The US Dollar traded overall lower against other major currencies, with the US Dollar Index (USDX) closing 0.1% down on Friday, while ending the week overall in the green. The Chinese Yuan (Offshore – CNH) was again under pressure after data on Chinese Industrial Production was below expectations at +6.0% y/y (expected +6.5%).
In a volatile trading session gold closed only marginally above the $1,240 level. According to the CFTC the net long positions for gold marginally increased to 81.4 thousand (previously 78.3 thousand).
Major US equity indices closed overall with gains, continuing to trade higher for the second week in a row as we are entering the earning season.
Cryptocurrencies saw a moderate upside on Sunday with Ethereum recovering more quickly than Bitcoin and other major cryptocurrencies. Cryptocurrency markets were in the previous weeks shaken by reports about exchange hacks, where millions worth of tokens were stolen. Kaspersky Lab published a study indicating that around $10M worth of Ethereum was stolen via Social Engineering over the past year.
On Monday the EU and Italy are going to release their Trade Balance data and in the US numbers on Retail Sales, Business Inventories and the Empire State General Business Conditions are due to be released.
The EUR/USD traded higher on Friday, continuing this move on Monday morning and reaching above the 1.17 level. US Import Prices were reported down by -0.4% m/m (expected +0.1%), while Export Prices were as expected at +0.3% m/m. The University of Michigan Consumer Sentiment showed a level of 97.1 for July (expected 98.4), which is the lowest value since beginning of February this year.
On Monday the EU and Italy will publish their Trade Balance data. In the US data on Retail Sales and Business Inventories will be released. On Tuesday the Chairman of the Federal Reserve Jerome Powell is due to deliver a monetary policy report at the Banking Committee of the US Senate.
Pivot: 1.1655 Support: 1.1655 1.164 1.161Resistance: 1.172 1.174 1.176 Scenario 1: long positions above 1.1655 with targets at 1.1720 & 1.1740 in extension. Scenario 2: below 1.1655 look for further downside with 1.1640 & 1.1610 as targets. Comment: the RSI is bullish and calls for further upside.
Despite concerns that emerging market currencies could suffer from an all-out trade war and a strong US Dollar, the South African Rand continued to improve against the USD and ended the week for the second time in a row stronger to the Dollar.
On Thursday the South African Central Bank is set to announce its interest rate decision and is expected to leave interest rates unchanged at 6.5%. Analysts pointed out that with the reducing inflation and stable interest rates, the South African Rand is interesting for carry trade, where investors borrow money at low interest rates and invest at higher rates.
On Wednesday in South Africa the Consumer Price Index (CPI) and Retail Sales statistics are due to be released.
Pivot: 13.2 Support: 13.2 13.116 13.067Resistance: 13.417 13.467 13.517 Scenario 1: rebound towards 13.4170. Scenario 2: below 13.2000, expect 13.1160 and 13.0670. Comment: the RSI is below 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the pair is trading above its 20 MA (13.2668) but under its 50 MA (13.2893).
WTI Oil
Oil had another volatile trading day on Friday, where WTI oil closed at the end only marginally higher but still at a weekly loss, after the prices plummeted on Wednesday. The fall on Wednesday was mostly attributed to the news that Libya managed to secure again the ability to export oil.
The Baker Hughes Oil Rig Count was unchanged at 863 oil rigs, which was also the high seen terms of producing oil rigs seen earlier in June.
Oil could be affected by the meeting between the Presidents from the US and Russia in Helsinki, in case oil and energy would be named a topic of discussion.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot: 70.9 Support: 70.2 69.85 69.2Resistance: 70.9 71.25 71.65 Scenario 1: short positions below 70.90 with targets at 70.20 & 69.85 in extension. Scenario 2: above 70.90 look for further upside with 71.25 & 71.65 as targets. Comment: the RSI advocates for further downside.
US 500
US equity indices continued to push higher, with the S&P 500 (US 500) reaching the 2,800 level for the first time in 3 months on Friday. NASDAQ (US Tech 100) also pushed higher, reaching a new all-time high.
Non-Cyclical (US Non-cyclical ETF +0.63%) and industrial (US Industrial ETF +0.63%) performed especially well, while bank stocks were overall trading lower (US Banks -1.09%).
Citigroup (NYSE:C) (-2.32%) closed lower despite Q2 earnings being reported 16% higher than the previous year. Analysts were however not too excited by this news as competitors like JP Morgan Chase (NYSE:JPM) (-0.37%) published even better than expected earnings and the uptick in Citigroup’s was attributed to some extent to the reducing tax bills.
The earning season continues with Goldman Sachs (NYSE:GS) scheduled to release their quarterly earnings on Tuesday before the trading session. Goldman is also expected to officially name David Solomon as its new CEO this week. Other significant earnings for this week are Netflix (NASDAQ:NFLX) on Monday, Johnson & Johnson (NYSE:JNJ) on Tuesday, Morgan Stanley (NYSE:MS) and ASML Holding (AS:ASML) on Wednesday and many more US and European companies later this week.
Pivot: 2793 Support: 2793 2787.5 2871 Resistance: 2814 2820 2827 Scenario 1: long positions above 2793.00 with targets at 2814.00 & 2820.00 in extension. Scenario 2: below 2793.00 look for further downside with 2787.50 & 2781.00 as targets. Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited. A support base at 2793 should limit the downside potential.