The U.S. dollar dipped against a basket of major currencies on Tuesday, after U.S. inflation data failed to convince currency traders that the Federal Reserve was moving closer to another interest rate hike.
The dollar initially rose against the euro and Swiss franc, after data showed U.S. consumer prices recorded their biggest increase in more than three years in April as gasoline and rents rose, with the euro hitting a session low against the greenback of $1.1303 and the dollar hitting a nearly nine-week high against the franc of 0.9803 franc .But that move was short-lived, and the dollar erased gains to trade lower against the euro, yen, and franc. Analysts said the inflation data was mixed, partly since core CPI increased 2.1% in the 12 months through April after rising 2.2% in March.
Fed funds futures on Tuesday suggested traders saw an 11% probability of a Fed rate hike next month, according to CME Group's (NASDAQ:CME) Fed Watch program.
Today the U.K. is to publish its monthly employment report; the euro area is to release revised data on consumer inflation, while the Federal Reserve is to publish the minutes of its April meeting, which will be closely watched by investors, for further information on the possible next rate hike.
The euro was virtually flat on Tuesday, as investors digested hawkish signals from the Federal Reserve on the increased likelihood of multiple interest rate hikes from the U.S. central bank this year, despite the release of subdued core inflation figures earlier in the session.
The currency pair traded in a tight range between 1.1302 and 1.1347, before settling down 0.01% on the session.
At a joint appearance in Washington, both Atlanta Fed president Dennis Lockhart and San Francisco Fed president John Williams suggested that "two to three rate hikes," seem possible for 2016, while Lockhart noted that a rate hike will still remain on the table at the FOMC's next meeting. Neither Lockhart, nor Williams own a vote in the current policy cycle.
Today all the focus will be on Federal Reserve’s minutes of its April meeting, for clues on the path of future interest rate increases.
Pivot: 1.1325Support: 1.1245 1.1215 1.1185Resistance: 1.1325 1.135 1.1365Scenario 1: short positions below 1.1325 with targets @ 1.1245 & 1.1215 in extension.Scenario 2: above 1.1325 look for further upside with 1.1350 & 1.1365 as targets.Comment: the RSI has broken down its 30 level.
Gold
Gold ticked up on Tuesday, remaining near one-week highs, as U.S. consumer prices showed little signs of building inflationary pressure last month, potentially delaying the timing of the Federal Reserve's next interest rate hike.
The precious metal wavered between $1,270.00 and $1,283.65 an ounce, before settling up 0.29%. With the slight gains on Tuesday, gold remains near 15-month highs from the beginning of May when it eclipsed $1,300 an ounce. Gold has now closed higher in four straight sessions and five of the last six. Since the start of the year, gold is up by more than 20% and is on pace for one of its strongest first halves in more than a decade.
Today all the focus will be on Federal Reserve’s minutes of its April meeting, for clues on the path of future interest rate increases.
Pivot: 1282Support: 1269 1265 1261.5Resistance: 1282 1289 1295Scenario 1: short positions below 1282.00 with targets @ 1269.00 & 1265.00 in extension.Scenario 2: above 1282.00 look for further upside with 1289.00 & 1295.00 as targets.Comment: the RSI advocates for further downside.
WTI Oil
Crude futures traded in a tight range on Tuesday, one session after surging more than 3%, amid production disruptions in Nigeria, increased political instability in Venezuela and a bullish note to investors by Goldman Sachs Group Inc (NYSE:GS) on near-term increases in oil prices through the end of the second quarter.
As demonstrations raged on in Caracas, the Financial Times reported that Venezuelan protesters fear that president Nicolas Maduro will cling on to his position at "all costs." Maduro's government has looked to plug a massive budget deficit by printing money in bulk, which has pushed inflation up by more than 140%, according to some estimates.
WTI edged higher in Asia on Wednesday, after U.S. industry estimates on stocks showed solid draws in refined products. The American Petroleum Institute said crude oil stock fell 1.14 million barrels at the end of last week, less than the 3 million barrel decline seen.
Today energy traders will focus on the government report by the Energy Information Administration (EIA), which could show that crude stockpiles fell by 3.1 million barrels in the week ended May 13.
Pivot: 47.5Support: 47.5 47 46.45Resistance: 49 49.3 49.8Scenario 1: long positions above 47.50 with targets @ 49.00 & 49.30 in extension.Scenario 2: below 47.50 look for further downside with 47.00 & 46.45 as targets.Comment: the RSI is mixed with a bullish bias.
US 500
U.S. stocks fell sharply on Tuesday, erasing most of their gains from the previous sessions, as two prominent Federal Reserve policymakers strongly hinted that the U.S. central bank could raise interest rates multiple times this year, providing downward pressure on the major indices.
At a joint appearance in Washington, both Atlanta Fed president Dennis Lockhart and San Francisco Fed president John Williams suggested that "two to three rate hikes," seem possible, while Lockhart noted that a rate hike will still remain on the table when the Federal Open Market Committee meets next on June 14-15.
The Dow Jones Industrial Average tumbled 1.02%, while the NASDAQ Composite index lost 1.25% and the S&P 500 Composite index, meanwhile, fell 0.94%, as nine of 10 sectors closed in the red. Stocks in the Utilities, Consumer Goods and Consumer Services lagged, each falling by more than 1% on the session. The S&P remains near a key technical level at 2,043.
Pivot: 2039 Support: 2039 2006 1970 Resistance: 2085 2100 2130 Scenario 1: long positions above 2039.00 with targets @ 2085.00 & 2100.00 in extension. Scenario 2: below 2039.00 look for further downside with 2006.00 & 1970.00 as targets. Comment: the RSI is mixed and calls for caution. A head-and-shoulders pattern is taking shape.