iFOREX Daily Analysis : May 18,2018
iFOREX | May 18, 2018 06:47AM ET
The US Dollar traded again higher against other major currencies for the 4th consecutive day this week, as the US Dollar Index closed 0.14% higher. Emerging market currencies such as the South African Rand (ZAR) or the Mexican Peso (MXN) were also seen weaker against the strong Dollar.
WTI oil hit a new 3-1/2 year high on Thursday. The Baker Hughes Oil Rig Count numbers due on Friday will show how many oil rigs are currently operating in the US. Gold reached a new low for 2018 as the 10 Year US Treasury Note Yield again hit a new high, last seen in 2011.
US equity indices traded marginally lower, while energy stocks were upbeat on higher oil prices. In the US E-Commerce Retail Sales were up by 3.9% q/q (previous +3.2%), while Jobless New Claims were up to 222 thousand (previously 211 thousand).
Cryptocurrencies are again facing pressure with Bitcoin now declining on all days of this week so far and hitting a new 4 weeks low. While the CEO of JPMorgan Chase (NYSE:JPM), Jamie Dimon is known for his criticism of Bitcoin last year, reports indicate that the bank is exploring a possible move into the cryptocurrency market after its rival Goldman Sachs (NYSE:GS) made a similar move.
On Friday the European Union will publish its newest Merchandise Trade statistic. Canada is set to release different Consumer Price Index (CPI) statistics and the Retail Sales numbers for the country.
EUR/USD
The EUR/USD traded above the low seen on Wednesday but still under pressure. While the idea that Italy might have a Europe-skeptical government soon, worried the markets with Italian equity indices declining on Wednesday, some analysts expect a limited fall-out for the common currencies, as only about 5% of holders of Italian bonds are outside the Euro area.
On Friday the European Union will publish its Merchandise Trade statistic. Germany released its Producer Price Index (PPI) data this morning, which showed an unexpected increase by +0.5% m/m (expected +0.3%).
Pivot:1.1835Support:1.1781.1761.172Resistance:1.18351.18551.1875Scenario 1:short positions below 1.1835 with targets at 1.1780 & 1.1760 in extension.Scenario 2:above 1.1835 look for further upside with 1.1855 & 1.1875 as targets.Comment:the RSI lacks upward momentum.
Gold
As pressure from rising yields on US Treasury Notes persisted, gold reached a new low for 2018 during trading on Thursday. It remains to be seen what the effect of the situation in North Korea will be on demand for this safe haven, as the US are again pushing North Korea to take part in the negotiations.
Get The News You Want
In terms of US data, next week the newest results of Existing Home Sales and Durable Goods New Orders statistics are due for release.
Pivot:1294Support:1284.512791273Resistance:129412971301.5Scenario 1:short positions below 1294.00 with targets at 1284.50 & 1279.00 in extension.Scenario 2:above 1294.00 look for further upside with 1297.00 & 1301.50 as targets.Comment:the RSI is mixed to bearish.
WTI Oil
Ahead of the soon expiry of WTI oil futures, WTI oil reached the $72 level for the first time in 3-1/2 years. Markets are continuously nervous what the mounting tensions between the US, its allies such as Israel and Saudi Arabia and Iran will do the supplies from the Middle Eastern region in the future. As OPEC members are curbing production, the expansive shale oil production in the US is pushing the American WTI oil further into the global markets.
On Friday the Baker Hughes Oil Rig Count for the US is set to be released. The statistic, which indicates the number of operating oil rigs, was continuously rising over the last 6 weeks.
Pivot:71.9Support:71.170.8570.65Resistance:71.972.2572.55Scenario 1:short positions below 71.90 with targets at 71.10 & 70.85 in extension.Scenario 2:above 71.90 look for further upside with 72.25 & 72.55 as targets.Comment:the RSI is mixed to bearish.
US 500
Most US equity futures indices traded marginally lower on Thursday. While the Jobless New Claims were up to 222 thousand (expected 215), the much regarded Philadelphia Fed General Business Conditions level was significantly above expected results at 34.4 (expected 21.0).
Especially energy stocks (US Energy ETF (NYSE:XLE) +1.59%) were up, spurred by higher energy commodity prices. Utilities (US Utilities ETF -0.77%) and real estate stocks (US Real Estate -0.48%) on the other hand were seen trading lower.
While Earnings Per Share (EPS) for Walmart (NYSE:WMT) (-1.94%), which announced its quarterly results on Thursday were above expectations at $1.14 (expected $1.12), the share price later retraced as the reduced gross margins in a bid to compete with Amazon (NASDAQ:AMZN) (-0.24%) fell. Snapchat reached a new all-time low on Thursday as the company is rolling out its unskippable ads in order to better monetize its platform - where it remains to be seen how the user acceptance of this change will be.
The earnings season is slowing down but over the next weeks still some key earnings will come in, such as from Lowe’s and Target next week.
Pivot:2711Support:27112704.52700Resistance:27322741.252751Scenario 1:long positions above 2711.00 with targets at 2732.00 & 2741.25 in extension.Scenario 2:below 2711.00 look for further downside with 2704.50 & 2700.00 as targets.Comment:the RSI is mixed to bullish. A support base at 2711 should limit the downside potential.
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