The US Dollar traded almost unchanged against other major currencies on Monday but then extended its gains early on Tuesday. After a small recovery on Friday, the Turkish Lira again declined as investors were apparently not satisfied that the Turkish Central Bank only indicated that higher interest rates might be coming as markets expect actions to stop the drawdown.
The strong Dollar pushed gold lower to the lowest level in 10 days. US equities traded almost unchanged in slow Labor Day trading, but gained positive momentum early on Tuesday.
Major cryptocurrencies traded close to the level seen on Monday with Bitcoin stopping its ascend again at around the level of $7,300.
On Tuesday Switzerland will release its Consumer Price Index (CPI), followed by the European Union with its Producer Price Index (PPI) data. Traders will be also looking forward to see the most recent UK PMI Construction data, as hard Brexit concerns are seen as adding uncertainty and at least delaying investments. In the US the ISM Manufacturing Index, data on Consumer Spending and Domestic Vehicle Sales data will be released. In the Asian-Pacific trading session on Wednesday in Australia GDP data for the second quarter of 2018 will be published.
The EUR/USD fell under the 1.16 threshold in early trading on Tuesday with analysts pointing out that this move is consistent with stronger US futures and allocation of funds towards US assets.
While the European PMI Manufacturing indicator was as expected at 54.6 for August, the German PMI fell further than expected and declined by one point for August to 55.9 (expected 56.1).
Due to the Labor Day Holiday in the United States, many markets remained closed and little new fundamental data was seen from that side.
On Tuesday In the EU the Producer Price Index (PPI) will be released, while in the US the ISM Manufacturing Index, as well as data on Construction Spending and domestic Vehicle Sales will be released.
Pivot:1.161Support:1.15651.1541.1525Resistance:1.1611.16251.165Scenario 1:short positions below 1.1610 with targets at 1.1565 & 1.1540 in extension.Scenario 2:above 1.1610 look for further upside with 1.1625 & 1.1650 as targets.Comment:the RSI shows downside momentum.
Many emerging market currencies were under pressure from the strong Dollar and the South African Rand moved closer to the level of 15 USD/ZAR early on Tuesday. The Rand weakness was also reflected in bond yields increasing as the 10 Year South African bond again yielded above 9%.
On Monday economic data was again negative for South Africa with the Manufacturing PMI at 43.4 (previous 51.5) and Vehicle Sales 2.5% lower compared to the same time last year.
The weakness of the Rand drives inflation with the country now intervening in the setting of fuel prices mandating that they may rise only by 0.05 instead of the projected 0.28 ZAR per liter.
On Tuesday South Africa will release its Gross Domestic Product (GDP) statistic, followed by data on Current Account on Thursday and Foreign Exchange Reserves on Friday.
Pivot:14.783Support:14.78314.65514.579Resistance:15.11315.18915.265Scenario 1:as long as 14.7830 is support look for 15.1130.Scenario 2:below 14.7830, expect 14.6550 and 14.5790.Comment:the RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The pair could retrace. Moreover, the pair is above its 20 and 50 MAs (respectively at 14.8740 and 14.8389).
WTI Oil
Oil was seen traded marginally higher in a slow Labor Day trading session. Meanwhile it was reported that Russia’s oil production remained close to recent record levels at 11.2 million barrels per day.
Reuters reported that the newly introduced ‘Petro’ cryptocurrency by ailing Venezuela to stem against the catastrophic economic downturn might now be supported as much by the oil rich country’s oil reserves as promised. It was reported that no major oil exploratory efforts were taking place in a region in the middle of the country, where the oil supposedly backing ‘Petro’ would be coming from.
Due to the Labor Day Holiday in the US, the American Petroleum Institute (API) will release oil stockpile figures only on Wednesday, followed by the Energy Information Administration (EIA) on Thursday.
Pivot:70Support:7069.5569.35Resistance:70.570.7571.35Scenario 1:long positions above 70.00 with targets at 70.50 & 70.75 in extension.Scenario 2:below 70.00 look for further downside with 69.55 & 69.35 as targets.Comment:the RSI is mixed to bullish.
Hong Kong 50
Asian shares traded mixed with Japanese indices mostly seen lower ahead of the strongest typhoon in 25 years about to hit Japan, while Chinese and Hong Kong indices recovered. Chinese indices with the CSI 300 and A50 were up by around 1.5%, while the performance of Hong Kong indices lagged behind.
Chinese smartphone maker Xiaomi, which is currently the fourth-largest producers of smartphones in the world, traded higher getting again close to its IPO price of HK$17. Xiaomi recently announced that it would store data of its Indian customers on local servers due to security concerns from the local regulators. India is one key market for Xiaomi.
On Wednesday in Hong Kong the Manufacturing PMI will be released and in China the Caixin Service PMI. On Thursday China releases its Trade Balance statistics.
Pivot: 27865 Support: 27515 27370 27235 Resistance: 27865 28000 28120 Scenario 1: short positions below 27865.00 with targets at 27515.00 & 27370.00 in extension. Scenario 2: above 27865.00 look for further upside with 28000.00 & 28120.00 as targets. Comment: the RSI is mixed to bearish.