The U.S. dollar collapsed to a five-week low against a basket of major currencies after President-elect Donald Trump warned that the greenback was “too strong,” according to a report in the Wall Street Journal on Monday.
Anthony Scaramucci, a senior member of Donald Trump’s economic advisory council, reiterated that sentiment on Tuesday, warning about the risk from a stronger dollar.
Meanwhile, Trump warned that the border adjustment provision, a feature of House Republicans' plan that would tax imports and exempt exports, is "too complicated."
The comments added to growing uncertainty over U.S. economic policy ahead of President-elect Donald Trump's inauguration later this week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 1.04% to 100.47, the lowest level since December 8.
Today the U.K. is to publish its monthly jobs report; the euro zone is to release revised data on inflation; the U.S. is to publish figures on inflation and industrial production and, later in the day, Fed Chair Janet Yellen is to speak at an event in San Francisco; while the Bank of Canada is to announce its latest monetary policy decision and hold a press conference to discuss the economic outlook.
Sterling rallied on Tuesday following British Prime Minister Theresa May’s Brexit speech, while the U.S. dollar sank as investors digested comments by President-elect Donald Trump.
GBP/USD jumped 2.66% to 1.2369, rebounding from the low of 1.1985 hit on Monday, which was the weakest level since October’s flash crash. It was the largest one-day gain in the pair since January 2009, during the global financial crisis.
In a speech in London, May confirmed that Britain will be leaving the single market when it exits the European Union, but would seek maximum access to it through a new trade agreement. May also said the final Brexit deal will be put to parliament for a vote.
Sterling had received a boost also earlier after data showing that U.K. inflation hit the highest since mid-2014 in December.
The Office for National Statistics said the annual rate of inflation accelerated to 1.6% in December, from 1.2% in November, and above forecasts for a gain of 1.4%.
Today the U.K. is to publish its monthly jobs report, while the euro zone is to release revised data on inflation.
Pivot: 1.2415Support: 1.231 1.2225 1.2155Resistance: 1.2415 1.249 1.253Scenario 1: short positions below 1.2415 with targets at 1.2310 & 1.2225 in extension.Scenario 2: above 1.2415 look for further upside with 1.2490 & 1.2530 as targets.Comment: the RSI is bearish and calls for further downside.
Gold
Gold prices extended its recent rally to a seventh day on Tuesday, the longest stretch of gains since November, as the U.S. dollar plunged amid lingering uncertainty over President-elect Donald Trump's economic policies.
The dollar fell by 0.6% against a basket of currencies on Tuesday after U.S. President-elect Donald Trump said that the strong greenback was hurting U.S. competitiveness.
The greenback remained on the defensive after Trump said in an interview published in the Wall Street Journal website that the U.S. dollar was too strong, so U.S. companies could not compete with China "because our currency is too strong, and it's killing us". In separate remarks, a senior adviser to the U.S. President-elect warned about the risk from a stronger dollar.
Pivot: 1209Support: 1209 1205 1201Resistance: 1218 1222 1228Scenario 1: long positions above 1209.00 with targets at 1218.00 & 1222.00 in extension.Scenario 2: below 1209.00 look for further downside with 1205.00 & 1201.00 as targets.Comment: a support base at 1209.00 has formed and has allowed for a temporary stabilisation.
WTI Oil
Oil prices rose on Tuesday, supported by a falling U.S. dollar and Saudi Arabia saying it would adhere to OPEC's commitment to cut output.
Saudi Arabian Energy Minister Khalid al-Falih said that the kingdom will adhere strictly to its commitment to cut output under a global agreement, expressing confidence that OPEC's plan to prop up prices would work.
Falih also added that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil output beyond six months, citing the level of compliance with the deal and the rebalancing of the market. Meanwhile, OPEC Secretary-General Mohammed Barkindo forecast that stability would return to oil markets this year, while price hawk Venezuela said it hoped its crude basket would rise to $70 in coming months.
Today the OPEC will publish its monthly assessment of oil markets while, later in the day, the American Petroleum Institute, is to publish its weekly report on U.S. oil supplies.
The reports are coming out one day later than usual due to Monday's Martin Luther King Jr. holiday on Monday.
Pivot: 52.95Support: 52.3 52.1 51.75Resistance: 52.95 53.15 53.5Scenario 1: short positions below 52.95 with targets at 52.30 & 52.10 in extension.Scenario 2: above 52.95 look for further upside with 53.15 & 53.50 as targets.Comment: technically the RSI is below its neutrality area at 50.
US 500
U.S. stocks fell on Tuesday, with financials, transports and other big post-election gainers losing ground as earnings season kicked into gear.
Also weighing on stocks were concerns about protectionist trade policies planned by U.S. President-elect Donald Trump. The concerns pushed the dollar to its lowest in more than a month and bond yields down as investors cut risk.
The S&P 500 financial index, which has rallied since the election on expectations of higher interest rates and reduced regulation under Trump, had its worst day since June 27 and led sector losses. It fell 2.3%.
Pivot: 2261 Support: 2261 2256 2249 Resistance: 2270 2273 2277 Scenario 1: long positions above 2261.00 with targets at 2270.00 & 2273.00 in extension. Scenario 2: below 2261.00 look for further downside with 2256.00 & 2249.00 as targets. Comment: the RSI is bullish and calls for further advance.