Currencies
EUR/USD – keeps on dropping quite fast and while only a few days ago I said that parity is still far away, we are approaching it relatively fast if we continue in this pace. The lowest level reached early last year was 1.046 (back in March 2015. If we drop below that we will be trading at levels not seen since January 2003! But before that we will be waiting to see what the ECB will do. In the short term, even though the USD is still strong, we are getting in strong oversold territory.
USD/JPY – continues to slice through resistance levels as butter as it appears there is nothing stopping the USD, maybe the next resistance just under the 111 level?
GBP/USD – we got some very strong sales data out of the UK, but this was unable to lift the GBP further up, most likely because it was trading higher already. Since then we see the GBP drop again and is currently trading again in the support range mentioned yesterday.
AUD/USD – since the weak data it has continued to drop further and reached the lowest level since June this year.
USD/MXN – kept on finding support on the Fibonacci level and has since moved further up, also due to the general strength of the USD. The Mexican Central Bank tried to strengthen the MXN by raising the interest rate with 0.50%, but it didn’t have the desired effect.
USD/TRY – moved to a new record high after reports in Turkey that President Erdogan is looking to increase his power by removing the post of Prime Minister.
Indices
Dollar Index – there we have it, we broke through the 100.655 level and reached the highest level since April 2003, a 13½ year high! We can see that since then we have continued moving up, so it appears that the profit taking deluxe I spoke about indeed took place. Also the fact that FED Chair Yellen said that the time for a rate hike was relatively soon, was a positive sign for the USD.
S&P 500 – is close to reaching a new record high and it will be interesting to see if after the Dow Jones, also the S&P will be able to mark new highs.
T-Notes – continue to drop further and is trading around an area of support. With the USD strengthening, the expected interest rate hike, and the booming equity market, the demand for T-Notes is low.
Commodities
Gold – I said yesterday that gold could be waiting for the Dollar Index to break through and that is indeed exactly what happened. Right after the Index marked a new 13+ year high, we saw gold move down and break out of the range it has been trading at in recent days. It has tested the support around the 1205 level, but the next one is right above the 1200 level, which is also a psychological level.
Oil – keeps looking for a direction, but the strength of the USD is driving oil lower, along with other commodities. Also the lack of any reported progress in the negotiations is casting renewed doubt on the likelihood of an agreement. We can expect some comments to filter through as that is what happens most of the time, just to cause oil to move up and keep expectations alive. Even if in the end an agreement will be reached, it must be scrutinized and see if there are indeed firm quotas for each country and also if that will rally impact the oversupply situation. The most important issue that must be checked is if they will really follow through on the agreement. As said many times in the past, OPEC has a habit of agreeing to something, but not actually following through, as can be seen at their own quota of which they usually always break by producing more.
Stocks
Boeing (NYSE:BA) – after reporting in September that the road was cleared for Boeing to sell airplanes to Iran after the sanctions were lifted, Congress has now blocked Boeing for doing business with Iran.
Tesla (NASDAQ:TSLA) – finalized the takeover of SolarCity for an estimated $2 billion. Tesla says it plans to make solar roofs that are cheaper than regular roofs. This is an additional step that Tesla is taking from being only a car manufacturer to become a clean energy powerhouse.