The dollar continues to gain against most major currencies on Thursday, after a solid U.S. jobless claims report and as growing expectations for a March rate hike by the Federal Reserve continued to support demand for the U.S. currency.
Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 223,000 for the week ended Feb. 25, the lowest level since March 1973, the Labor Department said on Thursday.
Economists had forecast new claims falling to 243,000 in the latest week.
The stronger labor market and rising inflation could push the Federal Reserve to raise interest rates this month. Several Fed officials have in recent days suggested the U.S. central bank could increase borrowing costs soon.
The case at the Federal Reserve for an interest rate increase in March has gained support and will be on the table when policymakers meet later this month, Federal Reserve Governor Jerome Powell said on Thursday.
Several Fed policymakers have made the case this week that the U.S. central bank is closer to another rate hike and investors widely expect the move will come at the March 14-15 policy meeting.
For Friday, Germany is to publish figures on retail sales, the U.K. is to report on service sector activity and the ISM is to report on service sector activity. Meanwhile, key Fed members are due to give remarks and Fed Chair Janet Yellen is to speak at an event in Chicago.
The euro remains broadly lower against the dollar, with the EUR/USD retreating by 0.35% on Thursday, as the U.S. economy appears to be gaining momentum bringing the case for a March rate hike on the table.
The number of Americans filing for unemployment benefits fell to near a 44-year low last week, pointing to further tightening of the labor market even as economic growth appears to have remained moderate in the first quarter.
For Friday, investors will be focusing on the ISM service sector activity report and on comments by key Fed officials later in the day including Fed president Janet Yellen for further clues on monetary policy tightening by the Fed.
Pivot: 1.0545Support: 1.049 1.047 1.045Resistance: 1.0545 1.057 1.059Scenario 1: short positions below 1.0545 with targets at 1.0490 & 1.0470 in extension.Scenario 2: above 1.0545 look for further upside with 1.0570 & 1.0590 as targets.Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
Gold
Gold prices extended losses from the prior session, as growing expectations of a March rate hike pushed the dollar higher and add pressure on the yellow-metal, especially after several key Fed members continued the hawkish rhetoric over the past few days.
Meanwhile, upbeat U.S. jobless claims data weighed further on gold prices, after the labor department said on Thursday that initial jobless claims fell to the lowest level in almost 44 years, marking a solid statement by the U.S. labour market.
Gold is trading near the $1230 level early on Friday’s European session with gold traders focusing on the ISM service sector activity report and on comments by key Fed officials later in the day.
Pivot: 1236.25Support: 1226 1223 1219Resistance: 1236.25 1242.25 1247.25Scenario 1: short positions below 1236.25 with targets at 1226.00 & 1223.00 in extension.Scenario 2: above 1236.25 look for further upside with 1242.25 & 1247.25 as targets.Comment: the RSI is bearish and calls for further decline.
WTI Oil
Crude settled more than 2% lower on Thursday, as rising U.S. crude stockpiles added to oversupply concerns while Russia failed to initiate further production cuts in January.
On Wednesday an Energy Information Agency (EIA) report showed crude inventories in the United States rose for an eight straight week to a record 520.2 million barrels for the week ended Feb 24.
Meanwhile, according to energy ministry data Russia’s February oil output was unchanged from January at 11.1 million barrels per day (bdp), with cuts remaining at 100,000, which is well below the production cuts pledged by Russia in a deal with OPEC last November.
Friday’s report by Baker Hughes on active U.S. oil rigs is now in focus.
Pivot: 52.9Support: 52.4 52.1 51.85Resistance: 52.9 53.25 53.5Scenario 1: short positions below 52.90 with targets at 52.40 & 52.10 in extension.Scenario 2: above 52.90 look for further upside with 53.25 & 53.50 as targets.Comment: the RSI is bearish and calls for further decline.
US 30
The main U.S. indices fell lower on Thursday, as markets retreated from record highs while Snap ended its debut session 44% higher. Markets were pressured by financials, mostly banks, that weighed on overall performance
In what was a quiet day for U.S. economic data releases with initial jobless claims the only event of note on the calendar, Snap’s market debut was closely watched by market participants.
Snap Inc (NYSE:SNAP) started its first day of trading at $24 per share, and gained by almost 50% by 14:00 EST, as investors stand in queue for shares of Snap, the parent company of the photo messaging service Snapchat.
The Dow Jones Industrial Average closed down around 112 points, the S&P 500 fell by 0.59% and the Nasdaq Composite dropped down 0.73%.
Pivot: 21070 Support: 20830 20765 20700 Resistance: 21070 21160 21300 Scenario 1: short positions below 21070.00 with targets at 20830.00 & 20765.00 in extension. Scenario 2: above 21070.00 look for further upside with 21160.00 & 21300.00 as targets. Comment: as long as 21070.00 is resistance, likely decline to 20830.00.