iFOREX Daily Analysis : December 05,2017
iFOREX | Dec 05, 2017 06:11AM ET
The US Dollar traded higher against a basket of global currencies with the US Dollar Index (USDX) closing 0.2% higher. This comes after the US Senate narrowly pushed through the Trump’s administration tax plan. Emerging market currencies showed significant improvement against the Dollar with the South African Rand (ZAR) gaining almost 2% against the Dollar on hopes that the business friendly candidate Ramaphosa for the leadership of the ruling ANC could succeed at the election in less than two weeks.
Gold continued trading lower after the Senate agreed on the tax proposal on Saturday while showing some upside momentum which could be attributed to the lack of consensus between the Democrats and Republicans on how to extend the government funding before the looming shutdown on Friday. Oil pared its gains from Friday as concerns over strong oil supply from the US reemerged.
US equity indices settled lower due to weak technology stocks, while other stocks from other sectors such as banks, industry and materials settled higher. There are concerns that the initiated tax legislation by the Republicans could have unfavorable effect on technology companies.
While Bitcoin retraced some of its gains from the weekend, it continued to push towards a new high. As the CBOE is about to launch Bitcoin futures on the 10th December some see this as a breakthrough for mainstream investors to trade the cryptocurrency, while others are concerned how the ability to short it will affect the market.
On Tuesday the European Union (EU) publishes retail sales and composite PMI data. The United Kingdom will publish the CIPS/PMI Services Index. Canada will release its trade statistics.
The US publishes Trade Balance, the ISM Non-Manufacturing Index and Redbook Store Sales data. The American Petroleum Institute (API) will release oil stockpile figures.
Bitcoin
Bitcoin continues to rise to new highs as after regulators in the US indicated that they do not object to the launch of Bitcoin futures, CME announced the launch of Bitcoin futures for the 18th December and the CBOE on the 10th December. The trading at regulated venues such as the CME or CBOE according to some market analysts would allow ETF and other funds to include the value of Bitcoins in their portfolio and raise its mainstream exposure.
While many traditional market analysts and bankers criticize Bitcoin as a bubble it continues its rise alongside other cryptocurrencies. Bitcoin with its current market capitalization over $190 bn. is worth more than the GDP of New Zealand.
Pivot: 10907.4 Support: 11107.7 10907.4 10397.6Resistance: 12090.9 12398.9 12706.9 Scenario 1: as long as 10907.42 is support look for 12398.89. Scenario 2: the downside breakout of 10907.42 would call for 10397.56 and 10094.08. Comment: the RSI is above 50. The MACD is positive and below its signal line. The pair could retrace. Moreover, the pair is above its 20 and 50 MAs (respectively at 11380.61 and 11258.42).
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Gold
Gold opened lower on Monday morning after the US Senate passed a bill on the Tax reform adding positive momentum to the US economy. Later in the day’s trading Gold gained slightly as the US Government shutdown deadline of this Friday is coming closer without a firm assurance between the Republicans and Democrats than an extension deal will be reached in time.
On Tuesday Trade Balance, the ISM Non-Manufacturing Index and Redbook Store Sales figures will be published.
Pivot: 1278 Support: 1270 1266 1260Resistance: 1278 1283 1289 Scenario 1: short positions below 1278.00 with targets at 1270.00 & 1266.00 in extension. Scenario 2: above 1278.00 look for further upside with 1283.00 & 1289.00 as targets. Comment: the RSI is mixed and calls for caution.
WTI Oil
WTI oil traded on Monday over 1% lower amid fears of increasing US output. On Friday it was announced that the amount of operating oil rigs in the US rose by two. Also the daily output in September according to the Energy Information Administration (EIA) was at 9.5 million barrels per day, the highest number since 2015.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the EIA on Wednesday.
Pivot: 58 Support: 57.25 56.75 56.4Resistance: 58 58.4 58.9 Scenario 1: short positions below 58.00 with targets at 57.25 & 56.75 in extension. Scenario 2: above 58.00 look for further upside with 58.40 & 58.90 as targets. Comment: the RSI advocates for further decline.
US 500
US equities settled lower as the Republican tax reform could impact different economic sectors differently, while a possible government shutdown on Friday adds insecurity. However the losses were mostly isolated within a few sectors such as technology (US Technology ETF -1.59%) and biotech (US Biotech ETF -1.58%) as some believe the tax reform as well as possible future Federal Reserve rate hikes could adversely affect those. However most other sectors, especially banks (US Banks ETF +1.88%) and financials (US Financials ETF +1.78%) closed significantly stronger. Comcast (NASDAQ:CMCSA) (+5.05%) and Disney (+4.77%) were trading higher as both are showing interest in buying some parts of 21st Century Fox businesses, which it wants to spin off.
Besides ISM and trade balance data, markets will pay attention to the further progress of the tax bill as well as the negotiations on the extension of the government shutdown deadline.
Pivot: 2657 Support: 2627 2615 2604.25 Resistance: 2657 2662 2670 Scenario 1: short positions below 2657.00 with targets at 2627.00 & 2615.00 in extension. Scenario 2: above 2657.00 look for further upside with 2662.00 & 2670.00 as targets. Comment: the RSI shows downside momentum.
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