The dollar recovered against most currencies on Tuesday with sentiment turning more upbeat on economic growth views that could be supported by tax cuts and higher infrastructure spending under the new administration.
However, the dollar edged weaker against the yen on Wednesday in the Asian trading session as Japan trade showed a surprise gain on exports and investors noted the most recent tweet by President Donald Trump signaled he would sign an executive order on Wednesday to build a wall on the border with Mexico.
Japan's exports rose for the first time in 15 months in December on strong sales of electronics and car parts, a positive sign for the export-reliant economy even as U.S. protectionism threatens to hurt trade across the region and dent external demand.
Sterling retreated on Tuesday as a British Supreme Court ruling that the government will need parliamentary approval before triggering the process the exit the European Union looked unlikely to hamper Prime Minister Theresa May’s plans.
For the week ahead, Trump's policy plans in his first days in office are likely to attract investor’s focus and dominate headlines. Investors will also looking at fourth quarter growth data from the U.S. on Friday and from the U.K. a day earlier. Today’s data on German business climate by the IFO institute will also be closely watched.
The pound fell on Tuesday as a ruling that British Prime Minister Theresa May must seek parliamentary approval before triggering the process to exit the European Union looked unlikely to hamper the government’s plans.
GBP/USD dropped as low as 1.2439 ending the day with losses of 0.47%.
The Supreme Court ruled by 8 votes to 3 that the government will need to seek approval from parliament in order to trigger Article 50 of the Lisbon Treaty to begin the formal process of withdrawing from the EU, known as Brexit.
The court also ruled that the government does not have to consult the devolved parliaments of Scotland, Wales or Northern Ireland before triggering article 50, removing a possible hurdle to Brexit.
The U.K. will be releasing the preliminary reading on fourth quarter growth on Thursday.
Pivot: 1.2535Support: 1.249 1.246 1.2415Resistance: 1.2535 1.258 1.2605Scenario 1: short positions below 1.2535 with targets at 1.2490 & 1.2460 in extension.Scenario 2: above 1.2535 look for further upside with 1.2580 & 1.2605 as targets.Comment: the RSI is mixed to bearish.
Gold
Gold prices were little changed on Tuesday, fluctuating close to the prior session's two-month high as investors continued to focus on President Donald Trump for further details on his promises of tax reform, infrastructure spending and deregulation.
However, on Wednesday, strong exporting data from Japan provided signs the recent rise in protectionism policies failed to dent global trade activity and demand across the region.
In the week ahead, the economic calendar is light but Trump's policy plans in his first days in office are likely to dominate headlines. Investors will also be waiting for a first look at fourth quarter growth from the U.S.
Pivot: 1207.6Support: 1198.4 1195.6 1191.5Resistance: 1207.6 1210 1214Scenario 1: short positions below 1207.60 with targets at 1198.40 & 1195.60 in extension.Scenario 2: above 1207.60 look for further upside with 1210.00 & 1214.00 as targets.Comment: the RSI is mixed to bearish.
WTI Oil
Crude oil pirces ended Tuesday slightly higher, despite a larger than anticipated build in U.S. inventories as reported by the API. According to the American Petroleum Institute, U.S. crude oil inventories gained by 2.9 million barrels at the end of last week, more than the 2.8 million barrels build expected.
API also said gasoline stocks rose 4.8 million barrels and distillate supplies gained 2.0 million barrels with supplies at the Cushing, Oklahoma, oil hub down 100,000 barrels at the end of last week.
In addition, Trump signed two executive orders on Tuesday to move forward with construction of the controversial Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favor of expanding energy infrastructure.
On Wednesday, the U.S. Department of energy will release official figures. The official EIA figures are expected to show a build of about 2.8 million barrels.
Pivot: 52.89Support: 52.89 52.65 52.38Resistance: 53.35 53.57 53.82Scenario 1: long positions above 52.89 with targets at 53.35 & 53.57 in extension.Scenario 2: below 52.89 look for further downside with 52.65 & 52.38 as targets.Comment: the RSI is mixed to bullish.
US 500
U.S. stocks were higher on Tuesday, as gains in the Basic Materials, Industrials and Technology sectors led shares higher. At the close in NYSE, the Dow Jones Industrial Average gained 0.57%, while the S&P 500 index climbed 0.66%, and the NASDAQ Composite index gained 0.86%.
The S&P 500 and Nasdaq set record highs as quarterly earnings season heats up and investors become optimistic that clarity on President Donald Trump's economic policies will be forthcoming.
Trump signed two executive orders on Tuesday to move forward with construction of the controversial Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favor of expanding energy infrastructure.
In the week ahead, the economic calendar is light but Trump's policy plans in his first days in office are likely to dominate headlines. Investors will also be waiting for a first look at fourth quarter growth from the U.S.
Pivot: 2267 Support: 2267 2259 2253 Resistance: 2280 2290 2300 Scenario 1: long positions above 2267.00 with targets at 2280.00 & 2290.00 in extension. Scenario 2: below 2267.00 look for further downside with 2259.50 & 2253.00 as targets. Comment: the RSI lacks downward momentum.