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iFOREX Daily Analysis : January 11,2017

Published 01/11/2017, 07:28 AM
Updated 09/16/2019, 09:25 AM

The dollar was lower against a basket of the other major currencies on Tuesday, while sterling pulled back from two-month lows, hit as investors continued to fret over Brexit.

Demand for the greenback continued to be underpinned by expectations for higher interest rates this year. Boston Fed President Eric Rosengren on Monday called for the U.S. central bank to step up the pace of interest rate increases, warning that inflation could overshoot its target if it does not.

The euro inched higher against the softer dollar, with EUR/USD edging up 0.1%.

The dollar fell to the day’s lows also against the yen, with USD/JPY falling 0.51%.

While in emerging markets, the Mexican peso and the Turkish lira fell to fresh record lows against the greenback, as political and economic woes continued to weigh.

The Mexican peso moved lower amid ongoing fears over potential changes to U.S. trade policy under the incoming Trump administration.

While the selloff in the lira gathered pace after ratings agency Moody's said Monday that bank profits will be hit by an increase in bad loans this year and warned of a "general worsening" in the investment climate in Turkey.

Today U.S. President-elect Donald Trump is scheduled to hold his first post-election news conference, which investors will be watching for hints about the possible direction of economic policy; while the U.K. is to release a report on manufacturing and industrial production as well as trade data.

GBP/USD

The sterling edged higher on Tuesday, after falling to two-month lows earlier amid fears that the UK won’t try to negotiate continued full access to the European single market, when it leaves the European Union.

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GBP/USD touched lows of 1.2106, the lowest level since October 25, before retracing losses to trade at 1.2173, up 0.12%. The pound hit two-month lows also against the euro, with EUR/USD rising as high as 0.8763, before pulling back to 0.8697.

Today the U.K. is to release a report on manufacturing and industrial production as well as trade data, all will be carefully watched by investors to gain further information on the strength of the UK.

GBP/USD ChartPivot: 1.219Support: 1.213 1.2105 1.2075Resistance: 1.219 1.2215 1.225Scenario 1: short positions below 1.2190 with targets at 1.2130 & 1.2105 in extension.Scenario 2: above 1.2190 look for further upside with 1.2215 & 1.2250 as targets.Comment: the RSI is mixed to bearish.

Gold prices rallied to a six-week high on Tuesday, amid jitters ahead of President-elect Donald Trump’s first news conference since his election victory on Wednesday.

Today U.S. President-elect Donald Trump is to hold a press conference at 11:00AM ET (18:00GMT), which investors will be watching for any hints about the possible direction of economic policy.

Gold has been well-supported in recent sessions after minutes from the Federal Reserve’s December meeting unsettled investors’ expectations about the pace of future interest rate hikes.

A delay in raising interest rates would be seen as positive for gold, a non-interest-bearing asset, and negative for the dollar.

However, traders remained unconvinced and markets are pricing in just two rate hikes during the course of this year, according to the Fed Rate Monitor Tool.

Metal traders will now continue to focus on key U.S. reports in the week ahead, with Friday’s retail sales data in the spotlight.

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Gold ChartPivot: 1182Support: 1182 1179 1175Resistance: 1193 1197 1201Scenario 1: long positions above 1182.00 with targets at 1193.00 & 1197.00 in extension.Scenario 2: below 1182.00 look for further downside with 1179.00 & 1175.00 as targets.Comment: the RSI is mixed to bullish.

Oil prices were modestly higher on Tuesday, rebounding from the prior session's sharp losses, as market players looked ahead to weekly data from the U.S. on stockpiles of crude and refined products.

Crude prices drifted higher also in Asia on Wednesday, shrugging off an industry-reported build in U.S. inventories, ahead of official figures later in the day from the U.S. Department of Energy.

The American Petroleum Institute said late Tuesday that crude oil stocks rose 1.5 million barrels last week, above a forecast of a 900,000 barrels build.

Today the U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles, which will be carefully watched by energy traders.

WTI Oil ChartPivot: 51.8Support: 50.34 49.75 49Resistance: 51.8 52.35 52.85Scenario 1: short positions below 51.80 with targets at 50.34 & 49.75 in extension.Scenario 2: above 51.80 look for further upside with 52.35 & 52.85 as targets..Comment: technically the RSI is below its neutrality area at 50.

U.S. stocks were mixed after the close on Tuesday, as gains in the Consumer Services, Basic Materials and Healthcare sectors led shares higher while losses in the Oil & Gas, Consumer Goods and Utilities sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average declined 0.16%, while the S&P 500 index added 0.00%, and the NASDAQ Composite index climbed 0.36%.

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Global financial markets will now continue to focus on key U.S. reports in the week ahead, with Friday’s retail sales data in the spotlight.

US 500 Chart Pivot: 2269 Support: 2254 2250 2244 Resistance: 2269 2274 2277 Scenario 1: short positions below 2269.00 with targets at 2254.00 & 2250.00 in extension. Scenario 2: above 2269.00 look for further upside with 2274.00 & 2277.00 as targets. Comment: the RSI is mixed with a bearish bias.

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