The dollar tumbled from a seven-month high on Thursday, as risk appetite took a turn for the worse after soft Chinese trade data spooked a market that is expecting an interest rate increase from the Federal Reserve by the end of the year. The U.S. currency also fell from a more than two-month high against the yen and Swiss franc, two safe-haven currencies that benefit in times of political or financial stress. Exports from China, the world's second largest economy, fell 5.6% in yuan terms in September, from a year earlier and 10% in dollars.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending October 8 held steady at 246,000, while analysts expected jobless claims to rise by 8,000 to 254,000 last week.
The dollar has gained more than 2% so far this month against a basket of currencies, boosted by U.S. rate hike expectations. Investors have priced in a roughly 70% chance the Fed would nudge rates higher at its December policy meeting, a prospect reinforced by Wednesday's release of the last Fed monetary policy meeting minutes.
Today Switzerland is to publish data on producer prices. The Bank of England will release its credit conditions survey, which includes detailed data on secured and unsecured lending to households, small businesses, non-financial corporations, and non-bank financial firms. While, later in the day, the U.S is to round up the week with a string of reports on retail sales, producer prices and a preliminary look at consumer sentiment.
The yen gained in early Asia on Friday and the Aussie was a tad weaker ahead of closely-watched consumer and producer prices data from China.
Australia's central bank releases a financial stability review. China reports CPI for September with a gain of 0.3% seen month-on-month and a 1.6% increase year-on-year. As well PPI data is expected to show a fall of 0.3% year-on-year.
Safe-haven demand strengthened after data earlier showed that China’s trade surplus narrowed to $41.99 billion in September from $52.05 billion the previous month, while analysts had expected the trade surplus to widen to $53.00 billion last month.
The weak data fueled fresh concerns over a slowdown in the world’s second largest economy.
Pivot: 103.3Support: 103.3 103.15 102.75Resistance: 104.65 105 105.5Scenario 1: long positions above 103.30 with targets at 104.65 & 105.00 in extension.Scenario 2: below 103.30 look for further downside with 103.15 & 102.75 as targets.Comment: the RSI shows upside momentum.
Gold
Gold prices held on to overnight gains on Thursday, as the U.S. dollar and global stock markets pulled back after surprisingly weak Chinese trade data raised fresh concern about the world's second-largest economy.
The precious metal stayed positive in Asia on Friday, after stronger than expected gains in China consumer and producer prices data.
Today investors will focus on US reports on retail sales, producer prices and on a preliminary look at consumer sentiment, to gain more information on the strength of the greenback.
Pivot: 1250.2Support: 1250.2 1241 1235Resistance: 1269 1277 1287Scenario 1: long positions above 1250.20 with targets at 1269.00 & 1277.00 in extension.Scenario 2: below 1250.20 look for further downside with 1240.50 & 1235.00 as targets.Comment: a support base at 1250.20 has formed and has allowed for a temporary stabilisation.
WTI Oil
Oil prices settled up on Thursday, after a U.S. government report showing hefty draws in diesel and gasoline offset the first crude inventory build in six weeks.
Crude prices fell initially when the EIA said crude stocks swelled 4.9 million barrels in the week ended Oct. 7. It was the first crude build since the end of August and was far above a 700,000-barrel rise forecast by analysts in a Reuter’s poll.
But prices bounced back as the market turned its attention to product inventory drawdowns in the same EIA data. The EIA reported a drop of 3.7 million barrels for distillates, which include diesel and heating oil, and 1.9 million barrels decline for gasoline; while analysts had expected distillates to draw by just 1.6 million barrels and gasoline to decline by 1.5 million.
Today Baker Hughes will release weekly data on the U.S. oil rig count, which will be closely watched by energy traders.
Pivot: 49.6Support: 49.6 49.1 48.65Resistance: 51.1 51.6 52.12Scenario 1: long positions above 49.60 with targets at 51.10 & 51.60 in extension.Scenario 2: below 49.60 look for further downside with 49.10 & 48.65 as targets.Comment: the RSI is mixed to bullish.
US 500
U.S. stocks slipped on Thursday led by falls in financial shares and following weak Chinese economic data but a late-day rebound in oil prices limited the day's decline.
Reviving concerns about the health of the world's second-largest economy, data showed China's exports fell 10% in September, far worse than markets had expected, while imports unexpectedly shrank.
Stocks pared losses late along with energy shares. Oil prices rebounded to end higher. A U.S. government report of larger-than-expected draws in diesel and gasoline helped prices rebound. Investors have been worried about market valuations, especially with third-quarter profits of S&P 500 companies expected to have fallen about 0.7%, according to Thomson Reuters data.
Some investors hope that enough companies will beat analysts' expectations to allow S&P 500 companies to end the earnings period with a slight gain.
Pivot: 2107 Support: 2107 2100 2093 Resistance: 2140 2145 2152 Scenario 1: long positions above 2107.00 with targets at 2140.00 & 2145.00 in extension. Scenario 2: below 2107.00 look for further downside with 2100.00 & 2093.00 as targets. Comment: the RSI is above its neutrality area at 50%.