The dollar was steady against most major currencies on Wednesday, after the release of mixed U.S. economic reports as concerns over global geopolitical tensions continue to add pressure on demand for riskier assets. The Institute of Supply Management said its non-manufacturing purchasing manager's index fell to a 20-month low of 55.3 last month from 55.9 in November, missing forecasts for a reading of 56.0. In addition, factory orders decreased by 0.2% in November, matching forecasts. The data came after payroll processing firm ADP reported that non-farm private employment rose by 257,000 last month, easily surpassing expectations for an increase of 192,000. A separate report showed that the U.S. trade deficit narrowed to $42.37 billion in November when analysts had expected it to narrow to $44.0 billion. Meanwhile, investors remain cautious after North Korea confirmed on Wednesday that it had conducted a nuclear test and said that it won't give up nuclear capability unless U.S. abandons its hostile foreign policy towards the country. For today, Germany is to publish data on factory orders and retail sales. The wider euro area is to report on the unemployment rate and the U.S. is to release the weekly report on initial jobless claims. The Swiss National Bank is to publish data on its foreign currency reserves.
The euro rose moderately against the dollar on Wednesday, following mixed economic reports from the U.S. and as the Federal Reserve reiterated a plan to normalize monetary policy gradually. The minutes from the Federal Open Market Committee's December meeting, showed that all of its voting members were in agreement that labor market and inflation conditions at the time were appropriate to raise short-term interest rates modestly by 25 basis points. Investors also reacted to a wave of geopolitical events which may escalate in Asia and the Middle East. The currency pair traded in a broad range between 1.0711 and 1.0839 before settling 0.30% higher for the session. Over the last month of trading, the euro is relatively flat against the dollar down approximately 1% during the period. For today, Germany is to publish data on factory orders and retail sales. The wider euro area is to report on the unemployment rate and the U.S. is to release the weekly report on initial jobless claims.
Pivot: 1.0745Support: 1.0745 1.0705 1.067Resistance: 1.084 1.0885 1.0945Scenario 1: long positions above 1.0745 with targets @ 1.084 & 1.0885 in extension.Scenario 2: below 1.0745 look for further downside with 1.0705 & 1.067 as targets.Comment: the RSI is supported by a rising trend line.
Gold
Gold surged by more than 1% on Wednesday moving to near two-month highs, as investors moved into the safe-haven asset after North Korea roiled global markets with claims that it successfully tested a miniaturized hydrogen bomb. On Wednesday morning, North Korea said it successfully exploded a nuclear device at the Punggye-ri test site, tests which were overseen by the country's leader Kim Jong-un. The explosion marked the isolationist nation's fourth nuclear test since 2006 and its first in nearly three years. The tests were immediately condemned by China, North Korea's strongest ally in the region, and United Nations Secretary-General Ban Ki-Moon. For today, investors will be focusing on jobless claims data from the U.S. while the main focus is shifted on tomorrow’s Non-Farm Payroll report.
Pivot: 1086Support: 1086 1082 1075Resistance: 1104 1110 1114Scenario 1: long positions above 1086 with targets @ 1104 & 1110 in extension.Scenario 2: below 1086 look for further downside with 1082 & 1075 as targets.Comment: the RSI is mixed to bullish.
WTI Oil
U.S crude oil prices fell sharply on Wednesday reaching fresh multi-year lows, as rising tensions between Saudi Arabia and Iran provided further indications that the two Persian Gulf oil powers may be unwilling to engage in any diplomatic efforts to cut near-record oversupply on global markets. WTI crude for February delivery traded in a broad range between $33.78 and $36.35 a barrel before settling lower by more than 5% for the day. Iran foreign minister Mohammad Javad Zarif criticized the Saudi kingdom for restraining Iranian economic growth by keeping oil prices low. Iran is set to release 500,000 barrels per day of oil ready for export when economic sanctions are eased this year and an additional 500,000 barrels shortly thereafter. Elsewhere, investors digested a massive draw of 5.1 million barrels in U.S. crude inventories for the week ending on January 1, significantly below forecasts for a build of 500,000 bpd.
Pivot: 34.3Support: 32.05 31 30Resistance: 34.3 35.15 35.78Scenario 1: short positions below 34.3 with targets @ 32.05 & 31 in extension.Scenario 2: above 34.3 look for further upside with 35.15 & 35.78 as targets.Comment: the RSI has broken down its 30 level.
U.S. stocks plunged more than 1% on Wednesday completing their worst three-day start to a year since 2008, as crude oil prices fell to fresh multi-year lows and the Federal Reserve reiterated its plan to raise interest rates gradually over the next year. Investors also reacted to gloomy geopolitical and economic news in Asia, as North Korea announced that it successfully detonated a miniature hydrogen bomb on Wednesday morning, while China said activity in its service sector in December fell to its lowest level in 17 months. The Dow Jones Industrial Average plummeted by 1.47% while the S&P 500 fell by 1.31% extending its weakest yearly start since the Financial Crisis. On the S&P 500, all 10 sectors closed in the red as stocks in the Energy, Basic Materials and Telecommunications sectors lagged. For today, investors will be focusing on jobless claims data from the U.S. while the main focus is shifted on tomorrow’s Non-Farm Payroll report.
Pivot: 1979 Support: 1979 1953 1867 Resistance: 2043 2090 2116 Scenario 1: long positions above 1979 with targets @ 2043 & 2090 in extension. Scenario 2: below 1979 look for further downside with 1953 & 1867 as targets. Comment: the RSI lacks downward momentum.