The dollar held steady against the other major currencies on Tuesday, after the release of downbeat U.S. data, as investors returned their attention to the Federal Reserve’s policy statement on Wednesday.
The U.S. Commerce Department earlier reported that retail sales fell 0.1% last month, and Core retail sales, which exclude automobile sales, declined by 0.1% in February. A separate report showed that the U.S. producer price index fell 0.2% last month, and year-over-year producer prices were flat. Core PPI, which excludes food and energy, was also flat in February, below forecasts for a gain of 0.1%. At the same time, the Federal Reserve Bank of New York said that its general business conditions index improved to 0.6 this month, from a reading of -16.6 in February, below analysts’ expectations.
Elsewhere, the yen was boosted after the Bank of Japan made no change to monetary policy, in a widely anticipated decision, as it assesses the economic impact of its decision in January to deploy negative interest rates. The BoJ maintained its ¥80 trillion base money target and a 0.1% negative interest rate it applies to some reserves. But the Bank also flagged weakness in exports and output due to slowing growth in emerging economies, indicating that more stimulus may be needed in the future.
Today the U.K. is to release its latest employment report and the government is to publish its annual budget statement; Canada is to produce data on manufacturing sales and foreign securities purchases; the U.S. is to publish report on building permits, housing starts, consumer inflation and industrial production; and New Zealand is to publish data on gross domestic product.
But the main event will be this evening FOMC meeting, when the Federal Reserve is to announce its benchmark interest rate and hold a press conference to outline the factors affecting the monetary policy decision.
The euro inched up on Tuesday in a quiet day of trading, as foreign exchange traders await the release of the Federal Reserve's monetary policy statement for potential clues on the pace of tightening the U.S. central bank will embark on for the remainder of the year.
The currency pair traded in a tight range between 1.1072 and 1.1125, before settling up 0.06% on the session. The euro closed above 1.11 against the dollar for the fourth consecutive session. Since opening 2016 slightly above 1.085, the euro is up approximately 2.3% against its American counterpart.
Today investors’ focus will be on the FOMC meeting, where the Fed is widely expected to leave its benchmark Federal Funds Rate at its current range between 0.25 to 0.50%.
Pivot: 1.1135Support: 1.107 1.103 1.0985Resistance: 1.1135 1.1165 1.122Scenario 1: short positions below 1.1135 with targets @ 1.1070 & 1.1030 in extension.Scenario 2: above 1.1135 look for further upside with 1.1165 & 1.1220 as targets.Comment: technically the RSI is below its neutrality area at 50.
Gold
Gold fell sharply on Tuesday, extending sharp losses from the previous session, as the Bank of Japan left interest rates unchanged, at a closely-watched meeting ahead of the Federal Reserve's latest interest rate decision on this afternoon.
The precious metal traded in a broad range between $1,226.50 and $1,238.60 an ounce before settling down 1.03% on the session. Gold has closed lower in three straight sessions and six of the last seven.
Today the main event for gold traders will be the FOMC meeting, when the Federal Reserve is to announce its benchmark interest rate and hold a press conference to outline the factors affecting the monetary policy decision.
Pivot: 1238Support: 1225 1215 1211Resistance: 1238 1248 1259Scenario 1: short positions below 1238 with targets @ 1225 & 1215 in extension.Scenario 2: above 1238 look for further upside with 1248 & 1259 as targets.Comment: the upward potential is likely to be limited by the resistance at 1238.
WTI Oil
Crude futures fell 2% on Tuesday, extending losses from the previous session, as a monthly report from OPEC provided further signals of a widening gap between supply and demand on energy markets worldwide.
WTI continued to slide, in spite of a slight reduction in OPEC production last month. In its monthly oil market report released on Monday, OPEC said its output decreased by 175,000 to 32.28 million barrels per day in February, mainly due to pipeline disruptions in Iraq and Nigeria. Production in Saudi Arabia, the world's largest exporter of crude, held steady at 10.22 million bpd. Analysts appeared more concerned with the growing imbalance between supply and demand, amid indications for lower than expected refinery demand in Asia during the spring maintenance season and slowing economic outlook in Latin America.
But crude oil prices pointed higher in early Asia on Wednesday after industry data on U.S. crude and refined product stockpiles showed a sharp drop in gasoline supplies. The American Petroleum Institute said crude oil stocks rose 471,000 barrels last week, while distillates stock fell 830,000 barrels and gasoline stock dropped 1.2 million barrels.
Today investors’ focus will be on the government report, which could show that crude stockpiles increased by 3.4 million barrels for the week ending on March 11.
Pivot: 37.45Support: 35.93 35.33 34.5Resistance: 37.45 38.22 38.9Scenario 1: short positions below 37.45 with targets @ 35.93 & 35.33 in extension.Scenario 2: above 37.45 look for further upside with 38.22 & 38.90 as targets.Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
US 500
U.S. stocks closed relatively flat on Tuesday, in spite of continued declines in oil prices, as investors remained cautious ahead of the Federal Reserve's release of its latest monetary policy statement following the completion of its March meeting.
The Dow Jones Industrial Average gained 0.13%, while the NASDAQ Composite index fell 0.45%, despite a strong performance from Apple Inc (NASDAQ:AAPL) and a host of other major tech stocks.
The S&P 500 Composite index, meanwhile, inched down 0.18%, as six of 10 sectors closed in the red. Stocks in the Health Care and Basic Materials industries lagged, while stocks in the Technologies and Utilities sectors led.
Now investors’ focus is on tonight FOMC meeting where, although the Federal Open Market Committee is widely expected to leave its benchmark interest rate at its current level between 0.25 and 0.50%, Fed chair Janet Yellen could provide indications on the pace of tightening the U.S. central bank will embark on for the remainder of the year.
Pivot: 1930 Support: 1930 1890 1810 Resistance: 2043 2080 2115 Scenario 1: long positions above 1930 with targets @ 2043 & 2080 in extension. Scenario 2: below 1930 look for further downside with 1890 & 1810 as targets. Comment: the RSI is bullish and calls for further upside. Prices have confirmed a double-bottom pattern. The 20-day simple moving average has turned up and now plays a support role.