The US Dollar traded overall stronger compared to other major currencies after the Federal Reserve reiterated its stance on interest rate hikes, with the US Dollar Index (USDX) closing 0.14% higher and extending gains on Thursday.
Oil was again under pressure after data from the EIA showed higher stockpiles for crude oil and distillates over the course of the last week. While gold managed to trade above the previous low, the strong Dollar and the prospect of higher interest rates pushed the precious metal safe haven asset’s price lower.
With the exception of the tech index NASDAQ (US Tech 100) indices traded mostly lower and extended losses early on Thursday. Chinese indices traded around 2 percent lower on Thursday as the US are considering to charge higher rates of tariffs on Chinese goods in the course of the trade standoff.
Major cryptocurrencies such as Bitcoin and Ethereum recovered from the lows seen on Thursday and traded moderately higher.
On Thursday in the United Kingdom PMI construction data is expected as well as the interest rate decision from the Bank of England (BoE). A majority of analysts expect the central bank to raise its rate but there is no complete confidence that this would actually happen.
The EUR/USD traded lower after the Dollar received support from statements of the Federal Reserve, which gave a positive assessment of the state of the US economy and confirmed that it would continue raising interest rates, despite the US President Trump not being in favor of higher rates.
German PMI Manufacturing data missed expectations at was only at a level of 56.9 in July (expected 55.9). In the ADP Employment Report exceeded expectations for July with 219 thousand (expected 173 thousand), while the ISM Manufacturing Index lagged behind expectations at a level of 58.1 (expected 59.5).
On Thursday in the European Union the Producer Price Index for June is expected. In the US data on Jobless New Claims and Factory Orders is due.
Pivot: 1.167 Support: 1.1635 1.162 1.16Resistance: 1.167 1.17 1.172 Scenario 1: short positions below 1.1670 with targets at 1.1635 & 1.1620 in extension. Scenario 2: above 1.1670 look for further upside with 1.1700 & 1.1720 as targets. Comment: the RSI shows downside momentum.
The Turkish Lira hit a new all-time low against the Dollar after the United States announced sanctions against two ministers in President Erdogan’s government. The tensions come amid the Turkish authorities holding an US pastor under house arrest, alleging his participation in the 2016 coup that sought to overthrow the president. The Turkish government vowed to take retaliatory measures for these sanctions.
Another key concern for the US, adding to the political tensions are the ongoing negotiations between Turkey and Russia to acquire the Russian S400 air defense system, with the supply of the US fighter jets F35 from Lockheed Martin (NYSE:LMT) (-0.4%) now being questioned by US lawmakers.
Meanwhile it was reported that the Manufacturing PMI for July was higher at 49.0 (previous 46.8) and exports were also picking up to 14.1 billion (previous 12.6).
On Friday the Consumer Price Index (CPI) and Producer Price Index (PPI) statistics will be released.
Pivot: 4.9443 Support: 4.9443 4.8969 4.8687Resistance: 5.0744 5.1027 5.1309 Scenario 1: as long as 4.9443 is support look for 5.0744. Scenario 2: below 4.9443, expect 4.8969 and 4.8687. Comment: the RSI is above 50. The MACD is positive and below its signal line. The pair could retrace. Moreover, the pair is below its 20 MA (4.9924) but above its 50 MA (4.9603).
WTI Oil
Oil extended its losses on Wednesday, as the report from the Energy Information Administration (EIA) pained a similar picture as the report from the American Petroleum Institute (API) released on Tuesday, that crude oil stockpiles were higher. According to EIA data crude oil inventories were up by 3.8 million barrels, distillates up by 3 million barrels and gasoline inventories saw a draw of 2.5 million barrels.
Trade tensions between the US and China could also be affecting the markets, as it was reported that the US could seek to further increase the rate for the proposed tariffs on Chinese goods. There are fears that protectionist measures, such as tariffs could lead to a global slowdown and thus also reduce the demand for commodities such as oil.
On Friday the US baker Hughes Oil Rig Count will be released, which will show the level of operation of US oil rigs.
Pivot: 68.4 Support: 67.3 66.95 66.7Resistance: 68.4 68.8 69.15 Scenario 1: short positions below 68.40 with targets at 67.30 & 66.95 in extension. Scenario 2: above 68.40 look for further upside with 68.80 & 69.15 as targets. Comment: the RSI is mixed to bearish.
US Tech 100
US equities with the exception of the NASDAQ (US Tech 100) closed lower on Wednesday and extended losses in early trading on Thursday as stock markets globally turned lower. Especially energy companies’ (US Energy ETF (NYSE:XLE) -1.40%) and industrial sector (US Industrial ETF -1.33%) stocks traded lower, while tech stocks (US Technology ETF +0.78%) continued to recover.
Tesla (NASDAQ:TSLA) (+1.24%) surged in after-hours trading gaining as much as 10 percent despite the company reporting higher losses than expected. Investors might have been satisfied with the company hitting its revenue target and achieving the long sought production figure of 5,000 Model 3 vehicles per week. CEO Musk also confirmed that the company would not see to raise equity and in his opinion is not in need to raise money.
The fintech payment company Square (NYSE:SQ) (-2.08%) exceeded expectations for earnings and reported higher transaction volumes but traded lower in after-hours trading over lower profit guidance for the next quarter compared to analysts’ expectations.
Key US economy data is expected for Friday with Trade Balance, Non-Farm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings.
Pivot: 7307 Support: 7232 7202 7166.5 Resistance: 7307 7342 7390.5 Scenario 1: short positions below 7307.00 with targets at 7232.50 & 7202.00 in extension. Scenario 2: above 7307.00 look for further upside with 7342.00 & 7390.50 as targets. Comment: the RSI is bearish and calls for further downside.