The US Dollar traded stronger against a basket of other major currencies with the US Dollar Index (USDX) rising by 0.17%. The Canadian Dollar (CAD) was one of the best performing currencies of the day with gains close to a percent against the US Dollar, following reports that a new NAFTA trade deal could be announced next week. The Turkish Lira (TRY) was again under pressure trading barely below the 4 USD/TRY after a disappointing inflation report.
Gold retraced as the Dollar strengthened and US Treasury yields rose. The reported new NAFTA deal could have had alleviated some concerns about the US led trade war rhetoric. Oil climbed on Tuesday and API crude oil inventory data showed a draw on oil stockpiles in the US.
US equities rebounded from the losses on Monday as also the embattled tech values hit by a variety of bad news in the last week managed to close higher.
Cryptocurrencies gained significantly on Monday, with Bitcoin’s gains at around 6% clearly below the daily gains of other cryptocoins such as Litecoin and Ripple.
On Wednesday in Australia Retail Sales figures will be published. In the United Kingdom the Construction PMI will be released. For the European Union unemployment and inflation figures will be published, while in the US mortgage, employment, factory and ISM statistics will be released.
The Euro was under pressure due to disappointing economic data from Germany, the biggest economy of the Euro Zone. German Retail Sales were unexpectedly at -0.7% m/m for February (expected +0.7%) and the Manufacturing PMI at 58.2 (expected 58.4) also failed to meet expectations. In the US data showed more optimism with Vehicle Sales at 17.48 million surpassing expectations. The Redbook Store Sales was up by 4.4% y/y (previous +3.6%).
On Wednesday Italy and the European Union release their respective Unemployment Rate statistics. The EU will also publish its Harmonised Index of Consumer Prices (HICP) data.
Pivot: 1.228 Support: 1.2235 1.2215 1.2185Resistance: 1.228 1.2315 1.2335 Scenario 1: short positions below 1.2280 with targets at 1.2235 & 1.2215 in extension. Scenario 2: above 1.2280 look for further upside with 1.2315 & 1.2335 as targets. Comment: the RSI is bearish and calls for further decline. Prices broke below a consolidation zone between 1.228 and 1.2335
Gold
Gold lost a significant part of the gains incurred on Monday when concerns about a trade war between China and US intensified. The strong Dollar and higher US Treasury yields pushed the safe-haven precious metal lower. A strong Dollar makes gold more expensive in non-Dollar countries, while higher yields on high-grade bonds are said to make the non-interest bearing gold a less attractive investment.
Analysts see potential in gold in case global tensions rise, such as breakout of a trade war. On Wednesday in the US a variety of fundamental data is expected.
Pivot: 1339.75 Support: 1328.5 1324.5 1321Resistance: 1339.75 1345 1351 Scenario 1: short positions below 1339.75 with targets at 1328.50 & 1324.50 in extension. Scenario 2: above 1339.75 look for further upside with 1345.00 & 1351.00 as targets. Comment: the RSI advocates for further decline.
WTI Oil
Oil gradually increased during the day ahead of reports from the American Petroleum Institute (API) on inventories. Data from the API indicated a draw of 3.3 million barrels, which was again a surprise, since it was expected that inventories would increase. However price movement on the news was rather restrained. Analysts fear that the spat between Saudi-Arabia could cause uncertainty in the oil market. While there is a possibility of short-term supply issues, it is mentioned to be also possible that this conflict could put the OPEC production cut agreement at risk. Iran and Saudi-Arabia are both OPEC members.
On Wednesday the Energy Information Administration (EIA) will publish its oil inventories report.
Pivot: 64.2 Support: 62.6 62 61.6Resistance: 64.2 64.9 65.3 Scenario 1: short positions below 64.20 with targets at 62.60 & 62.00 in extension. Scenario 2: above 64.20 look for further upside with 64.90 & 65.30 as targets. Comment: the RSI is mixed to bearish.
US 500
Equity indices in the US stabilized and closed higher, after the downturn on Monday brought them close to the low seen in February. Especially energy (US Energy ETF (NYSE:XLE) +2.15%) and chip maker values (US Semiconductors ETF +1.62%) traded higher.
Previously embattled companies such as Facebook (NASDAQ:FB) (+0.44%), Tesla (NASDAQ:TSLA) (+5.87%) and Amazon (NASDAQ:AMZN) (+1.43%) managed to close higher. Amazon is under pressure as the US President Trump leads a campaign to raise taxes on Amazon, citing unfair use of the postal service and putting small enterprises out of business. The newspaper ‘Washington Post’, which is owned by Amazon’s CEO J. Bezos, is one of the fiercest critics of the Trump Administration.
The IPO of the music-streaming company Spotify was met with significant interest and the reference price for the public offering of $132 was very clearly exceeded on the first trading day with intraday high over $168.
On Wednesday the Mortgage Bankers' Association publishes multiple mortgage market indicators. Also on Wednesday the ADP Employment Report, Factory Orders statistic and the ISM Non-Manufacturing Index are due for release.
Pivot: 2552 Support: 2552 2531 2500 Resistance: 2625 2660 2680 Scenario 1: long positions above 2552 with targets at 2625 & 2660 in extension. Scenario 2: below 2552 look for further downside with 2531 & 2500 as targets. Comment: the RSI is bullish and calls for further advance.