd) from December to 32.14 million (bpd), putting the supply and demand balance globally on track.
Inventory data from the API are due later on Tuesday.
Pivot: 52.76Support: 52.76 52.29 52Resistance: 53.4 53.7 53.95Scenario 1: long positions above 52.76 with targets at 53.40 & 53.70 in extension.Scenario 2: below 52.76 look for further downside with 52.29 & 52.00 as targets.Comment: the RSI broke above a bearish trend line.
US 500
Wall Street's three main indexes continue to move higher on Monday, as gains in the Basic Materials, Financials and Industrials sectors provided support.
At the close in NYSE, the Dow Jones Industrial Average rose 0.70% to hit a new all time high, while the S&P 500 index gained 0.52%, and the NASDAQ Composite index added 0.52%.
Some of the best performers included, Goldman Sachs Group Inc (NYSE:GS) which added 1.46% and Cisco Systems Inc (NASDAQ:CSCO) that was up 1.46%.
Some of the worst performers of the session were Verizon Communications Inc (NYSE:VZ), which fell 0.88% and Wal-Mart Stores Inc (NYSE:WMT) that declined 0.37%.
The U.S. will take the center stage later in the day with data on producer price inflation and Fed Chair Janet Yellen is due to appear before the Senate Banking Committee, in Washington to testify on the bank’s latest monetary policy report.
Pivot: 2318 Support: 2318 2313 2308.5 Resistance: 2330 2335 2345 Scenario 1: long positions above 2318.00 with targets at 2330.00 & 2335.00 in extension. Scenario 2: below 2318.00 look for further downside with 2313.00 & 2308.50 as targets. Comment: the RSI lacks downward momentum. The 50-period simple moving average is in support.