iFOREX Daily Analysis : June 25,2018
iFOREX | Jun 25, 2018 05:05AM ET
The US Dollar traded again lower against other major currencies, with the US Dollar Index (USDX) closing 0.36% lower on Friday. The Mexican Peso (MXN) ended the week with significant gains against the Dollar as the Mexican central bank raised the interest rates to the highest level since 2009.
After some gains on Friday, gold continued trading lower early on Monday with other precious metals such as silver and palladium also trading lower. On Monday oil reversed on part of its gains from Friday, when a possible OPEC consensus to only moderately raise production levels was announced.
US equity indices traded mixed on Friday. The increasingly protectionist trade policies of the United States could be seen as a concern for the US and global economy, with US President Trump adding measures its trading partners, in particular China.
Cryptocurrencies continued to feel the pressure with Bitcoin dipping below $6,000 and hitting a new year-to-date low on Sunday. Other major cryptocurrencies such as Litecoin and Bitcoin Cash faced even bigger losses with double-digit percentage losses on a weekly basis.
On Monday in Germany IFO survey results are set to be released. In the US data on the Chicago Fed National Activity Index (CFNAI) and New Home Sales is due. In the United Kingdom CBI Distributive Trades statistics will be published.
EUR/USD
The EUR/USD rate was up on Friday, closing the week with a gain. This comes as renewed trade war fears put the Dollar under pressure as US President Trump announced further measures against China, now blocking Chinese investments in US technology companies.
Economic data from the Euro zone was mostly around the expected parameters with the French Gross Domestic Product (GDP) at +2.2% y/y and German Manufacturing PMI almost as expected at 55.9 (expected 56.0) and Services PMI above expectations at 53.9 (expected 52.1). A similar picture was seen in the data for the European Union with Manufacturing PMI at 55.0 (expected 55.0) and Services PMI at 55.0 (expected 53.6).
On Monday in Germany the results of the influential IFO Survey will be released. Other key data releases for the Euro zone this week are the German Unemployment and Retail Sales figures due on Friday, as well as inflation data releases from Germany and Italy on Thursday and then from France and the EU on Friday.
Pivot: 1.1655 Support: 1.1615 1.1595 1.158Resistance: 1.1655 1.1675 1.169 Scenario 1: short positions below 1.1655 with targets at 1.1615 & 1.1595 in extension. Scenario 2: above 1.1655 look for further upside with 1.1675 & 1.1690 as targets. Comment: the RSI is bearish and calls for further downside. The pair has broken below an intraday rising trend line.
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USD/TRY
The Turkish Lira continued to gain after the reelection win by Turkish President Erdogan and the “People’s Alliance” which is made up of Erdogan’s AK party and the MHP, securing a parliamentary majority of more than 50%. Before the elections there were concerns what would happen if Erdogan’s coalition failed to secure the majority of the seats in parliament.
Despite the likely political stability, concerns remain what the renewed mandate for Erdogan in the strengthened presidential system will mean for the Turkish economy. Investors were concerned before the elections with Erdogan’s stance on supporting lower interest rates and his desire to have more control of the country’s central bank policies.
On Monday in Turkey data on Capacity Utilization and Manufacturing Confidence is due to be released.
Pivot: 4.5956 Support: 4.5956 4.5622 4.5423Resistance: 4.6967 4.7166 4.7366 Scenario 1: rebound towards 4.6967. Scenario 2: below 4.5956, expect 4.5622 and 4.5423. Comment: the RSI is below 50. The MACD is negative and above its signal line. The configuration is mixed. Moreover, the pair stands below its 20 and 50 MAs (respectively at 4.6342 and 4.6745).
WTI Oil
Oil settled significantly higher on Friday with an agreement by OPEC to allow additional production in its members’ countries. Investors appeared to be happy about the fact that the output hike is supposed to only modestly raise production levels towards the levels earlier agreed under the production cuts, which however could not be met by some producing countries.
Another factor possibly pushing prices higher was the fact that the US Baker Hughes Oil Rig Count was down by 1 to 862 operating oil rigs, and for the first time in 12 consecutive weeks the count was lower. Another pressure on supplies in the US is the pipeline bottleneck in the Permian region, which is already operating close to its maximum capacity.
On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.
Pivot: 69.15 Support: 67.5 66.65 66.1Resistance: 69.15 70.05 71 Scenario 1: short positions below 69.15 with targets at 67.50 & 66.65 in extension. Scenario 2: above 69.15 look for further upside with 70.05 & 71.00 as targets. Comment: the RSI is mixed with a bearish bias. Prices opened with a bearish gap this morning.
US 500
US equity indices traded mixed with the S&P 500 (US 500) and Dow Jones Industrial Average (US 30) seeing a slight uptick, while the NASDAQ Composite (US Tech 100) and Russell 2000 (US 2000) closed lower. The relatively weak performance, following the escalation in tariff announcements, ended the winning streak of the S&P 500, which lasted for 3 consecutive weeks.
Bank stocks (US Banks ETF -0.93%) were in particular under pressure on Friday, while energy companies' stocks (US Energy ETF (NYSE:XLE) +2.18%) rallied following the OPEC announcement.
Comcast (NASDAQ:CMCSA) (+3.36%) stocks continued to rise as analysts expect it to counter Disney's (+0.43%) offer for the purchase of 21st Century Fox. Dropbox (-5.61%) stocks declined for the 4th consecutive trading day, erasing most of the gains since the puzzling rally, that started on June 14. Most analysts struggled to give a concise explanation for this market move besides increased trading volumes.
On Monday the Chicago Fed National Activity Index (CFNAI) and New Home Sales statistics are due to be released. On Thursday the sports gear company Nike (NYSE:NKE) is due to release its quarterly earnings.
Pivot: 2762.5 Support: 2735 2728 2723 Resistance: 2762.5 2769 2777 Scenario 1: below 2762.50 with targets at 2735.00 & 2728.00 in extension. Scenario 2: above 2762.50 look for further upside with 2769.00 & 2777.00 as targets. Comment: the RSI is capped by a declining trend line. A bearish cross has been identified between the 20-period and 50-period moving averages.
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