The US Dollar started the week with a stronger performance against other major currencies, with the US Dollar Index (USDX) closing 0.22% higher on Monday. The Chinese Yuan (Offshore – CNH) reached a new one year low against the Dollar in early trading on Tuesday, despite efforts by the Chinese central bank to strengthen the currency by injecting $74 bn. into the Chinese banking system.
Gold was again pressured by the strengthening Dollar and now also rising yields for US Treasury Notes. Oil closed for another day almost unchanged despite escalating rhetoric between the US President Trump and his Iranian counterpart.
Bitcoin rallied on Tuesday morning, reaching the level of $8,000 on some exchanges for the first time in two months. Other major cryptocurrencies, such as Ethereum and Ripple traded with a mixed performance unable to match Bitcoin’s upwards move. Analysts mentioned the likely soon to come approval of Bitcoin ETFs and the interest of asset managers such as Blackrock (NYSE:BLK) in the cryptocurrency industry as some of the factors possibly pushing prices higher.
On Tuesday in Germany and the EU data on Manufacturing and Services PMI is due to be released and in France the Business Climate Indicator for July. In the United Kingdom the CBI Industrial Trends Survey results will be published and in the US retail, manufacturing and housing market statistics are expected.
EUR/USDThe strong performance of the Dollar made the Euro retreat below the 1.17 threshold of the EUR/USD. Some analysts attributed the strength of the Dollar to the rising yield on US Treasuries, as the 10 Year Treasury Note had a yield as high as 2.96% late on Monday, which is a significant improvement compared to the 2.84% yield seen on Friday.
The Chicago Fed National Activity Index for June was higher at 0.43 (expected 0.23), while Existing Home Sales fell below expectations at 5.38 million (expected 5.44 million) for June.
On Tuesday in Germany and the EU data on Manufacturing and Services PMI is due to be released. In France the Business Climate Indicator for July is forecasted to remain unchanged at the level of 110. In the US the Redbook Store Sales, FHFA House Price Index and Richmond Fed Manufacturing Index are expected to be released.
Pivot: 1.172 Support: 1.1635 1.1605 1.1575Resistance: 1.172 1.175 1.1765 Scenario 1: short positions below 1.1720 with targets at 1.1635 & 1.1605 in extension. Scenario 2: above 1.1720 look for further upside with 1.1750 & 1.1765 as targets. Comment: the RSI shows downside momentum.
The Australian Dollar was pressured by the strong US Dollar and was pushed lower close to the low level it had since June. Analysts are expecting that the Australian interest rates remain at their low level, while interest rates in the US are expected to rise due to the decision on the Federal Reserve.
The weakness of the Chinese Yuan could also have played a role in the weakening of the Australian Dollar.
On Wednesday in Australia Consumer Price Index (CPI) data is expected. Then on Thursday the Export and Import Price Index and on Friday the Producer Price Index (PPI) will be published.
Pivot: 0.74 Support: 0.7355 0.734 0.7325Resistance: 0.74 0.7415 0.7435 Scenario 1: short positions below 0.7400 with targets at 0.7355 & 0.7340 in extension. Scenario 2: above 0.7400 look for further upside with 0.7415 & 0.7435 as targets. Comment: the RSI is mixed to bearish.
Oil closed almost unchanged on Monday, with the WTI contracts showing small losses, while the Brent oil contract closed marginally higher than Friday. The angry message by US President Trump also threatening Iran with war, mostly failed to push oil prices higher.
It was reported that crude inventories at the Cushing hub in Oklahoma gained since Friday but are again expected to fall on a weekly basis. Some analysts also point to the possible fallout from the US led ‘trade war’, which could have negative effect of global growth.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot: 68.3 Support: 67.4 67 66.6Resistance: 68.3 68.85 69.3 Scenario 1: short positions below 68.30 with targets at 67.40 & 67.00 in extension. Scenario 2: above 68.30 look for further upside with 68.85 & 69.30 as targets. Comment: the RSI is mixed to bearish.
US equity indices traded overall higher, supported by a strong performance of bank (US Banks ETF +1.34%) and financial (US Financials ETF +1.31%) stocks.
Tesla (NASDAQ:TSLA) (-3.32%) traded for the first time in more than two weeks at times again below the $300 mark after it was reported that the company requested some of its suppliers to pay back money they received for past contracts in order to help Tesla achieve profitability. Analysts assume that this effort could stem from the fact that the company is running out of cash and is reluctant to seek more debt financing in the capital markets.
Halliburton (NYSE:HAL) (-8.08%) shares fell the most in almost four years despite the company reporting higher revenue than expected, as demand for their oil services dropped with oil production outpacing the capacity in certain regions, such as the Permian basin in the US.
The earning season continues with Lockheed Martin (NYSE:LMT), 3M and Verizon on Tuesday and Boeing (NYSE:BA), UPS, General Motors (NYSE:GM), Coca-Cola, AMD and Facebook (NASDAQ:FB) among others on Wednesday releasing their quarterly earnings numbers.
Pivot: 2809 Support: 2809 2802 2796 Resistance: 2824.5 2829 2834 Scenario 1: long positions above 2809.00 with targets at 2824.50 & 2829.00 in extension. Scenario 2: below 2809.00 look for further downside with 2802.00 & 2796.00 as targets. Comment: the RSI shows upside momentum. Both rising 20-period and 50-period moving averages maintain the bullish bias.