The dollar rose to its highest level since April 2003 against a basket of the other major currencies on Friday, amid a rally driven by the U.S. presidential election and expectations that the Federal Reserve will raise interest rates next month.
The US index has risen around 3.0% so far this month following the outcome of the U.S. presidential election, tracking rising U.S. Treasury yields amid expectations that President-elect Donald Trump’s plans to ramp up fiscal spending and cut taxes will spur economic growth and inflation. Faster growth would spark inflation, which in turn would prompt the Fed to tighten monetary policy a faster rate than had previously been expected.
The dollar rally has also been boosted by bets that the U.S. central bank will almost certainly raise interest rates next month. Fed Chair Janet Yellen on Thursday reiterated that a rate hike “could well become appropriate relatively soon.”
In the week ahead, trade volumes are expected to remain light around Thursday's Thanksgiving holiday and Friday's shortened trading session. The U.S. is set to release data on durable goods orders, jobless claims and new home sales ahead of the holiday, on Wednesday. Survey data on euro zone private sector business activity, also due on Wednesday will be closely watched for fresh indications on the health of the single currency bloc’s economy.
The euro fell to 11-month lows against the dollar on Friday, with EUR/USD at 1.0588 in late trade. For the week the pair was down 2.16%.
The euro-dollar was down for a 10th consecutive session on Friday as ECB president Mario Draghi promised to maintain stimulus until it was clear that euro zone inflation was self-sustainable and while Fed chair Janet Yellen’s revelation that the members of the American central bank generally agreed at the November 2 policy meeting that a rate hike in the U.S. would be appropriate “relatively soon” strengthened the greenback.
Draghi said on Friday that the ECB would base the decision on the withdrawal of stimulus on its analysis of whether the recovery in inflation can sustain itself.
Today European Central Bank President Mario Draghi is to testify about the bank's Annual Report before the European Parliament, in Strasbourg.
Pivot: 1.064Support: 1.0565 1.051 1.046Resistance: 1.064 1.0685 1.074Scenario 1: short positions below 1.0640 with targets at 1.0565 & 1.0510 in extension.Scenario 2: above 1.0640 look for further upside with 1.0685 & 1.0740 as targets.Comment: as long as the resistance at 1.0640 is not surpassed, the risk of the break below 1.0565 remains high.
Gold
Gold prices fell to the lowest level since May on Friday, as the dollar rallied to almost 14-year highs amid a rally driven by the U.S. presidential election and expectations that the Federal Reserve will raise interest rates next month.
Gold prices were pressured lower as the dollar continued to surge following the outcome of the U.S. presidential election, tracking rising U.S. Treasury yields amid expectations that President-elect Donald Trump’s plans to ramp up fiscal spending and cut taxes will spur economic growth and inflation. Faster growth would spark inflation, which in turn would prompt the Fed to tighten monetary policy a faster rate than had previously been expected.
Today metal traders will focus on ECB President Mario Draghi’ speech about the bank's Annual Report before the European Parliament, in Strasbourg.
Pivot: 1200Support: 1200 1193 1184Resistance: 1222 1233 1245Scenario 1: long positions above 1200.00 with targets at 1222.00 & 1233.00 in extension.Scenario 2: below 1200.00 look for further downside with 1193.00 & 1184.00 as targets.Comment: technically the RSI is above its neutrality area at 50.
WTI Oil
Oil futures finished higher on Friday, logging their first weekly gain in more than a month amid optimism that OPEC will agree to production cuts at a meeting scheduled for the end of the month.
Crude oil for delivery in December inched up 27 cents, or 0.59%, to end the week at $45.69 a barrel. The contract touched $46.58 on Thursday, a level not seen since November 1.
OPEC is moving closer toward finalizing its first deal since 2008 to limit oil output, with most members prepared to offer Iran significant flexibility on production volumes, ministers and sources said on Friday.
In the week ahead energy traders will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.
Pivot: 44.78Support: 44.78 44.25 43.6Resistance: 46.75 47.25 47.68Scenario 1: long positions above 44.78 with targets at 46.75 & 47.25 in extension.Scenario 2: below 44.78 look for further downside with 44.25 & 43.60 as targets..Comment: the RSI is mixed to bullish.
US 500
U.S. stocks ended lower on Friday, with healthcare stocks leading the declines, as investors cashed in on a post-election rally and waited for clarity on the next administration's policies.
Wall Street equities took a breather after rising dramatically since Donald Trump's surprise victory in the presidential election last week.
While the three major indexes closed higher for the second week in a row, the rally lost some steam this week as investors awaited more information to support their bets that Trump could succeed in passing proposals to lift infrastructure spending and reduce taxes.
The Dow Jones industrial average fell 0.19%, while the S&P 500 dropped 0.24% and the Nasdaq Composite slipped 0.23%.
Pivot: 2168 Support: 2168 2150 2100 Resistance: 2190 2200 2216 Scenario 1: long positions above 2168.00 with targets at 2190.00 & 2200.00 in extension. Scenario 2: below 2168.00 look for further downside with 2150.00 & 2100.00 as targets. Comment: the RSI calls for a rebound.