The U.S. dollar eased against its major counterparts on Friday, amid fading expectations of a Federal Reserve rate hike in the next couple of months and as markets continued to evaluate the consequences of the Brexit vote. Market players all but ruled out further rate hikes by the Fed this year in the aftermath of Britain’s vote to leave the European Union.
The dollar slumped 0.7% against the yen as weak economic data from China and the fallout from the U.K.’s vote to leave the EU boosted safe-haven demand. The Caixin China manufacturing purchasing managers’ index fell to 48.6 in June, below expectations for 49.1, while the official manufacturing PMI came in at 50.0 last month, in line with expectations.
Meanwhile, GBP/USD slid 0.33%, remaining close to a 31-year low of 1.3122, as investors continued to digest the political and economic aftermath of the U.K.’s decision to leave the European Union.
London mayor Boris Johnson abruptly pulled out of the race to become Britain's next prime minister on Thursday, while Britain’s Justice Secretary Michael Gove and Interior Minister Theresa May also announced their candidacy to lead the party.
Today U.S. financial markets will be closed for the Independence Day holiday, while the U.K. is to release data on construction activity.
On Friday the euro rose after a Reuters report said the European Central Bank was not considering buying government debt out of proportion to euro zone countries' shareholding in the bank. The single currency had fallen sharply on Thursday on a Bloomberg report that the ECB had been considering giving up the capital key due to a shortage of German paper.
In the week ahead, market players will be shifting their attention slightly away from Brexit-related headlines and more towards economic fundamentals and U.S. monetary policy, with the June nonfarm payrolls report and FOMC meeting minutes in the spotlight. There is also ISM services data on Wednesday. Elsewhere, in the U.K., market players will be eyeing the release of the Bank of England’s financial stability report for fresh clarity on the health of the U.K. banking sector in wake of Britain’s shock decision to leave the European Union.
Pivot: 1.11Support: 1.11 1.1075 1.103Resistance: 1.117 1.119 1.122Scenario 1: long positions above 1.1100 with targets @ 1.1170 & 1.1190 in extension.Scenario 2: below 1.1100 look for further downside with 1.1075 & 1.1030 as targets.Comment: the RSI is mixed to bullish.
Gold
Gold prices rallied on Friday, closing just below a 27-month peak, amid fading expectations of a Federal Reserve rate hike in the next couple of months and as investors continued to digest the political and economic aftermath of the U.K.’s decision to leave the European Union.
For the week, the precious metal tacked on $16.70, or 1.27%, the fifth straight weekly gain.
In the week ahead, market players will be shifting their attention slightly away from Brexit-related headlines and more towards economic fundamentals and U.S. monetary policy, with the June nonfarm payrolls report and FOMC meeting minutes in the spotlight. There is also ISM services data on Wednesday.
Pivot: 1328Support: 1328 1320 1313Resistance: 1359 1376 1393Scenario 1: long positions above 1328.00 with targets @ 1359.00 & 1376.00 in extension.Scenario 2: below 1328.00 look for further downside with 1320.00 & 1313.00 as targets.Comment: the RSI is mixed to bullish.
WTI Oil
Oil futures ended higher on Friday, as a weaker U.S. dollar lent support to the commodity and amid subsiding fears about the Brexit referendum’s impact on crude demand.
Gains were limited as data showed that the U.S. oil rig count rose for the fourth time over the past five weeks. Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. increased by 11 last week to 341, marking the fourth increase in five weeks.
In the week ahead, oil traders will be focusing on U.S. stockpile data on Wednesday and Thursday for fresh supply-and-demand signals. The reports come out one day later than usual due to the Independence Day holiday in the U.S. on Monday. Market players will also continue to monitor supply disruptions across the world for further indications on the rebalancing of the market.
Pivot: 48.15Support: 48.15 47.4 46.8Resistance: 49.6 50 50.5Scenario 1: long positions above 48.15 with targets @ 49.60 & 50.00 in extension.Scenario 2: below 48.15 look for further downside with 47.40 & 46.80 as targets.Comment: the RSI broke above a bearish trend line.
US 500
U.S. stocks were higher after the close on Friday, as gains in the Healthcare, Telecoms and Consumer Services sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average added 0.11%, while the S&P 500 index gained 0.28%, and the NASDAQ Composite index gained 0.41%.
In the week ahead, market players will be shifting their attention slightly away from Brexit-related headlines and more towards economic fundamentals and U.S. monetary policy, with the June nonfarm payrolls report and FOMC meeting minutes in the spotlight. There is also ISM services data on Wednesday.
Pivot: 1990 Support: 1990 1950 1895 Resistance: 2130 2190 2250 Scenario 1: long positions above 1990.00 with targets @ 2130.00 & 2190.00 in extension. Scenario 2: below 1990.00 look for further downside with 1950.00 & 1895.00 as targets. Comment: the RSI is mixed to bullish.