The US Dollar traded almost unchanged against other major currencies on Thursday, but then fell in early trading on Friday, with some analysts attributing this move to profit taking. The Indian Rupee (INR) hit a record low against the Dollar due to feeble macro-economic indicators and continued Dollar strength over the Emerging Market countries, with some analysts now expecting the Reserve Bank of India eventually to step in.
WTI oil reached a new 3-1/2 year high as stockpiles were reported lower by more than 9 million barrels over the course of the previous week and global supply issues in countries like Libya and Iran could also be a factor. Gold was under continued pressure falling below the $1,250 level for the first time this year.
Equity indices in the US managed to close higher on Thursday, after falling to the lowest level this month in the afternoon.
Cryptocurrencies traded overall lower and Bitcoin fell below the $6,000 level, reaching a new low for this year. The loss of confidence is attributed among other factors, to crypto exchange hacks and increased scrutiny into ICOs, which in turn often times use major cryptocurrencies like Bitcoin or Ethereum to secure funding.
On Friday in the EU the Harmonised Index of Consumer Prices (HICP) is set to be released. France also releases its PPI and CPI statistics. The United Kingdom and Canada will publish their respective GDP data. In The US Personal Income, Consumer Spending and Core PCE Price Index statistics will be released.
The Chinese Yuan (Offshore – CNH) continued losing against the US Dollar for the 11th day in a row. Analysts speculate that this could be a move by the People’s Bank of China (PBOC) to make exports more competitive in the difficult global economic climate since the US are pushing for harsher protectionist measures. As the PBOC is fixing the bounds for the exchange rate, this move is seen as having political support from Beijing.
Meanwhile there are continued concerns about corporate debt default risks, with policy makers mandating companies seeking offshore funding, to pay off maturing debt first.
The Chinese smartphone maker Xiaomi, which is in the process of its IPO at the Hong Kong Stock Exchange, lowered its IPO target by close to a quarter to $4.7B as the stock received less attention from investors in term of oversubscription compared to other recent IPOs in Hong Kong. Xiaomi shares are set to start trading on July 9.
On Saturday in China the Manufacturing and Non-Manufacturing PMI are going to be released.
Pivot: 6.6321 Support: 6.6048 6.5989 6.593Resistance: 6.6321 6.642 6.6479 Scenario 1: the downside prevails as long as 6.6321 is resistance. Scenario 2: the upside breakout of 6.6321, would call for 6.6420 and 6.6479. Comment: the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the pair stands below its 20 and 50 MAs (respectively at 6.6358 and 6.6314).
The DAX (Germany 30) was again under pressure on Thursday, falling to its lowest level in over 2 months. Analysts attributed this to the continued uncertainty in the global trade conflict with the US, which are now considering levying tariffs on car imports. Especially German car makers and suppliers such as Volkswagen (DE:VOWG_p) (-2.78%), Continental (-2.75%) and BMW (-1.30%) were under pressure.
The ailing Deutsche Bank (DE:DBKGn) (+0.50%), which hit a 35-years low this week, was announced by the US Federal Reserve to be the only bank failing its stress test.
German Retail Sales for May were significantly below expectations at -2.1% m/m (expected -0.4%). The German Unemployment Rate statistics will be announced on Friday. On the upcoming Monday the most recent Manufacturing PMI figures will be released.
Pivot: 12170 Support: 12170 12060 11900Resistance: 12360 12430 12525 Scenario 1: long positions above 12170.00 with targets at 12360.00 & 12430.00 in extension. Scenario 2: below 12170.00 look for further downside with 12060.00 & 11900.00 as targets. Comment: the RSI is bullish and calls for further advance.
Oil pushed higher for the third consecutive day, with WTI oil reaching a new 3-1/2 year high, above the recent record seen in May.
Analysts attributed this to recent supply concerns but also due to falling inventories. Data from the American Petroleum Institute and the Energy Information Administration both showed a decline of crude oil stockpiles by over 9 million barrels within one week. This comes together with the recent announcement by the United States to sanction Iranian oil exports from November without any further grace period and supply problems in Libya and Canada.
On Friday the US Baker Hughes Oil Rig Count is due to be released, which will indicate the number of operating oil wells in the US.
Pivot: 72.2 Support: 72.2 71.2 70Resistance: 74.05 74.62 75.85 Scenario 1: long positions above 72.20 with targets at 74.05 & 74.62 in extension. Scenario 2: below 72.20 look for further downside with 71.20 & 70.00 as targets. Comment: the RSI is mixed to bullish.
After marking a new low for this month, US equity indices managed to close still higher on Thursday. Jobless New Claims climbed up to 227 thousand this week (expected 220 thousand) and Corporate After Tax Profits were reported +2.7% y/y for the first quarter of the year.
Despite rising oil prices, energy company stocks (US Energy ETF (NYSE:XLE) -0.17%) traded overall lower, while most gains were seen technology (US Technology ETF +1.05%) and real estate (US Real Estate +0.80%) companies.
The market was extremely enthusiastic following the release of Nike’s positive earnings after trading closed. The sport gear maker recovered in terms of sales in the North American market and announced a $15B stock buyback program.
The announcement that Amazon (NASDAQ:AMZN) (+2.51%) is taking over the online pharmacy Pillpack sent shockwaves through the American market, with its competitors like Walgreens Boots (-10.01%) coming under severe pressure, as analysts fear Amazon’s competitiveness.
On Friday in the US data on Personal Income, Consumer Spending and the Core PCE Price Index will be released.
Pivot: 2714 Support: 2714 2700 2693 Resistance: 2740 2748 2757.5 Scenario 1: long positions above 2714.00 with targets at 2740.00 & 2748.00 in extension. Scenario 2: below 2714.00 look for further downside with 2700.00 & 2693.00 as targets. Comment: the RSI calls for a rebound. A bullish cross has been identified between the 20-period and 50-period moving averages.