iFOREX Daily Analysis : February 08,2018
iFOREX | Feb 08, 2018 04:34AM ET
The US Dollar traded significantly stronger against other major and emerging market currencies with the US Dollar Index (USDX) closing 0.72% higher. The New Zealand Dollar (NZD), also called Kiwi, declined by almost 1.5% against the Dollar as the Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged and somewhat surprised the markets with the indication that no rate hikes in the immediate future are planned due to slow economic growth and timid inflation.
Gold fell to a four week low as higher Treasury yields and a stronger Dollar put pressure on this safe haven asset. Oil was also pressured by the strong Dollar. The EIA data indicating crude oil inventory builds and a daily production in the US at a record high of 10.25 million barrels per day created additional pressure from growing supplies.
US equity indices settled lower, as 10 year Treasury yields were again above 2.85%, close to the Friday’s high, when the equity sell-off intensified. Snapchat gained 47% in one day as the positive financial report surprised investors
Cryptocurrencies started the day with gains, as the Bitcoin traded for a short time above $8,600, before it retraced later in the day below $8,000. The gain is by some in part attributed to statements from the SEC and CFTC at the Senate Banking Committee that they see a need for consumer protection of this new investment class, without an outright ban.
On Thursday Germany publishes its merchandise trade statistic. The Bank of England is due to make its interest rate decision. In the US data on new jobless claims as well as Federal Reserve data about its total assets, credit and M2 monetary supply is due to be released. Canada publishes housing starts data.
EUR/USD
Despite the little available fundamental economic data from the Euro-Zone such as the German Industrial Production (IP) was better than expected with losing 0.6% on a monthly scale (expected -1.0% / previous +3.4%), the EUR/USD was seen falling by the highest amount in one day since October 2017.
On Thursday Germany publishes its merchandise trade statistic. In the US data on new jobless claims as well as Federal Reserve data about its total assets, credit and M2 monetary supply is due to be released.
Pivot:1.2315Support:1.2221.2191.216Resistance:1.23151.23451.2385Scenario 1:short positions below 1.2315 with targets at 1.2220 & 1.2190 in extension.Scenario 2:above 1.2315 look for further upside with 1.2345 & 1.2385 as targets.Comment:the RSI is capped by a declining trend line.
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Gold
Gold fell for the second consecutive day as the strong US Dollar made the precious metal more expensive to non-Dollar buyers. Additional pressure came from higher yields in the bond markets as the 10 year US Treasury yield again climbed over the level of 2.85%. Investment grade sovereign bonds, such as the US Treasuries are seen as a safe haven and so is gold, with the difference, that gold does not bear interest, which is why in theory, higher yields make gold comparably less attractive to bonds.
Pivot:1325.5Support:13091302.51296Resistance:1325.513311339Scenario 1:short positions below 1325.50 with targets at 1309.00 & 1302.50 in extension.Scenario 2:above 1325.50 look for further upside with 1331.00 & 1339.00 as targets.Comment:the RSI is capped by a declining trend line.
WTI Oil
Oil prices experienced a significant fall, with WTI oil futures declining by the highest amount in a day since June 2017. This was attributed to the Energy Information Administration (EIA) report showing builds in crude oil and gasoline stockpiles. This is contrary to the report released by the American Petroleum Institute on Tuesday, indicating that crude oil supplies fell by 1.1 million barrel. A significant concern seems to be that US production now hit an all-time high with 10.25 million barrels per day. The Baker Hughes Oil Rig Count showing the number of operating oil rigs in the US is due to be released on Friday.
Pivot:63.25Support:61.0560.559.95Resistance:63.2564.364.95Scenario 1:short positions below 63.25 with targets at 61.05 & 60.50 in extension.Scenario 2:above 63.25 look for further upside with 64.30 & 64.95 as targets.Comment:the RSI broke below a rising trend line.
US 500
Equity markets closed the day in the red as the bond market yields traded close to Friday’s levels. Higher bond yields make fixed income products more appealing compared to equities and also make financing for companies more expensive, and thus impacting earnings of companies heavily reliant on borrowed cash.
Especially energy stocks (US Energy ETF (NYSE:XLE) -1.45%) were under pressure as energy commodity prices fell across the board by over 2% in Wednesday’s trading. Snapchat closed 47.65% higher, easily surpassing its IPO level of $17 after earnings and sales data published on Tuesday after trading closed, positively surprised investors.
Twitter was up by 6.81% ahead of earnings data due to be published on Thursday. Also for Thursday among others, earnings from ABB and Nvidia are expected.
Pivot: 2658 Support: 2658 2615 2579 Resistance: 2731 2764 2809 Scenario 1: long positions above 2658.00 with targets at 2731.00 & 2764.00 in extension. Scenario 2: below 2658.00 look for further downside with 2615.00 & 2579.00 as targets. Comment: the RSI is bullish and calls for further advance. The 50-period Moving average acts as support.
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