The US Dollar traded almost unchanged against other major currencies, with the US Dollar Index (USDX) closing 0.02% lower on Monday. Emerging market currencies, such as the South African Rand (ZAR) or Indian Rupee (INR) were weaker against the Dollar in early trading on Tuesday, as there are fears further escalation in the trade conflict with the United States.
Gold traded almost unchanged on Monday managing a very moderate climb above the $1,280 level as further tariffs were mentioned by Trump. Oil traded lower in early trading on Tuesday as reports were circulating that OPEC members would still agree to moderately raise production quotas at their meeting later this week.
Equity indices in most countries faced pressure from the escalation in tariffs and countermeasures announced, with Asian indices such as the Nikkei (Japan 225) and Hang Seng 50 (Hong Kong 50) declining by more than 2 percent.
There was an uptick in cryptocurrencies on Monday, with Bitcoin again trading above the $6,500 level, while Ethereum was able to climb above the $500 level. The move was attributed by some analysts to New York issuing the app ‘Square’ a virtual currency license, which would allow it to trade bitcoin in the state.
On Tuesday the ECB president is due to deliver a speech. Later in the US data on housing market is due to be released. In the Asian-Pacific trading session on Wednesday in Australia data on Consumer Confidence and Current Accounts level is due for publication.
The EUR/USD showed very limited movement on Monday trading slightly up, while remaining firmly in the 1.16 territory following the European Central Bank (ECB) meeting last Thursday. On Monday in the US the Housing Market Index was indicating a level of 68 (expected 78) and missed market expectations.
While overall there is concerns over expanding use of tariffs following the US yet again announcing tariffs and its trading partners corresponding countermeasures, the government crisis in Germany appears to be averted for the time being with Chancellor Merkel given more time to find a European solution on migration.
For this morning a speech by ECB president Draghi and later ECB board member Praet is scheduled. FOMC member Bullard is also due to deliver a speech today.
Pivot:1.1645Support:1.1561.1541.1515Resistance:1.16451.16751.1725Scenario 1:short positions below 1.1645 with targets at 1.1560 & 1.1540 in extension.Scenario 2:above 1.1645 look for further upside with 1.1675 & 1.1725 as targets.Comment:the RSI shows downside momentum.
The South African Rand continued its decline against the Dollar and reached a new 6-months low on Tuesday morning. Since the start of June the Rand lost more than 9.5 percent against the Dollar in the sell-off in Emerging Markets.
Besides the pressure from the trade conflict and the strong Dollar, South Africa’s economy faces significant internal issues. The country suffered a negative GDP growth for the 1Q of 2018 as announced earlier this month. Issues with electricity providers again flared up as the country faces load shedding for the first time since 2015.
On Wednesday CPI data from South African is set to be released. On Thursday the Current Account level is due for publication.
Pivot:13.663Support:13.66313.58713.542Resistance:13.96114.00614.052Scenario 1:the upside prevails as long as 13.6630 is support.Scenario 2:the downside breakout of 13.6630 would call for 13.5870 and 13.5420.Comment:the RSI is above 70. It could mean either that the pair is in a lasting uptrend or just overbought and therefore bound to correct (look for bearish divergence in this case). The MACD is positive and above its signal line. The configuration is positive. Mo
WTI Oil
Oil managed to recover some of last week’s losses on Monday but traded again lower early on Tuesday on reports that OPEC members are still considering to increase production by between 0.3 and 0.6 million barrels per day at their meeting in Vienna later this week.
It was reported that US energy companies are seeking to be exempted from tariffs on steel import to build their pipelines, as the majority of such material has to be imported. Oil businesses could face losses due to the trade conflict as China announced its countermeasures following the announcement of US tariffs, that it would be levy 25 percent tariffs on US oil imports, which currently amount to approximately $1 bn. each month.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot:64.9Support:64.964.1563.6Resistance:65.9766.3566.7Scenario 1:long positions above 64.90 with targets at 65.97 & 66.35 in extension.Scenario 2:below 64.90 look for further downside with 64.15 & 63.60 as targets.Comment:technically the RSI is above its neutrality area at 50. The 20-period moving average has turned up and crossed above the 50-period one.
US 500
Major equity indices traded lower on Monday and extending their losses early on Tuesday over the uncertainty of how the global trade conflict the United States under President Trump initiated would play out. The concerns were fueled by the threat from President Trump to levy tariffs on another $200 bn. worth of Chinese imports to the US, should China implement countermeasures to this recent round of tariffs.
Especially non-cyclical stocks (US Non-cyclicals ETF -1.36%) traded lower, while energy sector stocks (US Energy ETF (NYSE:XLE) +1.19%) were able to recover.
Tesla (NASDAQ:TSLA) (+3.55%) surged up to a new year-to-date high, despite concerns about Chinese tariffs on US electric vehicles and reports that Tesla would require employees receiving severance packages in the announce layoffs to keep quiet about any safety issues they encountered at the car maker facilities.
Intel (NASDAQ:INTC) (-3.38%) shares fell to a six-week low over analysts predicting slower growth for the chip maker over stiff competition from AMD (+4.84%) and Nvidia (-0.03%). The announced tariffs by China and the US could also affect the business of the company.
This week among other companies, FedEx (NYSE:FDX) is set to announce its quarterly earnings on Tuesday and chip maker Micron on Wednesday.
On Tuesday in the US data on Housing Starts and Permits will be released. The publication of the Redbook Store Sales statistic is also due on Tuesday.
Pivot: 2768 Support: 2742.5 2733 2723.5 Resistance: 2768 2780 2787.5 Scenario 1: short positions below 2768.00 with targets at 2742.50 & 2733.00 in extension. Scenario 2: above 2768.00 look for further upside with 2780.00 & 2787.50 as targets. Comment: the RSI shows downside momentum. Both declining 20-period and 50-period moving averages should push the prices lower.