After being under pressure since the beginning of the week, the US Dollar managed to slightly rebound against other major currencies on Friday, with the US Dollar Index (USDX) closing 0.14% higher. The South African Rand (ZAR) was meanwhile under pressure, trading above the 13 USD/ZAR level for the first time since December last year. Analysts see this as an overall weakness of emerging market currencies against the strong Dollar and the South African Reserve Bank is not seen as likely to raise interest rates in this situation.
Gold traded again in a tight range on Friday, while market participants will direct their focus at what happens during the Trump-Kim summit in Singapore on Tuesday, as both leaders may act unpredictable in the fragile geopolitical situation. Oil traded lower on reports of increasing production in Russia and the US Baker Hughes Oil Rig Count at a new 3 year high.
Major US equity indices, with the exception of the NASDAQ Composite Index (US Tech 100) traded higher on Friday, with only few economic sectors, such as semiconductors and energy stocks trading lower.
On Monday data on Industrial Production (IP) is set to be released in Italy. In the United Kingdom also IP data and Manufacturing Output and Merchandise Trade level data is due. Later in the Asian-Pacific Trading Session Japan will publish data on the Capital Goods Price Index (PPI) and Australia on Home Loans.
The EUR/USD traded lower on Friday, but managed to break with the 7 week long downwards trend on a weekly basis. This comes as data on Industrial Production (IP) from both Germany at -1.0% m/m (expected +0.2%) and France -0.5% m/m (expected +0.3%) disappointing market expectations. The common European currency was however supported by statements from Italy’s new government, assuring the markets that the country is not contemplating on leaving the Euro bloc.
This week both the US FOMC and the European ECB are set to make their rate decisions, with the US central bank scheduled to announce their meeting results on Wednesday and the central bank for the Euro area on Thursday.
Pivot:1.176Support:1.1761.17351.171Resistance:1.1811.1841.186Scenario 1:long positions above 1.1760 with targets at 1.1810 & 1.1840 in extension.Scenario 2:below 1.1760 look for further downside with 1.1735 & 1.1710 as targets.Comment:the RSI shows upside momentum.
Cryptocurrencies, including Bitcoin faced significant pressure over the weekend, with Bitcoin losing within one hour on Sunday as much as $500 value per token. The plunge, which reduced the market capitalization value of Bitcoin and other cryptocurrencies by billions, was attributed to reports that the South Korean cryptocurrencies exchange Coinrail suffered from a security breach, leading to the theft of around 30% of its held cryptocurrencies’ value. This increases investor’s worries about the security of their assets in this new product category.
Other cryptocurrencies were similarly affected, with Litecoin notably falling to a new 6-months low, while Bitcoin traded this low the last time in March.
Pivot:6598Support:667965986391Resistance:703471587281Scenario 1:rebound towards 7158.Scenario 2:the downside breakout of 6598 would call for 6391 and 6267.Comment:the RSI is below its neutrality area at 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the pair stands below its 20 and 50 MAs (respectively at 6840 and 7305).
WTI Oil
Oil traded lower on Friday, closing the week almost unchanged as upward momentum was blocked by indications of rising oil production in Russia, as well as the US crude output at an all-time high of 10.8 million barrels per day. The Baker Hughes Oil Rig Count released on Friday, showed a yet again higher number of operating oil rigs in the US at 862 (previously 861), which is yet another 3 year record.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday. Also on Wednesday the International Energy Agency (IEA) is set to release its monthly global oil supply and demand report.
Pivot:66.25Support:65.1564.864.5Resistance:66.2566.6567.3Scenario 1:short positions below 66.25 with targets at 65.15 & 64.80 in extension.Scenario 2:above 66.25 look for further upside with 66.65 & 67.30 as targets.Comment:the RSI is mixed to bearish. The 20-period moving average has turned down and crossed below the 50-period one.
US 500
US equity index futures traded mixed on Friday. While the S&P 500 (US 500) closed higher, marking an 11-week high, the NASDAQ (US Tech 100) was unable to make up for all the losses in the early trading on Friday and traded lower. Health Care (US Health Care ETF +0.71%) and non-cyclical (US Non-Cyclicals ETF +1.30%) stocks in particular traded higher, while energy (US Energy ETF (NYSE:XLE) -0.17%) and chip makers’ (US Semiconductors ETF -0.70%) stocks were seen lower.
Snapchat (+3.39%) continued with its recovery, as analysts from Deutsche Bank (DE:DBKGn) estimated that Snapchat had a “robust” growth in user numbers in May. Apple (NASDAQ:AAPL) (-0.90%) was under pressure over reports that it was telling its suppliers for iPhone components to reduce production by 20% in the second half of this year.
With the earning season almost over, one of the few companies left to report its quarterly earnings is Adobe on Thursday.
Before the FOMC meeting is concluded on Wednesday, on Tuesday data on the Consumer Price Index (CPI) as well as on the Treasury Budget level is set to be released.
Pivot: 2772.5 Support: 2772.5 2765 2758.5 Resistance: 2783.5 2789.75 2795 Scenario 1: long positions above 2772.50 with targets at 2783.50 & 2789.75 in extension. Scenario 2: below 2772.50 look for further downside with 2765.00 & 2758.50 as targets. Comment: the RSI lacks downward momentum. The index broke above the broadening wedge.