The US Dollar closed overall lower compared to other major currencies on Monday, as the US Dollar Index (USDX) declined by 0.25% and extended the losses on Tuesday morning.
While it was reported that the demand for gold as a safe haven asset was seen rising over the recent weeks, prices remained mostly unchanged below $1,200 with the strong Dollar and expectations of higher interest rates possibly restricting upwards momentum.
Equity indices traded mixed, with US equity indices able to recover losses in late trading on Monday and European indices also closing mostly higher. Chinese and Hong Kong indices however still see pressure over the uncertainty how the trade conflict with the US will play out and also over concerns over increasing bankruptcies in China.
Volatility in the cryptocurrency market was seen lower, following the sell-off in the previous week. Bitcoin remained mostly unchanged around the $6,300 level, while other cryptocurrencies such as Ripple and Bitcoin Cash were facing more losses. Recently Vitalik Buterin, the co-founder of Ethereum, the second largest cryptocurrency by market capitalization said that the days of ‘1000-times’ gains in the crypto market are over.
On Tuesday in the UK the Unemployment Rate and Average Earnings statistics will be released. In Germany the influential ZEW Survey on Business Expectations and Conditions will be published and in Canada the Housing Starts level will be released.
The Pound Sterling reached its highest level in more than a month and further extended gains on Tuesday morning. The statements from EU chief Brexit negotiator Michel Barnier, that he has the expectations reaching a deal with the UK within 8 weeks is realistically possible, pushing the Pound higher, despite only mixed economic data releases on Monday.
Industrial Production at +0.9% y/y (expected +1.1%) and Manufacturing Output at +1.1% y/y (expected +1.4%) were reported below the set expectations, while the Trade Deficit was lower at GBP10 bn. (expected GBP11.7 bn.) for July.
On Tuesday in the United Kingdom the Unemployment Rate and Average Earnings data will be released.
Pivot:1.3005Support:1.30051.29551.2905Resistance:1.311.31451.3175Scenario 1:long positions above 1.3005 with targets at 1.3100 & 1.3145 in extension.Scenario 2:below 1.3005 look for further downside with 1.2955 & 1.2905 as targets.Comment:the RSI advocates for further upside.
The Russian Ruble traded above 70 USD for the first time in almost 2-1/2 years. While the sell-off in emerging markets and the strength of the Dollar were both recently affecting multiple emerging market economies, the threat of further US sanctions, especially against the Russian financial sector could have had negative impact on the currency.
Quarterly Gross Domestic Product (GDP) data as reported on Monday was at +1.9% marginally higher than estimated.
On Tuesday the Russian Trade Balance for July will be released. Then on Thursday statistics on Central Bank Reserves are expected and on Friday the Russian Central Bank is due to decide whether to keep the interest rates unchanged at 7.25%, which is the overall market consensus.
Pivot:70.997Support:69.69169.47769.262Resistance:70.99771.3671.576Scenario 1:target 69.691.Scenario 2:the upside breakout of 70.997, would call for 71.360 and 71.576.Comment:the RSI is below 50. The MACD is below its signal line and positive. The MACD must penetrate its zero line to expect further downside. Moreover, the pair is trading under its 20 MA (70.539) but above its 50 MA (70.310).
WTI Oil
Oil prices showed relatively little movement on Monday. With the slow movement a clear divergence between WTI, which is the US benchmark and the Brent oil contract, which is seen more as an international contract was seen. The looming US sanctions against Iranian oil exports could have especially affected the available international supply and pushed prices higher.
Analysts mentioned that due to the trade standoff between the US and China, China curbed its purchases of American crude oil, which means that the US might need to add discounts to its oil sales to compete in the international markets.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot:68.1Support:67.0566.565.7Resistance:68.168.569Scenario 1:short positions below 68.10 with targets at 67.05 & 66.50 in extension.Scenario 2:above 68.10 look for further upside with 68.50 & 69.00 as targets.Comment:the RSI is mixed with a bearish bias.
US 500
US equity indices mostly managed to close marginally higher in after-hours trading as the Consumer Credit statistic for July indicated higher borrowing at $16.6 bn. (expected $13.9 bn.). Higher consumer credit could in principle indicate higher confidence and also higher spending.
Especially chip maker stocks (US Semiconductors ETF +0.96%) traded higher, while health sector stocks (US Health Care ETF -0.37%) were some of the worst performing.
Snapchat (-2.31%) came again under pressure, reaching yet another all-time low after the company’s chief strategy officer announced plans to depart from the social media company.
The AMD (+9.10%) stock continues to experience significant volatility and after retracing from the decade-high last Wednesday was up and closed almost at Wednesday’s record level. This came as yet another analyst gave positive business estimate to the company’s desktop and mobile computing processor business.
On Tuesday in the US the NFIB Small Business Optimism Index, Redbook Store Sales statistic and Wholesale Trade statistic are going to be released.
Pivot: 2876.25 Support: 2876.25 2873 2865 Resistance: 2887 2895 2900 Scenario 1: long positions above 2876.25 with targets at 2887.00 & 2895.00 in extension. Scenario 2: below 2876.25 look for further downside with 2873.00 & 2865.00 as targets. Comment: the RSI is mixed to bullish. Prices broke above a bearish trend channel.