iFOREX Daily Analysis : May 11,2018
iFOREX | May 11, 2018 07:29AM ET
The Dollar traded lower against a basket of other major currencies on Thursday, with the US Dollar Index (USDX) declining by 0.42% as US inflation data fell below expectations. Meanwhile the Pound Sterling (GBP) fell to an almost 4 months low against the Dollar with as the Merchandise Trade level balance at -12.29B showed a higher than expected deficit. Analysts criticizes the decision by the Bank of England to leave the interest rates unchanged at 0.5%, as this would give little room for rate cuts, should they be needed following Brexit next Year.
Gold edged higher on a weaker Dollar and geo-political tensions surrounding the situation in Iran, as Israel targeted allegedly Iranian military sites in Syria and the US are bringing up new sanctions against the oil-rich nation. Oil traded also higher on the outlook of sanctions, as the US are trying to make companies and countries drop Iranian crude oil imports.
US equity indices traded higher on Thursday with analysts mentioning that the muted inflation, with the CPI numbers released on Thursday below expectations could have given some reassurance to the market. Technology and chip values were especially strong in trading on Thursday.
Cryptocurrencies broadly declined, with of the major crypto-tokens Ripple and Litecoin losing double-digit percentages and Bitcoin falling to a 2 week low. It was speculated that a large seller of Bitcoin and Bitcoin Cash could be selling or intending to sell his tokens.
On Friday the US are set to release import and export prices. In Canada statistics on the change in employment and the unemployment rate are expected.
EUR/USD
The EUR/USD traded higher the first time this week so far on Thursday, after the inflation data in the US fell below market expectation. Inflation is one of the factors central banks keep in mind when deciding on whether to increase their interest rates. The Consumer Price Index (CPI) was at only +0.2% m/m (expected +0.3%), while the Core CPI also fell short of expectations at +0.1% m/m (expected +0.2%). Meanwhile New Jobless Claims were at the same level as last week at 211,000 and below the market expectations.
On Friday a speech by the President of the European Central Bank M. Draghi is expected in Florence. Meanwhile the President of a Federal Reserve Bank, James Bullard is also scheduled to hold a speech. Traders are eager to get direct insight from decision makers of central banks to help them understand the future of their respective monetary policy.
Pivot:1.189Support:1.1891.1871.184Resistance:1.19451.19751.2005Scenario 1:long positions above 1.1890 with targets at 1.1945 & 1.1975 in extension.Scenario 2:below 1.1890 look for further downside with 1.1870 & 1.1840 as targets.Comment:technically the RSI is above its neutrality area at 50.
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Gold
Gold traded for the first time above the $1,320 mark in May, as the Dollar gave away some of this week’s gains and the 10 Year US Treasury Note Yield further fell below the 3% territory. Rising geo-political tension could have further pushed the demand for the safe haven asset as the conflict with Iran intensifies on multiple fronts. While the US is seeking to isolate Iran by sanctions, which have to be taken seriously after the major telecom supplier ZTE in China had to temporarily shut down after violating said sanctions, Saudi-Arabia warns that it will get nuclear weapons, should Iran do the same.
In term of Dollar related economic news, on Friday the US will release its recent Import and Export Prices statistic.
Pivot:1311Support:131113061304Resistance:132513321339Scenario 1:long positions above 1311.00 with targets at 1325.00 & 1332.00 in extension.Scenario 2:below 1311.00 look for further downside with 1306.00 & 1304.00 as targets.Comment:even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
WTI Oil
Oil reached a new 3-1/2 year high on Thursday over supply concerns, following the announcement by the United States to soon again impose sanction on Iran, after quitting the nuclear deal. It has been reported that the US government’s Bureau of Energy Resources is seeking to convince companies and foreign governments to shun oil imports of Iranian oil.
On Friday the US Baker Hughes Oil Rig Count will be released, indicating the number of operating oil rigs in the US. The statistics showed a continued rise in activity of the past 5 consecutive weeks.
Pivot:71.65Support:70.870.5570.25Resistance:71.6571.972.3Scenario 1:short positions below 71.65 with targets at 70.80 & 70.55 in extension.Scenario 2:above 71.65 look for further upside with 71.90 & 72.30 as targets.Comment:as long as 71.65 is resistance, expect a return to 70.80. The 50-period moving average is turning down
US Tech 100
US equity indices traded higher on Thursday, with the NASDAQ closing higher for the 6th consecutive day higher in regular hours trading. Chipmaker’s (US Semiconductors ETF +1.63%) and utilities (US Utilities ETF +1.31%) stocks were in particular trading higher, while biotech (US Biotech ETF -0.19%) values remained subdued.
Nvidia’s (+1.91%) earnings disappointed investors, with the stock trading lower in after-hours trading as revenue from the data center business segment was below expectations. The company also disclosed that demand by cryptocurrency miners was above expectations at $289M in Q1, however the company expects this revenue stream to significantly decline over the next quarter.
Booking Holdings/Priceline (-4.78%) stocks fell on Thursday after the company’s earnings showed a solid performance but investors expected a stronger sales growth.
Other blue chip companies like Walmart (NYSE:WMT) and Cisco are set to release their earning next week.
Pivot: 6920 Support: 6920 6850 6808 Resistance: 6990 7035 7085 Scenario 1: long positions above 6920.00 with targets at 6990.00 & 7035.00 in extension. Scenario 2: below 6920.00 look for further downside with 6850.00 & 6808.00 as targets. Comment: the RSI lacks downward momentum.
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