iFOREX Daily Analysis : June 02,2018
iFOREX | Jun 13, 2018 06:15AM ET
The Dollar continued with its recovery against other major currencies, as the US Dollar Index (USDX) closed 0.27% higher on Tuesday. Emerging market currencies, such as the Russian Ruble (RUB), South African Rand (ZAR) and Mexican Peso (MXN) further declined on the strong Dollar but also from the rise in US interest rates. Some analysts say that emerging markets suffer from a withdrawal of liquidity following the end of near-zero interest rates from the Federal Reserve.
Gold was trading marginally lower after the successful meeting between the leaders of North Korea and the United States lowered geo-political risk in the region, while markets are anxiously looking forward to the FOMC meeting. Oil traded lower as API data showed higher stockpiles in the US and a report from OPEC indicated an increase in production for May.
US equity indices settled again higher, with biotech, real estate and utilities stocks leading the field.
Cryptocurrencies continued to face significant pressure, with Bitcoin remaining in the $6,500 range. However other major cryptocurrencies faced new lows with Litecoin falling below $100 for the first time since December and Ethereum below $500 for the first time since April.
On Wednesday in Switzerland Producer and Import Price Index data is due for publication. The European Union will publish its Industrial Production (IP) figures. Then later the Federal Reserve is set to announce its interest rate decision. In the Asian-Pacific trading session on Thursday the Bank of Japan is due to announce its interest rate decision, followed by unemployment data from Australia and later IP and Retail Sales data from China.
EUR/USD
The EUR/USD continued to trade lower on Tuesday, with further downward movement early on Wednesday. Italy’s Unemployment Rate was as expected reported at 11.1% for the first quarter. In Germany the ZEW Survey on Current conditions (80.6 / expected 85.0) and Business Expectations (-16.1 / expected -14.5) continued with a trend of disappointing data. In the previous week German Industrial Production (IP) and Manufacturers' Orders were both lower compared to market expectations.
On Wednesday in the EU data about IP is set to be released. Then on Thursday after Germany and France release their respective CPI figures, the ECB is set to announce its interest rate decision.
Pivot:1.1775Support:1.1711.1681.165Resistance:1.17751.1811.184Scenario 1:short positions below 1.1775 with targets at 1.1710 & 1.1680 in extension.Scenario 2:above 1.1775 look for further upside with 1.1810 & 1.1840 as targets.Comment:the RSI is mixed to bearish.
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GBP/USD
The Pound received support after data about unemployment in the United Kingdom was at the lowest level since 1975 with Claimant Unemployment numbers dropping by 7,700 (expected rise by 11,300).
Prime Minister Theresa May was able to convince her party members in the House of Commons to rejects amendments to the EU withdrawal bill from the House of Lords, which if passed would have given Parliament more rights in deciding the negotiating strategy for Brexit.
On Wednesday in the UK data on the Consumer Price Index (CPI) and Producer Price Index (PPI) is set to be released. Then on Thursday the Retail Sales statistics are due to be published.
Pivot:1.3345Support:1.33451.33051.328Resistance:1.341.34251.3455Scenario 1:long positions above 1.3345 with targets at 1.3400 & 1.3425 in extension.Scenario 2:below 1.3345 look for further downside with 1.3305 & 1.3280 as targets.Comment:a support base at 1.3345 has formed and has allowed for a temporary stabilisation.
WTI Oil
Oil declined on Tuesday, especially in late trading, after data from the API (American Petroleum Institute) showed oil stockpiles higher by 0.833 million barrels, while forecasts estimated a moderate drop.
There was a disparity between the WTI and Brent type of oil. Brent oil, which in contrast to the US-centric WTI standard is used more as a benchmark of purchases on the global market declined further, after an OPEC report showed that production in the cartel was 35,000 barrels higher in May than in the previous month.
On Wednesday the Energy Information Administration (EIA) is going to publish its oil stockpile data. Also on Wednesday the International Energy Agency (IEA) is set to release its monthly global oil supply and demand report.
Pivot:66.35Support:65.565.264.85Resistance:66.3566.767Scenario 1:short positions below 66.35 with targets at 65.50 & 65.20 in extension.Scenario 2:above 66.35 look for further upside with 66.70 & 67.00 as targets.Comment:the RSI advocates for further decline. The 20-period moving average has crossed below the 50-period one.
US 500
US equities continued with gains on Tuesday. The expected Consumer Price Index (CPI) ahead of the FOMC meeting, showed an annual inflation of 2.8%, which was in line with expectations. The Redbook Store Sales index was shown at +4.3% y/y (previous +4.0%.
Especially biotech (US Biotech ETF +0.78%) and utilities (US Utilities ETF +1.34%) stocks traded higher, while losses were seen in bank (US Banks ETF -0.66%) and energy sector (US Energy ETF (NYSE:XLE) -0.80%) stocks.
Previously pressured tech stocks continued their recovery with Snapchat gaining 2.6 %, as the company announced an increase in the functionality of its app and additional advertising options. Twitter (+4.93%) shares also surged higher over JP Morgan significantly raising their price target over higher advertising sales. Tesla (NASDAQ:TSLA) (+3.25%) also continued with its recovery as analysts raised their delivery estimate of the ailing Model 3 up by 50% for Q2. It has yet to be seen how market reacts to the announcement by Tesla to cut its workforce by 9%.
On Wednesday data about the mortgage market from the Mortgage Bankers' Association is due to be released.
Pivot: 2782 Support: 2782 2774 2765 Resistance: 2802 2810 2818 Scenario 1: long positions above 2782.00 with targets at 2802.00 & 2810.00 in extension. Scenario 2: below 2782.00 look for further downside with 2774.00 & 2765.00 as targets. Comment: the RSI lacks downward momentum. The rising 50-period moving average should push the prices higher.
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