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iFOREX Daily Analysis : January 31 ,2017

Published 01/31/2017, 05:13 AM
Updated 09/16/2019, 09:25 AM

The dollar lost ground on Monday with concerns over a travel ban to the U.S. for seven predominantly Muslim countries leading to a move to safe-haven investments such as the Japanese yen and gold, as expectations grow for the Fed to issue cautious language in its latest policy statement on Wednesday.

In addition, the U.S. President Donald Trump on Monday fired acting U.S. Attorney General Sally Yates after she ordered Justice Department lawyers not to enforce his immigration ban order, adding further pressure on the dollar.

The Fed, which is to hold its next policy meeting on Wednesday, isn’t expected to raise interest rates, but investors are keen to hear how it views the economic outlook and the future path of interest rates.

Data on Monday showed that U.S. consumer spending increased in December, rising 0.5% after a 0.2% increase in November. Personal income rose 0.3% last month after edging up 0.1% in November.

A separate report showed that U.S. pending home sales rose by 1.6% in December, ahead of forecasts for a 1.1% increase.

In the week ahead, markets will be paying close attention to Friday’s U.S. nonfarm payrolls report for January as well as Wednesday’s policy statement by the Federal Reserve.

For today, The euro zone is to release preliminary estimates of consumer price inflation and fourth quarter GDP, while later in the day, European Central Bank President Mario Draghi is to speak at an event in Frankfurt.

USD/JPY

Despite positive economic data from the U.S., the dollar slipped against the yen on Monday, as the Japanese currency benefited from its safe-haven status, with the appetite for risk curbed by U.S. President Donald Trump's hardening defense over his immigration policies.

The dollar lost more than 1 percent overnight, retreating from 115.000.

The latest blow against the dollar was initiated on Monday, after the president fired acting U.S. Attorney General Sally Yates after she refused to defend Trump's new travel restrictions.

For today, the U.S. is to release private sector data on consumer confidence.

USD/JPY ChartPivot: 113.9Support: 114.5 114.25 113.9Resistance: 113 112.55 112Scenario 1: long positions above 1.0720 with targets at 1.0775 & 1.0800 in extension.Scenario 2: below 1.0720 look for further downside with 1.0690 & 1.0665 as targets.Comment: the RSI lacks downward momentum.

Gold

Gold gained in the U.S. on Monday due to a weaker dollar and with concerns over a travel ban to the U.S. for seven predominantly Muslim countries leading to a move to safe-haven assets such as gold and as expectations grow for the Fed to issue cautious language in its latest policy statement on Wednesday.

Appetite for safe-haven assets improved after Trump fired attorney General Sally Yates after she refused to defend Trump's new travel restrictions.

Gold traders will be focusing on the Fed statement which is due on Wednesday, but will also keep an eye out on key economic data, with the monthly U.S. employment report in the spotlight.

Gold ChartPivot: 1193Support: 1193 1188 1181Resistance: 1217.5 1211.5 1207Scenario 1: long positions above 1193.00 with targets at 1207.00 & 1211.50 in extension.Scenario 2: below 1193.00 look for further downside with 1188.00 & 1181.50 as targets.Comment: the RSI is supported by a bullish trend line.

WTI Oil

WTI crude oil prices ended Monday in negative territory, still pressured by increased drilling activity from the U.S. as prospects of rising U.S. production weighed on the market.

Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. increased by 15 last week, the 12th gain in 13 weeks.

That brought the total count to 566, the most since November 2015.

Elsewhere on Nymex, gasoline futures gained 0.3% to $1.529 a gallon, while March heating oil dipped 0.6%, to $1.624 a gallon.

In the week ahead, market participants will focus on the next weekly data on U.S. inventories due on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

WTI Oil ChartPivot: 52.87Support: 53.42 53.19 52.87Resistance: 52.33 52.1 51.93Scenario 1: short positions below 52.80 with targets at 52.06 & 51.80 in extension.Scenario 2: above 52.80 look for further upside with 53.05 & 53.25 as targets.Comment: technically the RSI is below its neutrality area at 50.

US 500

U.S. stocks were lower after the close on Monday, as losses in the Oil & Gas, Basic Materials and Technology sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average fell 0.61%, while the S&P 500 index declined 0.60%, and the NASDAQ Composite index declined 0.83%.

The best performers of the session on the Dow Jones Industrial Average were Walt Disney Company (NYSE:DIS) which rose 1.50%, Wal-Mart Stores Inc (NYSE:WMT) added 1.16% and American Express Company (NYSE:AXP) was up 0.56%.

In the week ahead, markets will be paying close attention to Friday’s U.S. nonfarm payrolls report for January as well as Wednesday’s policy statement by the Fed.

US 500 Chart Pivot: 2280 Support: 2263.5 2259.5 2253 Resistance: 2296 2290 2280 Scenario 1: short positions below 2280.00 with targets at 2263.50 & 2259.50 in extension. Scenario 2: above 2280.00 look for further upside with 2290.00 & 2296.00 as targets. Comment: as long as the resistance at 2280.00 is not surpassed, the risk of the break below 2263.50 remains high.

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