The Dollar again gained against other major currencies on Wednesday, with the US Dollar Index (USDX) closing 0.43 percent higher. The British Pound (GBP) continued with its decline, hitting a new low against the Dollar for 2018 as the Consumer Price Index (CPI) for the UK was below expectations at +2.4% (expected +2.5%) y/y and the Producer Price Index at 5.3% y/y also fell short of the expected 5.8%.
Gold reached a one week high with tensions between the US and North Korea building up, as the North Korean leadership is sending mixed signals over its readiness to meet with the US leaders, citing continued threats by the US side. Oil traded lower as stockpiles for crude oil and gasoline, according to the EIA went up contrary to market productions and there are rumors that OPEC might decide to increase its production quota at its meeting in June.
Cryptocurrencies overall declined for the third day this week, with Bitcoin falling below $7,500 for the first time in almost 6 weeks and Bitcoin Cash trading below $1,000 for a short time. It was reported that India plans to introduce an 18% General Sales Tax on cryptocurrency trading.
On Thursday in the United Kingdom data on Retail Sales is due to be released. In the US data on Jobless Claims, Home Sales and Prices, as well details to the Federal Reserve Balance Sheet are due to be released.
The EUR/USD reached a new 6 months low on Wednesday. The FOMC minutes from the May meeting showed that monetary policy makers in the US all were in consensus that the inflation target would be met in the next months and raised market expectations for another rate hike in June.
Data from Europe was widely below expectations with the Manufacturing PMI at 56.8 (expected 57.8) for Germany and 55.5 (expected 56.0) for the European Union. The Services PMI was at 52.1 (expected 53.0) for Germany and 53.9 (expected 54.6) for the European Union. French Unemployment Rate was reported up at 8.9% (expected 8.5%).
On Thursday the German GDP was reported as expected at +2.3% y/y and the French Business Climate Indicator up at 109 (expected 108). In the US data on Jobless New Claims and the housing market is due to be released on Thursday.
Pivot:1.1735Support:1.16751.1651.162Resistance:1.17351.1771.179Scenario 1:short positions below 1.1735 with targets at 1.1675 & 1.1650 in extension.Scenario 2:above 1.1735 look for further upside with 1.1770 & 1.1790 as targets.Comment:as long as the resistance at 1.1735 is not surpassed, the risk of the break below 1.1675 remains high.
The Turkish Lira faces continued pressure from a sell-off, as among other factors, Japanese margin traders are said to pull out of Turkish Bonds, despite the high difference in interest rates and are reducing long positions in the Lira. The Turkish Central Bank surprisingly increased one of its interest rates from 13.5 to 16.5 percent in a move to curb the sell-off. However after initially retreating from its record-low, the Lira continued to lose ground in early trading on Thursday.
Turkey faces economic pressure from the trade balance deficit, rising inflation. Investors are also concerned about an earlier statement by Turkish President Erdogan, where he vowed to increase his influence over the Central Bank policy.
On Friday data releases on Capacity Utilization and Manufacturing Confidence are due in Turkey. In the following week traders can look forward to the publishing of the Turkish Trade Balance for April.
Pivot:4.5422Support:4.56474.54224.4848Resistance:4.65664.69074.7249Scenario 1:rebound towards 4.6907.Scenario 2:the downside breakout of 4.5422 would call for 4.4848 and 4.4506.Comment:the RSI is below 50. The MACD is above its signal line and negative. The configuration is mixed. Moreover, the pair is trading above its 20 MA (4.5725) but under its 50 MA (4.7092).
WTI Oil
Oil extended its losses on Wednesday as markets are waiting to see if OPEC countries would actually decide to increase output, while its members Iran and Venezuela could see reduced global supplies. The OPEC is said to make a decision at its coming meeting in about a month in June.
Meanwhile data from the Energy Information Administration (EIA) indicated that oil stockpiles in the United States surprisingly increased by 5.8 million barrels, while market participants expected a moderate drop in inventories. Gasoline stockpiles were up by 1.9 million barrels, as markets previously also expected inventories to drop.
On Friday the Baker Hughes Oil Rig Count for the US will be released, indicating the amount of operating oil rigs in the US. The count did not drop for the last 7 consecutive weeks.
Pivot:72.05Support:71.471.270.8Resistance:72.0572.2572.5Scenario 1:short positions below 72.05 with targets at 71.40 & 71.20 in extension.Scenario 2:above 72.05 look for further upside with 72.25 & 72.50 as targets.Comment:the RSI is mixed to bearish. The prices are trading below both 20-period and 50-period moving averages.
US 500
US equity indices closed moderately higher, covering losses seen earlier in that trading session. Especially utilities (US Utilities ETF +0.85%) and real estate (US Real Estate ETF +0.81%) stocks traded higher, as the 10 Year US Treasury Note Yield moved below the 3% mark for the first time in over a week.
Stocks of the retail company Target (-5.88%) traded significantly lower as the company’s quarterly earnings disappointed due to increased spending in online sales, which the company tries to boost in order to catch up with Amazon (NASDAQ:AMZN). On the other hand the home improvement retailer Lowe’s (+10.65%) improved significantly as the company’s projected earnings for this year were slightly above what analysts predicted so far.
On Thursday in the US Jobless New Claims the FHFA House Price Index and data on Existing Home Sales is due to be released.
Pivot: 2733 Support: 2712 2704.5 2691 Resistance: 2733 2742 2754 Scenario 1: short positions below 2733.00 with targets at 2712.00 & 2704.50 in extension. Scenario 2: above 2733.00 look for further upside with 2742.00 & 2754.00 as targets. Comment: as long as 2733.00 is resistance, expect a return to 2712.00. The RSI indicator is mixed to bearish.