Continued concerns about the trade standoff between the US and China could be one factor driving the Dollar higher after last week low in the US Dollar Index (USDX) on Friday morning.
The stronger Dollar and also higher yields on bonds contributed to gold falling again below the $1,200 level. The 10 Year US Treasury Note yielded for the first time in more than a month over 3%. As both Treasury Notes and gold are seen as safe-haven assets, in theory it is assumed that higher yields on Treasury Notes make the non-yielding gold less attractive to investors.
Equity indices traded lower on Monday, as especially Asian stocks were again seen falling after reports that US President Trump still intends to levy additional tariffs on $200 bn. worth of Chinese imports, despite possible ongoing negotiations.
Cryptocurrencies continued trading at lower volatility with Bitcoin trading marginally below $6,500 and Ethereum staying firmly above $200 over the weekend. Meanwhile one of the key cryptocurrency exchanges Binance is set to open its exchange now also in Singapore, after announcing exchanges in different European and African countries.
On Monday in Italy the Merchandise Trade and in the European Union the Harmonised Index of Consumer Prices (HICP) statistics will be released. In the US the Empire State General Business Condition survey will be published.
For emerging markets Turkey publishes its Budget Balance for August, in Brazil the central bank releases its Focus Market Report, and Russia discloses its Industrial Production level.
In the Asian-Pacific trading session on Tuesday the Bank of Japan will announce its interest rate decision and in Australia the Housing Price Index will be released.
On Friday economic data from Italy showed a lower inflation than expected with the CPI at +1.6% y/y (expected +1.7%). The Trade Balance deficit level increased to €17.4 bn. in July.
In the United States prices were also seen rising slower than expected with Import Prices at -0.6% m/m (expected -0.1%) and Export Prices also lower at -0.1% m/m (expected +0.2%). While Capacity Utilization was lower than expected at 78.1% in August (expected 78.3%), the University of Michigan Consumer Sentiment was unexpectedly up at 100.8 (expected 97.0).
On Monday in Italy the Merchandise Trade and in the European Union the Harmonised Index of Consumer Prices (HICP) statistics will be released. In the US the Empire State General Business Condition survey will be published. Also on Monday, the member of the Executive Board of the European Central Bank, Yves Mersch is due to deliver a speech.
Pivot: 1.166 Support: 1.161 1.1575 1.155Resistance: 1.166 1.1685 1.172 Scenario 1: short positions below 1.1660 with targets at 1.1610 & 1.1575 in extension. Scenario 2: above 1.1660 look for further upside with 1.1685 & 1.1720 as targets. Comment: as long as the resistance at 1.1660 is not surpassed, the risk of the break below 1.1610 remains high.
The South African Rand (ZAR) traded stronger last week, supported by the positive sentiment in emerging markets, following the interest rate decision in Turkey and also by indications by the rating agency Moody’s, that it would likely not downgrade its credit rating for South Africa. Moody’s is the last remaining credit rating agency giving South Africa an investment grade rating.
However there is continued uncertainty how the controversial proposed land reforms would be implemented, as policymakers face pressure to deliver on promises ahead of the 2019 general election.
Many analysts see it as likely that the South African Central Bank would raise its interest rates by 25 basis points from the current 6.5% rate at its meeting on Thursday. On Wednesday before the Central Bank meeting, Consumer Price Index (CPI) data for August is expected.
Pivot: 14.836 Support: 14.836 14.707 14.63Resistance: 15.171 15.248 15.325 Scenario 1: as long as 14.8360 is support look for 15.1710. Scenario 2: below 14.8360, expect 14.7070 and 14.6300. Comment: the RSI is above 50. The MACD is positive and below its signal line. The pair could retrace. Moreover, the pair is trading under its 20 MA (14.9407) but above its 50 MA (14.8887).
WTI Oil
Oil had another volatile trading day on Friday, closing the week overall lower. Multiple factors moved the oil prices that week. On one had data from the API and EIA surprised most of the market participants as the draw on stockpiles was bigger than anticipated. Also the situation regarding the trade standoff between the US and China, which could have potential to slow down global economies seems unclear. Only last week signs of possible reconciliation appeared with both parties interested in talks, while later it emerged that US President Trump is still intending to levy new tariffs on Chinese imports.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot: 69.35 Support: 68.35 67.95 67.5Resistance: 69.35 69.9 70.35 Scenario 1: short positions below 69.35 with targets at 68.35 & 67.95 in extension. Scenario 2: above 69.35 look for further upside with 69.90 & 70.35 as targets. Comment: the RSI is mixed with a bearish bias. As long as 69.35 is resistance, likely decline to 68.35.
US 500
US equity indices closed almost unchanged during the regular trading session on Friday, but then extended losses in the late trading with especially utilities (US Utilities ETF -0.48%) and real estate (US Real Estate ETF -0.69%) stocks trading lower. Most gains were seen in chipmakers’ stocks (US Semiconductors ETF +1.22%) with sector stocks recovering from the low seen on Wednesday.
Snap (-0.43%) continues to trade close to its all-time low and closed last week for the sixth consecutive week lower. Snap, the company of the popular social media app ‘Snapchat’ is under pressure due to slower than expected growth, declining active user numbers and departure of key executives.
Adobe (NASDAQ:ADBE) (+2.45%) stocks traded at an all-time high after the company accounted better than expected quarterly results, clearly surpassing revenue and earnings estimates as the company’s digital media segment revenue hit a new record gaining 28% compared to the previous year.
Few earnings are expected for this week with Micron expected to release its earnings on Thursday.
Pivot: 2912 Support: 2902 2895 2889 Resistance: 2912 2917.25 2922 Scenario 1: short positions below 2912.00 with targets at 2902.00 & 2895.00 in extension. Scenario 2: above 2912.00 look for further upside with 2917.25 & 2922.00 as targets. Comment: the RSI lacks upward momentum. The 20-period moving average crossed below the 50-period one. A break below 2902 would trigger a drop to 2895.