The Dollar stopped its decline and traded higher against most other currencies in early trading on Thursday, ahead of the central bankers’ meeting in Jackson Hole. The Russian Ruble (RUB) was again under pressure following sanctions against Russian entities over an alleged breach of the North Korean embargo. The US Congress is reported to be discussing further sanctions against Russia, which could target Russian banks and debt securities.
Gold faced again pressure after briefly trading again over $1,200, with the strong Dollar pushing gold prices lower. Oil extended its recovery as the EIA reported a significant draw on crude oil inventories.
Equities settled higher, with retailers Lowe’s and Target reporting better than expected quarterly results. It was also reported that low-key talks on trade between China and the US started again on Wednesday.
Cryptocurrencies came down from the intraday high, where Bitcoin reached above $6,800. Crypto investors were disappointed that the US SEC rejected nine separate applications for Bitcoin ETFs (Exchange Traded Funds).
On Thursday in France the Business Climate Indicator and in Germany and the EU the Manufacturing and Services PMI data will be released. In the UK the CBI Distributive Trades level statistic will come out. In the US Jobless Claims and housing market data is expected. In the Asian-Pacific trading session on Friday New Zealand publishes its Merchandise Trade Balance and Japan Consumer Price Index (CPI) data.
The EUR/USD retreated from its recent high above 1.16, as the Dollar strengthened ahead of the Jackson Hole central bankers’ meeting which starts on Thursday. It was also reported that Chinese and US officials met for the first time in over two months for low-level talks to discuss the ongoing trade standoff.
While mortgage market data with the MBA Composite Index was reported higher than last week at +4.2% w/w (previous -2.0%), key data of Existing Home Sales were lower at 5.34 million in July (expected 5.42 million).
On Thursday in the EU the Manufacturing and Services PMI will be released. Then in the US data about Jobless New Claims, the FHFA House Price Index, New Home Sales and Federal Reserve Bank statistics will be released.
Pivot:1.16Support:1.15151.1491.1445Resistance:1.161.1641.167Scenario 1:short positions below 1.1600 with targets at 1.1515 & 1.1490 in extension.Scenario 2:above 1.1600 look for further upside with 1.1640 & 1.1670 as targets.Comment:the RSI shows downside momentum.
Germany 30
The DAX (Germany 30) closed higher on Wednesday but notably by a smaller margin than most of its European peers. Weak performance of carmakers such as BMW (-0.60%), Daimler (-1.00%) and Volkswagen (DE:VOWG_p) (-1.42%) weighted on the index. The significant drop in the value of Continental (-13.62%), which lost this year so far more than 27% was also a factor. The fall of the car parts supplier Continental came after the company released a warning that the revenue for 2018 would be one billion Euro less than expected, while margins would also be reduced from the previous outlook. Multiple reasons were named for this development, such as lower demand and costs of the transition to hybrid and electric cars.
On Thursday in Germany the Service and Manufacturing PMI data will be released. Then on Friday the Gross Domestic Product (GDP) will be published.
Pivot:12430Support:123251226612130Resistance:124301250012571Scenario 1:short positions below 12430.00 with targets at 12325.00 & 12266.00 in extension.Scenario 2:above 12430.00 look for further upside with 12500.00 & 12571.00 as targets.Comment:the RSI lacks momentum.
WTI Oil
Oil traded sharply up on Wednesday, as data from the Energy Information Administration (EIA) confirmed the sentiment from the data of the American Petroleum Institute (API) released on Tuesday with crude oil stockpiles in the US reported lower by 5.8 million barrels (mbl) compared to last week. However gasoline stockpiles were up by 1.2 mbl and distillate stockpiles up by 1.8 mbl.
While it is not fully clear what market impact the planned sanctions against the Iranian oil sector, which come into effect in November will have, it was reported that South Korea stopped its import and the French company Total stopped its operations in Iran. Meanwhile exports to China and India were reported lower for the first half of August, which could be unrelated to the sanctions.
On Friday the US Baker Hughes Oil Rig Count will be reported, which in recent weeks reached the highest level in more than three years.
Pivot:67.25Support:67.2566.866.4Resistance:68.568.969.2Scenario 1:long positions above 67.25 with targets at 68.50 & 68.90 in extension.Scenario 2:below 67.25 look for further downside with 66.80 & 66.40 as targets.Comment:the RSI is supported by a bullish trend line. The prices are trading around the 20-period moving average.
US 500
US equity indices recovered from the downturn at the end of Tuesday’s trading and closed higher putting the S&P (US 500) on track for the fifth consecutive month of gains, as the index trades around its high from January.
Especially energy company stocks (US Energy ETF (NYSE:XLE) +1.23%) traded higher as oil prices recovered from the recent slump. On the other end industrial stocks (US Industrial ETF -0.94%) were some of the weakest performing during trading on Wednesday.
Lowe’s (+5.64%) stocks briefly surpassed the previous all-time high, as investors were happy about its CEO’s plans to turn around the company and earnings and sales exceeding investors’ expectation. Shares of the retailer Target (+3.21%) likewise shot up to a new high over better than expected earnings and strong sales figures. Target’s CEO Brian Cornell mentioned that “This is the best consumer environment I have seen in my career”.
Alibaba (NYSE:BABA) is set to deliver its earnings before the markets open in the US on Thursday.
Pivot: 2868.5 Support: 2852 2846 2835 Resistance: 2868.5 2874 2881 Scenario 1: short positions below 2868.50 with targets at 2852.00 & 2846.00 in extension. Scenario 2: above 2868.50 look for further upside with 2874.00 & 2881.00 as targets. Comment: the RSI is bearish and calls for further decline. The index broke below its 20-period moving average.