The dollar fell against most major currencies on Friday, posting its largest one day decline in three weeks due to fears over the prospect for further interest rate hikes this year amid a slowdown in inflation.
The U.S. dollar index, which measures the dollar’s strength against a basket of six major currencies, was down 0.37% at 96.98 late Friday, pulling further away from the one-month highs reached on Tuesday.
St. Louis Federal Reserve President James Bullard said Friday that the Fed should hold off on any further rate increases to see how the economy is progressing.
In the week ahead, investors will be focusing on remarks by Fed Chair Janet Yellen on Tuesday for new indications on the timing of further rate hikes and signals on plans to trim the Fed’s balance sheet.
Investors will also be waiting for Friday’s euro zone inflation data and speeches by central bank heads at the ECB’s forum on central banking in Portugal.
GBP/USD was 0.2 percent higher on Friday, reaching $1.2745, its highest level in six days.
The pound was supported by comments from outgoing Bank of England policymaker Kristin Forbes, who said the increase of UK interest rates should not be delayed any longer.
Further support in the pound came earlier in the week when Bank of England chief economist Andy Haldane called for a rate rise in the coming months.
On Tuesday, the Bank of England is to publish its bi-annual financial stability report and Governor Mark Carney is to hold a press conference.
Pivot: 1.2705
Support: 1.2705 1.268 1.265
Resistance: 1.2785 1.2815 1.286
Scenario 1: long positions above 1.2705 with targets at 1.2785 & 1.2815 in extension.
Scenario 2: below 1.2705 look for further downside with 1.2680 & 1.2650 as targets.
Comment: the RSI lacks downward momentum.
Gold
Gold prices rose to one-week highs on Friday, boosted by the weaker dollar which fell amid persistent fears over prospects for further U.S. interest rate hikes this year.
However, persisting expectations for a rate hike later this year limited the upside momentum for the precious metal which is currently trading around the $1254 area, early on Monday, recovering from a low of $1241 reached on Wednesday.
Further support on gold came after St. Louis Federal Reserve President James Bullard said Friday that the Fed should hold off on any further rate increases to see how the economy is progressing.
A speech by Fed Chair Janet Yellen will be in the spotlight for Tuesday for fresh indications on the timing of further rate hikes.
Pivot: 1252
Support: 1252 1248 1244
Resistance: 1259 1263 1266
Scenario 1: long positions above 1252.00 with targets at 1259.00 & 1263.00 in extension.
Scenario 2: below 1252.00 look for further downside with 1248.00 & 1244.00 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
WTI Oil
U.S. West Texas Intermediate crude August contract inched up 27 cents, or around 0.6%, to end at $43.01 a barrel by close of trade Friday. It touched its lowest since August 11 at $42.05 on Wednesday.
Prices started to recover on Thursday supported by a drop in crude and gasoline inventories.
Data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 23rd week in a row, the longest such streak on record.
Inventory data from the American Petroleum Institute and the Energy Information Administration will remain in focus for this week.
Pivot: 42.7
Support: 42.7 42.3 42
Resistance: 43.75 44.2 44.7
Scenario 1: long positions above 42.70 with targets at 43.75 & 44.20 in extension.
Scenario 2: below 42.70 look for further downside with 42.30 & 42.00 as targets.
Comment: the RSI is bullish and calls for further upside.
US 500
The main U.S. indices closed mostly higher on Friday, as upbeat new home sales data eased concerns about a slowdown in the housing market while a rebound in oil prices helped the energy sector to post a four-day losing streak.
Investors also kept a close eye on health care stocks, which closed about 3% higher for the week ahead of the Senate’s vote on a healthcare bill next week, which aims to repeal and replace Obamacare.
A week after announcing its $13.7 billion deal for Whole Foods, Amazon (NASDAQ:AMZN) announced the launch of Prime Wardrobe, its new fashion platform.
For Friday, the Dow Jones Industrial Average closed at 21,394.76, the S&P 500 closed 0.13% higher and the Nasdaq closed up by 0.44%.
Pivot: 2439
Support: 2428 2425 2421
Resistance: 2439 2442 2445
Scenario 1: short positions below 2439.00 with targets at 2428.00 & 2425.00 in extension.
Scenario 2: above 2439.00 look for further upside with 2442.00 & 2445.00 as targets.
Comment: as long as 2439.00 is resistance, look for choppy price action with a bearish bias.