The dollar rose against a basket of the other major currencies on Friday as the pound remained sharply lower after British Prime Minister Theresa May’s Conservative Party unexpectedly lost its majority in parliament in a national election.
May faced calls to quit on Friday after her election gamble to win a stronger mandate backfired, leaving no single party with a clear claim to power just 10 days ahead of the start of negotiations on Britain's divorce from the European Union.
The dollar index fell to seven-month lows earlier in the week amid caution ahead of former FBI Director James Comey's testimony and the UK election.
Comey accused President Donald Trump of firing him in order to undermine an investigation into Russia’s alleged involvement in the U.S. presidential election, but did not say whether he thought the president attempted to obstruct justice.
Gains in the euro were limited after the European Central Bank cut its inflation forecasts, but dropped its guidance that interest rates may be cut again.
For the coming week, all eyes are on the Fed which ends a two-day meeting on Wednesday. The central bank is widely expected to hike interest rates and the focus is on whether it would leave the door open for further monetary tightening in the months to come.
The Sterling dropped on Friday as British elections left no single party with a clear claim to power.
The pound had tumbled by as much as 2.5 percent after the results, its lowest since mid-April a result flagged by some analysts as the worst possible election outcome due to uncertainty.
Negotiations on Britain's exit from the European Union are due to start next Monday.
Pivot: 1.278
Support: 1.27 1.2635 1.255
Resistance: 1.278 1.2825 1.288
Scenario 1: short positions below 1.2780 with targets at 1.2700 & 1.2635 in extension.
Scenario 2: above 1.2780 look for further upside with 1.2825 & 1.2880 as targets.
Comment: intraday technical indicators are mixed and call for caution.
Gold
Gold prices fell for a third day on Friday as the stronger dollar weighed after British elections failed to deliver a clear majority for Prime Minister Theresa May, sending sterling sharply lower.
In addition, a testimony from former FBI Director James Comey to the Senate Committee was less controversial than many had feared, easing investor concerns about a sharp rise in U.S. political turmoil which dampened demand for safe havens.
The precious metal found some support by the fact that the UK election had thrown the country's politics into turmoil and will potentially disrupt Brexit negotiations.
The focus is now shifted towards next week’s FOMC meeting for indications on further monetary tightening in the months to come.
Pivot: 1271
Support: 1264 1260 1254
Resistance: 1271 1276 1280
Scenario 1: short positions below 1271.00 with targets at 1264.00 & 1260.00 in extension.
Scenario 2: above 1271.00 look for further upside with 1276.00 & 1280.00 as targets.
Comment: the RSI is mixed with a bearish bias.
WTI Oil
Oil futures settled a bit higher on Friday, but prices still suffered their third straight weekly loss as the market weighed rising U.S. drilling and swelling stockpiles against efforts by major producers to cut output to reduce a global glut.
For the week, WTI lost $1.83, or about 3.8% after the U.S. Energy Information Administration (EIA) showed a surprise build in crude oil stocks to 513.2 million barrels and after Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 21st week in a row
In the week ahead, investors will continue to eye fresh inventory data to gauge the strength of demand in the U.S., while diplomatic tensions between Qatar and other Middle Eastern nations will also remain in focus.
Pivot: 45.2
Support: 45.2 44.6 44.15
Resistance: 46.75 47.1 47.55
Scenario 1: long positions above 45.20 with targets at 46.75 & 47.10 in extension.
Scenario 2: below 45.20 look for further downside with 44.60 & 44.15 as targets.
Comment: the RSI is supported by a rising trend line.
US 500
The main U.S. indices moved higher on Friday, as gains in the Oil & Gas, Financials and Basic Materials sectors led shares higher while losses in the Technology, Consumer Services and Consumer Goods sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average added 0.42% to hit a new all-time high, while the S&P 500 index fell 0.08%, and the NASDAQ Composite index fell 1.80%.
Some of the best performers of the session were Pfizer Inc (NYSE:PFE) which rose 3.21% and JPMorgan Chase & Co (NYSE:JPM) which added 2.37%. The worst performers of the session were Apple Inc (NASDAQ:AAPL) which fell 3.88% and Microsoft Corporation (NASDAQ:MSFT) that declined 2.27%.
The focus is now shifted towards the FOMC statement this Wednesday where a rate hike is widely expected.
Pivot: 2417
Support: 2417 2412 2407
Resistance: 2433 2437 2443
Scenario 1: long positions above 2417.00 with targets at 2433.00 & 2437.00 in extension.
Scenario 2: below 2417.00 look for further downside with 2412.50 & 2407.00 as targets.
Comment: the RSI lacks downward momentum.