The US Dollar further extended its gains on Friday, with the basket of six major currencies against the Dollar – the US Dollar Index (USDX) closing 0.41% higher.
Gold continued trading in a narrow range with limited upwards momentum due to strengthening of the Dollar. Oil declined as a higher number of operating oil rigs in the US was reported and reports indicate a higher production from OPEC countries and the US, offsetting potential losses from embargoes Iranian facilities.
Equity indices traded mostly flat, while Asian indices faced pressure over continued tensions regarding the trade relations of the US and China, as the US is about to levy 25% tariffs on $200 bn. worth of Chinese imports to the US.
Bitcoin managed to outperform other major cryptocurrencies such as Ethereum or Ripple over the weekend, as Bitcoin reached a 4-weeks high.
On Monday Switzerland releases its Adjusted Retail Sales and SVME PMI data. Germany, the EU and the UK are set to release their Manufacturing PMI statistics.
EUR/USDThe Euro further extended losses against the strong Dollar on Friday ending the week marginally lower, despite reaching a new high for August. Concerns about a possible escalation with the Trump administration, as the US president alleged that the European Union was in terms of trade almost as bad a China.
European Inflation was reported below expectations at 2.0% y/y in the Harmonized Index of Consumer Prices (expected +2.1%). Italy however reported stronger growth in terms of Gross Domestic Product (GDP) at +1.2% y/y (expected +1.1%) and a stronger CPI growth at +1.7% y/y for August (expected +1.4%).
On Monday in Germany and the European Union data on the Manufacturing PMI will be released.
Pivot: 1.163 Support: 1.158 1.1555 1.153Resistance: 1.163 1.1655 1.1675 Scenario 1: short positions below 1.1630 with targets at 1.1580 & 1.1555 in extension. Scenario 2: above 1.1630 look for further upside with 1.1655 & 1.1675 as targets. Comment: the RSI lacks upward momentum.
The Australian Dollar traded at the lowest level against the Dollar in over 1-1/2 years on Monday as Retail Sales were reported flat with 0% growth, below expectations. Last week data on Building Approvals and Machinery Capital Expenditure was also below expectations, while House Prices were reported lower for the 11th month in a row.
This comes at a time of political uncertainty after Prime Minister Turnbull was ousted from power last month from power from parts of his own Liberal Party.
On Tuesday in Australia the Current Account and Net Exports Contribution data will be released and the Interest Rate Decision by the Reserve Bank of Australia (RBA) is expected. Then on Wednesday GDP data will be released.
Pivot: 0.7215 Support: 0.716 0.7135 0.71Resistance: 0.7215 0.724 0.7275 Scenario 1: short positions below 0.7215 with targets at 0.7160 & 0.7135 in extension. Scenario 2: above 0.7215 look for further upside with 0.7240 & 0.7275 as targets. Comment: as long as the resistance at 0.7215 is not surpassed, the risk of the break below 0.7160 remains high.
Oil traded marginally lower on Friday, but managed to end the week for the second time in a row with higher prices. The US Baker Hughes Oil Rig Count rose by 2 operating oil rigs to 862, still below the recent 3-1/2 year high.
While markets are concerned about the impact of the US sanctions against Iranian oil industry, which will come into effect in two months, rising output from OPEC countries and the US is seen keeping markets balanced. Furthermore the confrontational tone of the Trump administration towards China and other trading partners could increase the fears of a global economic slowdown.
Due to the Labor Day Holiday in the US, the American Petroleum Institute (API) will release oil stockpile figures only on Wednesday, followed by the Energy Information Administration (EIA) on Thursday.
Pivot: 70 Support: 69.35 68.95 68.65Resistance: 70 70.5 70.95 Scenario 1: short positions below 70.00 with targets at 69.35 & 68.95 in extension. Scenario 2: above 70.00 look for further upside with 70.50 & 70.95 as targets. Comment: the RSI is mixed to bearish.
US equity indices traded mixed with very limited upwards momentum on Friday. Markets were relieved to hear the announcement that the United States and Mexico found common ground on trade last week. On the other hand the hostile comments of US president Trump directed towards Canada, the EU and China could have added concerns where the global economy is headed.
A Bloomberg report last week mentioned a cooperation between MasterCard (+0.70%) and Google’s Alphabet (NASDAQ:GOOGL) (-1.75%), whereby MasterCard would share data with Google to enable advertisers to better track online and offline sales. This secret partnership could lead to increased regulatory scrutiny just as the public was disturbed to learn how Facebook (NASDAQ:FB) (-1.13%) shared user data in recent years.
The US trading session could be more quite than usual due to the Labor Day Holiday, with reduced trading hours in many asset classes. On Thursday Broadcom (NASDAQ:AVGO) is set to release its earnings.
Other key data this week can be expected from the ISM Manufacturing Index on Tuesday, the ADP Employment Report on Thursday and the Non-Farm Payrolls (NFP) on Friday.
Pivot: 2892 Support: 2892 2885 2874 Resistance: 2917.5 2927 2937 Scenario 1: long positions above 2892.00 with targets at 2917.50 & 2927.00 in extension. Scenario 2: below 2892.00 look for further downside with 2885.00 & 2874.00 as targets. Comment: the RSI is mixed to bullish. The support base at 2892 should limit the downside room.