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iFOREX Daily Analysis : July 05,2017

Published 07/05/2017, 04:51 AM
Updated 09/16/2019, 09:25 AM

The dollar held onto its recent gains on Tuesday, after a data boost by U.S. manufacturing reports, with trading expected to be light due to the fourth of July holiday.

Further support in the dollar came after a retreat in both the euro and the pound. The pound was trading below $1.30 and the euro below $1.14.

An RBA meeting on monetary policy took place early on Tuesday, where the Aussie fell after a decision to keep interest rates steady at a record low.

The yen held stronger ahead of the Wednesday release of Fed minutes and heightened geopolitical risk after North Korea said overnight it had successfully test fired an intercontinental ballistic missile.

Today, the UK is to release data on service sector activity and the U.S. is to release data on factory orders.

For this week the main focus is on Wednesday’s minutes of the Fed’s latest meeting for fresh clues on the timing of the next U.S. rate hike. Friday’s U.S. jobs report for June will also be closely watched.

USD/CAD

The Canadian dollar was higher against its U.S. counterpart on Tuesday, re-approaching Friday’s nine-month peaks boosted by the newly hawkish tone of the Bank of Canada.

USD/CAD was down 0.26% to 1.2972 by 09.30 AM ET, not far from Friday’s lows of 1.2945.

Expectations for a rate hike by the BoC as early as next month mounted following hawkish comments by central bank head Stephen Poloz last week.

Today, the U.S. is to release data on factory orders while later in the day, the Fed is to publish the minutes of its latest monetary policy meeting..

USD/CAD Chart.

Pivot: 1.298
Support: 1.291 1.288 1.285
Resistance: 1.298 1.3015 1.3045

Scenario 1: short positions below 1.2980 with targets at 1.2910 & 1.2880 in extension.
Scenario 2: above 1.2980 look for further upside with 1.3015 & 1.3045 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

Gold

Gold prices posted the largest one day percentage decline since June 15 dropping by almost 1.5% on Monday as a stronger dollar, gains in U.S. equities and strong U.S. manufacturing data on Monday weighed on the precious metal.

Gold prices bounced back, rising by 0.73% to $1,228.09 early on Wednesday, amid heightened geopolitical risk after North Korea said it had successfully test fired an intercontinental ballistic missile.

Gold traders will be focusing mainly on the Fed minutes on Wednesday and the Non-Farm Payrolls report on Friday.

Gold Chart

Pivot: 1228.5
Support: 1221 1217.5 1211
Resistance: 1228.5 1234.5 1240.5

Scenario 1: short positions below 1228.50 with targets at 1221.00 & 1217.50 in extension.
Scenario 2: above 1228.50 look for further upside with 1234.50 & 1240.50 as targets.
Comment: the upward potential is likely to be limited by the resistance at 1228.50.

WTI Oil

Oil prices recovered part of their earlier losses in subdued trade on Tuesday, due to the U.S. fourth of July holiday.

U.S. crude oil was up 10 cents, or 0.21%, at $47.17 at 10:15 ET. Brent gained 8 cents, or 0.16%, to $49.76.

Oil has settled higher for eight consecutive sessions, as support came from reports of a recent dip in U.S. output and a slowdown in U.S. drilling activity.

In the week ahead, market focus will be shifted towards weekly data on U.S. inventories with the API report due later today because of the 4th of July holiday.

WTI Oil

Pivot: 46.45
Support: 46.45 46 45.4
Resistance: 47.8 48.6 49.35

Scenario 1: long positions above 46.45 with targets at 47.80 & 48.60 in extension.
Scenario 2: below 46.45 look for further downside with 46.00 & 45.40 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Germany 30

The main German index lost ground on Tuesday, as losses in the Food & Beverages, Telecoms and Retail sectors led shares lower.

At the close in Frankfurt, the DAX fell 0.31%.

The best performers of the session on the DAX were Deutsche Bank (DE:DBKGn) which rose 1.86%, Henkel & Co KG which added 0.46% and Allianz (DE:ALVG) that was up 0.43%.

The worst performers of the session were Lufthansa which fell 1.06%, Siemens that declined 1.02% and Deutsche Telekom (DE:DTEGn) that was down 0.95%.

The DAX volatility index, which measures the implied volatility of DAX options, was up 3.09% to 14.10.

Germany 30

Pivot: 12375
Support: 12375 12310 12260
Resistance: 12490 12555 12630

Scenario 1: long positions above 12375.00 with targets at 12490.00 & 12555.00 in extension.
Scenario 2: below 12375.00 look for further downside with 12310.00 & 12260.00 as targets.
Comment: the RSI is mixed and calls for caution.

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