iFOREX Daily Analysis : May 23,2018
iFOREX | May 23, 2018 04:44AM ET
The US Dollar traded initially lower against other major currencies but managed to recover later in the day with the US Dollar Index (USDX) closing 0.06% higher. The British Pound (GBP) reached a new low against the Greenback for 2018 ahead of reports on inflation on Wednesday.
With the Dollar movement in a limited range and only moderately falling Treasury Note yields, gold traded only insignificantly higher on Tuesday. Oil prices were under pressure as API oil stockpile figures indicated a smaller decline than expected. Reports that the OPEC might overthink its production quota agreement as soon as June also could have contributed to the move.
US equity traded lower with companies such as Boeing (NYSE:BA) (-2.26%) and Caterpillar (NYSE:CAT) (-1.74%), which were up on Monday on progress in US-China trade talks, erasing most of the gains from Monday.
Cryptocurrencies faced again pressure as Bitcoin fell below the $8,000 territory to the lowest point seen in over more than a month. Tuesday was called by cryptocurrency enthusiast ‘Bitcoin pizza day’, as it is said that in 2010 two pizzas were bought using 10,000 Bitcoins.
On Wednesday in France, Germany and the EU recent PMI data is set to be released. Later South Africa and the United Kingdom are set to publish inflation data. In the US Manufacturing and Sales PMI data, followed by New Home Sales numbers will be released.
EUR/USD
In a volatile trading day, the EUR/USD closed almost unchanged but extended losses in the early trading on Wednesday. Analysts are looking at the new formed government in Italy with reservations, as it pledges significant changes to the fiscal policy, which would require the heavily indebted nation to collect further public debts.
On Wednesday Germany, France and the European Union are set to release the latest Manufacturing and Composite PMI numbers.
Today the FOMC is set to publish the minutes of its last policy meeting. After the publication the FOMC member Kashkari is set to deliver a speech. On Thursday the European Central Bank will follow suit and also publish the account of the last monetary policy meeting.
Pivot:1.179Support:1.1741.17151.169Resistance:1.1791.1831.1855Scenario 1:short @ 1.1765 with targets @ 1.1740 & 1.1715 in extension.Scenario 2:above 1.1790 look for further upside with 1.1830 & 1.1855 as targets.Comment:the RSI shows downside momentum.
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USD/TRY
The Turkish Lira continued its plunge against the Dollar and other hard currencies. The move is attributed in part to a statement last week by Turkish President Erdogan, to take even more control over the monetary policy following the elections in June. The Turkish Lira is now at its record low and performed in May so far against the Dollar worse than the also declining cryptocurrency Bitcoin.
On Tuesday the rating agency S&P warned that it could further lower the sovereign rating for Turkey, as it named balance of payments concerns, which could affect growth and banks.
On Wednesday Turkey is set to publish its most recent Consumer Confidence data. Then on Friday data releases on Capacity Utilization and Manufacturing Confidence are due. In the following week traders can look forward to the publishing of the Turkish Trade Balance for April.
Pivot:4.7302Support:4.74674.73024.6882Resistance:4.81594.84094.8659Scenario 1:as long as 4.7302 is support look for 4.8409.Scenario 2:below 4.7302, expect 4.6882 and 4.6632.Comment:the RSI is above 50. The MACD is positive and below its signal line. The pair could retrace. Moreover, the pair is trading above both its 20 and 50 MAs (respectively at 4.7294 and 4.6575).
WTI Oil
Oil traded lower later on Tuesday, extending losses in early trading on Wednesday. Market participants are speculating, whether the OPEC could possibly consider increasing its production quotas as soon as June over worries regarding supplies from Iran and Venezuela. Meanwhile the oil stockpiles in the US as reported by the American Petroleum Institute (API) on Wednesday decreased by 1.3 million barrels, while investors expected a further decrease.
On Wednesday the Energy Information Administration (EIA) is set to publish its oil stockpile statistics.
Pivot:72.5Support:71.5571.370.8Resistance:72.572.973.25Scenario 1:short positions below 72.50 with targets at 71.55 & 71.30 in extension.Scenario 2:above 72.50 look for further upside with 72.90 & 73.25 as targets.Comment:the RSI shows downside momentum.
US 500
US equity indices traded overall lower on Tuesday, with especially industrial (US Industrial ETF -1.15%) and energy (US Energy ETF (NYSE:XLE) -1.18%) stocks trading lower, while financial (US Financials ETF +0.71%) and chip markers’ (US Semiconductors ETF +0.84%) stocks traded up.
Micron (+6.63%) shares jumped higher after the company announced late on Monday, that it expects revenue and profits to pick up and within time to repurchase $10B worth of its shares. Micron CEO was also optimistic that ‘exploding’ data consumption would stabilize the chip industry.
On Tuesday it was announced that Snapchat’s (-0.09%) VP on monetization engineering will leave the company for Tesla (NASDAQ:TSLA) (-3.13%), which recently experienced the departure of several of its top executives.
The earning season continues as among other companies Target is set to release its quarterly earnings on Wednesday, followed by Best Buy on Thursday.
Pivot: 2733 Support: 2712 2704.5 2696 Resistance: 2733 2741.75 2751 Scenario 1: short positions below 2733.00 with targets at 2712.00 & 2704.50 in extension. Scenario 2: above 2733.00 look for further upside with 2741.75 & 2751.00 as targets. Comment: the RSI is mixed with a bearish bias. The prices have broken below the rising channel, which should confirm a negative outlook.
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