The dollar traded lower against a basket of major currencies on Thursday, after the Federal Reserve failed to adopt a more aggressive outlook concerning the pace of rate hikes this year.
The Federal Reserve on Wednesday, raised interest rates by 0.25% to a target range of 0.75% to 1% but kept its previous forecast of three rate increases this year unchanged, which disappointed investors, who expected four rate hikes in 2017.
The dollar continued its move lower in the mid-afternoon session, after a mixed batch of economic data failed to halt the slide, as the greenback slumped to a five-week low.
Weekly initial jobless claims fell to 241,000. Housing starts rose to a seasonally adjusted annual rate of 1.288 million in February while the Philadelphia Fed Index topped forecasts at 32.8 for March.
Both the Philadelphia Fed Index and the housing starts beat forecasts.
Today Canada is to release a report on manufacturing sales ; while the U.S. is to round up the week with a report on industrial production and a preliminary reading of consumer sentiment from the University of Michigan.
The pound rose to two-week highs against the dollar on Thursday after the Bank of England held interest rates at record lows, but the meeting minutes showed the monetary policy committee was split on the decision.
Kristen Forbes, who is due to leave the BoE in June, voted in favor of raising the benchmark interest rate to 0.5%, the first monetary policy committee member to do so in over a year.
The other eight members of the committee voted to keep rates on hold at 0.25%.
The central bank also said it was to maintain the stock of asset purchases financed by the issuance of central bank reserves at £435 billion.
Market analysts had expected the central bank to vote 9-0 to keep policy steady.
The central bank warned that inflation is likely to overshoot its target this summer, due in part to higher energy costs and to keep increasing.
Pivot: 1.231Support: 1.231 1.226 1.2235Resistance: 1.24 1.243 1.2475Scenario 1: long positions above 1.2310 with targets at 1.2400 & 1.2430 in extension.Scenario 2: below 1.2310 look for further downside with 1.2260 & 1.2235 as targets.Comment: the RSI lacks downward momentum.
Gold
Gold prices traded sharply higher on Thursday, amid a slump in the dollar, as investors mulled over the Federal Reserve’s more dovish than expected statement on the pace of rate hikes this year.
The Federal Reserve stuck a familiar tone in its statement on Wednesday, pointing out that interest rate increases “will be gradual” in 2017, and maintained its view of three rate hikes, with the remaining two rate hikes expected later this year.
Fed Chief Janet Yellen said in press conference Wednesday, the US central bank would continue to provide accommodative monetary policy to support the US economy but warned against a prolonged period of lower rates in order to avoid a situation which forces the fed to “raise rates rapidly”.
Meanwhile a mixed batch of economic data had a muted effect on the yellow-metal as it continued to trade near session highs.
Pivot: 1223.2Support: 1223.2 1217.5 1211Resistance: 1233.7 1237 1241Scenario 1: long positions above 1223.20 with targets at 1233.70 & 1237.00 in extension.Scenario 2: below 1223.20 look for further downside with 1217.50 & 1211.00 as targets.Comment: a support base at 1223.20 has formed and has allowed for a temporary stabilisation.
WTI Oil
Crude settled lower on Thursday, as high levels of U.S. crude inventories sparked doubts about the effectiveness of OPEC’s plan to drain the flood of oil that continues to suppress prices.
Crude prices struggled for direction throughout the day, after rising more than 2% in the previous session, following the surprise dip in U.S. crude inventories.
U.S. crude inventories declined to 528.2 million barrels last week, the first decline in nine weeks, data from the Energy Information Agency showed.
Today energy traders will focus on Baker Hughes weekly data on the U.S. oil rig count.
Pivot: 49.13Support: 48.3 47.75 47.25Resistance: 49.13 49.63 50.13Scenario 1: short positions below 49.13 with targets at 48.30 & 47.85 in extension.Scenario 2: above 49.13 look for further upside with 49.63 & 50.13 as targets.Comment: the RSI lacks upward momentum.
US 500
U.S. equities closed mostly lower on Thursday, as gains in Financials were offset by losses in health care, after President Trump’s budget blueprint proposed budget cuts to the National Institutes of Health (NIH).
Healthcare stocks nosedived, as President Trump’s budget blueprint proposed cutting the NIH budget by $5.8 billion while Financials, mostly banks, traded tentatively higher after the Federal Reserve hiked interest rates on Wednesday.
Weekly initial jobless claims fell to 241,000. Housing starts rose to a seasonally adjusted annual rate of 1.288 million in February while the Philadelphia Fed Index topped forecasts at 32.8 for March. Both the Philadelphia Fed Index and the housing starts beat forecasts.
The Dow Jones Industrial Average closed 0.07% lower at 20,934. The S&P 500 lost 0.16% and the Nasdaq Composite added 0.01% to close at 5,900.
Pivot: 2356.5 Support: 2356.5 2353 2350.7 Resistance: 2372 2375 2380 Scenario 1: long positions above 2356.50 with targets at 2372.00 & 2375.00 in extension. Scenario 2: below 2356.50 look for further downside with 2353.00 & 2350.70 as targets. Comment: the RSI advocates for further advance.