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iFOREX Daily Analysis : October 11, 2016

Published 10/11/2016, 06:28 AM
Updated 09/16/2019, 09:25 AM
GBP/USD
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US500
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DJI
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AAPL
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IXIC
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0593xq
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The dollar held onto gains against the other major currencies on Monday, hovering close to a two-month peak, as hopes for a U.S. rate hike before the year end continued to support.

Trading volumes remained thin, with most banks and federal institutions closed for the Columbus Day holiday and no major data releases are on tap for Monday.

Elsewhere, the pound erased the sharp losses posted on Friday but remained under pressure amid sustained concerns over a ‘hard Brexit’ for Britain.

While the commodity-related currencies strengthened as oil prices moved sharply higher on Monday, after Russian President Vladimir Putin said his country is prepared to join an oil-output deal which may include a production freeze or cut.

Today in the euro zone the ZEW Institute is to report on German economic sentiment, while in the U.S., Minneapolis Fed President Neel Kashkari is to deliver comments at 15:00GMT.

GBP/USD

On Monday the sterling was down only 0.3% against the dollar at $1.2324, in the wake of Friday's "flash crash" that sent it hurtling to its lowest levels in 31 years.

Yesterday Marc Chandler, global head of currency strategy at Brown Brothers Harriman, commented the event like this: “Economic data does not help very much to explain sterling's movement. The fact of the matter is that the UK has fared well in the three and half months since the referendum, but now the depreciation of sterling will have an impact on the UK current account balance. It will be reduced, but do not be surprised if it comes from reduced volume of imports as much as an increase in value of exports”.

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This week investors will focus on the Bank of England’s credit conditions survey that will be released on Friday.

GBP/USD ChartPivot:1.24Support:1.22251.2121.201Resistance:1.241.24851.26Scenario 1:short positions below 1.2400 with targets at 1.2225 & 1.2120 in extension.Scenario 2:above 1.2400 look for further upside with 1.2485 & 1.2600 as targets.Comment:as long as 1.2400 is resistance, look for choppy price action with a bearish bias.

Gold

Gold prices rose sharply on Monday, as traders returned to the market to seek cheap valuations after futures suffered their worst one-week performance since September 2013.

The precious metal gained modestly also in Asia on Tuesday, with attention on minutes from the Fed's September board meeting later this month and policymaker speeches in focus. But U.S. retail sales data will also be in the spotlight, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs before the end of the year.

Gold ChartPivot:1250.2Support:1250.21240.51235Resistance:126512771287Scenario 1:long positions above 1250.20 with targets at 1265.00 & 1277.00 in extension.Scenario 2:below 1250.20 look for further downside with 1240.50 & 1235.00 as targets.Comment:the RSI lacks downward momentum.

WTI Oil

Oil prices added to strong gains on Monday, after Russian President Vladimir Putin said his country is prepared to join an oil-output deal which may include a freeze or cut to output.

Speaking at the World Energy Congress in Istanbul Monday, Putin said he hoped OPEC would agree on limits to its crude production in November and that Russia was ready to support that decision. Russia will continue to be a reliable energy supplier, he said. Putin's bullish comments came after Saudi Arabia's Energy Minister Khalid al-Falih said he was optimistic a production deal could be reached by November and that it wasn’t “unthinkable” that crude prices could rise another 20% this year to $60 a barrel.

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WTI Oil ChartPivot:44.2Support:44.23935.4Resistance:56.561.770Scenario 1:long positions above 44.20 with targets at 56.50 & 61.70 in extension.Scenario 2:below 44.20 look for further downside with 39.00 & 35.40 as targets.Comment:the RSI is mixed to bullish.

US 500

U.S. stocks rose on Monday, as energy shares gained with oil prices and as Apple (NASDAQ:AAPL) jumped, due to rival Samsung Electronics (KS:005930)' worsening smartphone recall crisis.

Aiding the advance, polls showed Democrat Hillary Clinton's lead widening in the U.S. presidential race, following further turmoil in Republican Donald Trump's campaign over the weekend and a late Sunday debate between the candidates. Clinton is viewed as more positive for stocks partly because her positions are well known, Wall Street strategists have said.

For the day, the Dow Jones industrial average was up 0.49%, the S&P 500 gained 0.46% and the Nasdaq Composite added 0.69%.

US 500 Chart Pivot: 2136 Support: 2136 2128 2123 Resistance: 2168 2172 2177 Scenario 1: long positions above 2136.00 with targets at 2168.00 & 2172.00 in extension. Scenario 2: below 2136.00 look for further downside with 2128.00 & 2123.00 as targets. Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

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