The dollar gained on Wednesday, reaching to a 14-year high against other majors, supported by strong U.S. economic data that showed the economy is on track for steady growth and reinforced expectations of interest rate increases by the Federal Reserve next month and in 2017.
The dollar also posted sharp gains against the yen, reaching a seven-month high, and climbed versus the euro to its highest since early December.
The Universtity of Michigan said its consumer sentiment index rose to 93.8 in November from 91.6 the previous month, beating expectations for an unchanged reading. In addition, the U.S. Commerce Department said durable goods orders climbed 4.8% last month, compared to expectations for a gain of 1.5%.
Core durable goods orders, which exclude volatile transportation items, rose 1% last month, compared to a forecast increase of 0.2%.
On the contrary, the U.S. Department of Labor said initial jobless claims in the week ending November 19 increased by 18,000 to 251,000 from the previous week’s total of 233,000 (initially 235,000) when analysts had expected jobless claims to rise by 15,000 to 250,000 last week. Another report showed that U.S. new home sales fell by 1.9% to 563,000 units last month, disappointing expectations for a 0.3% increase.
Fed Chair Janet Yellen reiterated that a rate hike “could well become appropriate relatively soon.”
The euro is facing a host of political risks in the coming months, including an Italian constitutional referendum in less than two weeks and French and German elections next year, that are seen as likely to drive the currency lower.
For today, the Ifo Institute is to release data on German business climate while financial markets in the U.S. are to remain closed for the Thanksgiving holiday.
The euro fell sharply against the dollar on Wednesday, for yet another session, following the solid economic data from the U.S, that include a 0.4 percent rebound in U.S. durable goods orders last month and solid U.S. jobless claims that have been below 300,000 for 90 straight weeks, something which boosts the possibility of multiple rate hikes by the Fed.
Some positive data also came out from the Eurozone, but failed to boost the euro as Research group Markit earlier reported that its euro zone composite purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, increased to 54.1 November from the prior month’s reading of 53.3 and above forecasts for no change.
The euro is now facing a host of political risks in the coming months, including an Italian constitutional referendum in less than two weeks and French and German elections next year, that are seen as likely to drive the currency lower.
For today, the Ifo Institute is to release data on German business climate while financial markets in the U.S. are to remain closed for the Thanksgiving holiday.
Pivot: 1.0585Support: 1.051 1.046 1.04Resistance: 1.0585 1.0615 1.066Scenario 1: short positions below 1.0585 with targets at 1.0510 & 1.0460 in extension.Scenario 2: above 1.0585 look for further upside with 1.0615 & 1.0660 as targets.Comment: as long as the resistance at 1.0585 is not surpassed, the risk of the break below 1.0510 remains high.
Gold
Gold prices dropped to their lowest levels since February on Wednesday after the dollar reached fresh 14-year highs following a batch of solid U.S.
economic reports including durable goods orders and jobless claims, which support the possibility for multiple rate hikes in the coming months.
Gold is known to trade inversely with the dollar like most commodities as it is priced in dollars and becomes more expensive to holders of other currencies when the dollar strengthens.
Prices of the yellow metal had already come under pressure this month amid the view that increased U.S. fiscal spending under a Trump administration will spur economic growth and inflation, which would lead to an era of higher interest rates. In terms of economic releases, today will most likely be quiet with the U.S. closed for thanksgiving.
Pivot: 1202Support: 1181 1175 1165Resistance: 1202 1215 1221Scenario 1: short positions below 1202.70 with targets at 1181.50 & 1175.00 in extension.Scenario 2: above 1202.70 look for further upside with 1215.00 & 1221.00 as targets.Comment: the RSI is capped by a declining trend line.
WTI Oil
Oil prices fluctuated between gains and losses on Wednesday, finally closing the day in positive territory, after the U.S. Energy Information Administration reported a larger-than-expected U.S. oil inventory decrease last week. Crude oil inventories fell by 1.25 million barrels last week, the EIA said.
That was compared to forecasts for a stockpile build of 0.67 million barrels after a build of 5.27 million barrels in the previous week. The report also showed that gasoline inventories rose by 2.31 million barrels, compared to expectations for an increase of 0.64 million barrels, while distillate stockpiles rose by 0.32 million barrels, compared to forecasts for a decrease of 0.35 million.
The main focus for traders now is shifted on a planned output cut by major producers, aimed at reducing a global supply glut and supporting prices. OPEC is to meet on November 30 to decide on a strategy for the first half of next year.
Pivot: 48.5Support: 47.15 46.38 45.8Resistance: 48.5 49.22 49.79Scenario 1: short positions below 48.50 with targets at 47.15 & 46.38 in extension.Scenario 2: above 48.50 look for further upside with 49.22 & 49.79 as targets.Comment: the RSI is mixed with a bearish bias.
US 500
The main U.S. stock indices were mixed on Wednesday, as gains in the Industrials, Telecoms and Oil & Gas sectors drove shares higher while losses in the Utilities, Technology and Consumer Goods sectors led shares lower.
Machinery and equipment makers climbed after strong results from Deere, but technology companies fell after HP gave a weak profit forecast. Industrial stocks also were given a boost by a report that showed a strong jump in orders for durable goods in October due to demand for machinery and other equipment.
The Dow rose 0.31% to hit a new all-time high following the release of the minutes, while the S&P 500 index gained 0.08%, and the NASDAQ Composite index lost 0.11%.
The main indices remained higher despite the minutes from the Federal Reserve's policy-setting meeting which indicated that an interest rate hike could come "relatively soon." The Fed noted that inflation has been rising and that the labor market has improved. Today the U.S. will be closed for thanksgiving.
Pivot: 2191 Support: 2191 2179 2169 Resistance: 2203 2216 2247 Scenario 1: long positions above 2191.00 with targets at 2203.00 & 2216.00 in extension. Scenario 2: below 2191.00 look for further downside with 2179.00 & 2169.00 as targets. Comment: the RSI is mixed with a bullish bias.