The dollar extended losses against most major currencies on Wednesday, pressured by a surge in both the pound and Canadian dollar, after central bank governors from both the Bank of England and the Bank of Canada hinted that they could reduce current stimulus measures.
Expectations for tighter monetary policy measures from Bank of England and Bank of Canada provide significant support to both the sterling and the Canadian dollar.
In addition, the U.S. the Senate’s decision to delay a vote on a health-care bill to repeal and replace Obamacare weighed on dollar sentiment, as investors questioned whether the delay would derail President Trump’s plan to introduce pro-growth economic measures such as tax-reform.
Meanwhile pending home sales in the U.S. unexpectedly declined in May for a third straight month, dampening optimism over the health of the housing sector, industry data showed on Wednesday.
In a report, the National Association of Realtors (NAR) said its pending home sales index decreased by a seasonally adjusted 0.8% last month, compared to expectations for a gain of 0.8%.
For today, Germany is to publish preliminary data on inflation and later in the day, the U.S. is to release revised data on first quarter growth and a report on initial jobless claims.
GBP/USDThe sterling surged to a post-election high of $1.2973 against the dollar on Wednesday, up more 1%, after Bank of England governor Mark Carney, appeared to reverse his recent assertion that there ‘was no need to raise rates soon’, hinting that a rate hike may be in the plans for the near future, suggesting that “some removal of monetary stimulus is likely to become necessary”.
Speaking at a European Central Bank forum in Portugal, Carney said that policymakers would need to look at the extent to which stronger business investment is offset by weaker consumption, as well as growth in wages and labor costs.
U.S. data on first quarter growth and a report on initial jobless claims will be in the spotlight for today.
Pivot: 1.291
Support: 1.291 1.286 1.2815
Resistance: 1.3015 1.305 1.31
Scenario 1: long positions above 1.2910 with targets at 1.3015 & 1.3050 in extension.
Scenario 2: below 1.2910 look for further downside with 1.2860 & 1.2815 as targets.
Comment: the RSI is bullish and calls for further upside.
Gold prices recovered slightly from six-week lows reached on Monday, only to trade in a tight range between $1245 and $1254 on Wednesday.
The precious metal was supported by a slump in the dollar to eight-month lows as well as rising political uncertainty, after the Senate’s decision to delay a vote on a healthcare bill raised fresh doubts about President Trump’s ability to deliver on his pro-growth economic agenda.
Gold traders will be focusing on today’s U.S. data on first quarter growth and a report on initial jobless claims.
Pivot: 1246
Support: 1246 1241 1238
Resistance: 1257 1259 1263
Scenario 1: long positions above 1246.00 with targets at 1257.00 & 1259.00 in extension.
Scenario 2: below 1246.00 look for further downside with 1241.00 & 1238.00 as targets.
Comment: the RSI advocates for further advance.
Crude futures settled higher on Wednesday, as a bigger than expected drop in gasoline inventories offset an unexpected build in crude output, easing investor concerns about a slowdown in demand for refined products.
Data in June showed stockpiles of gasoline rose back above 2016 levels and well above their five-year average.
For the remaining of the week, investors will be watching closely on data from Baker Hughes on active U.S. oil rigs.
Pivot: 44.4
Support: 44.4 43.9 43.55
Resistance: 45.25 45.55 45
Scenario 1: long positions above 44.40 with targets at 45.25 & 45.55 in extension.
Scenario 2: below 44.40 look for further downside with 43.90 & 43.55 as targets.
Comment: the RSI is supported by a bullish trend line.
The main U.S. indices gained sharply on Wednesday, with the benchmark S&P 500 index scoring its biggest one-day percentage gain in about two months, as financial and technology stocks led a broad market rebound.
Financials were the best performing S&P sector, rising 1.6 percent.
Bank stocks including JP Morgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) helped boost the S&P 500, both rising more than 2.0 percent. The interest rate-sensitive group was helped by an increase in yields for 10-year Treasuries.
The Dow Jones rose 0.68 percent, the S&P 500 gained 0.88 percent, and the Nasdaq added 1.43 percent.
Pivot: 2436
Support: 2436 2431 2425
Resistance: 2447 2451 2460
Scenario 1: long positions above 2436.00 with targets at 2447.50 & 2451.50 in extension.
Scenario 2: below 2436.00 look for further downside with 2431.00 & 2425.00 as targets.
Comment: the RSI is mixed with a bullish bias.