iFOREX Daily Analysis : October 11,2017
iFOREX | Oct 11, 2017 05:09AM ET
The dollar fell against a most major currencies on Tuesday pressured by a surge in the euro following the strong data related to the Eurozone economy.
Germany, the Eurozone’s largest economy, revealed better-than-expected trade data as its trade balance expanded to 21.6 billion, beating economist expectations of 20 billion. Further support on the euro came from increased expectations of European Central bank monetary policy tightening following comments from an ECB official on Monday.
It was a quiet day in terms of economic data, however, investor demand for safe-haven currencies like gold, the yen and Swiss franc remained high due to ongoing geopolitical uncertainty on the Korean Peninsula.
The sterling rose against the dollar, reaching 0.50% higher to $1.3209 after the better than expected manufacturing and industrial data.
Crude oil prices continue to move higher on Tuesday after Opec leader Saudi Arabia vowed to reduce monthly exports on expectations that market rebalancing is underway.
The Bitcoin is trading close to to all-time highs on Tuesday as investors ignored news that Russia will block access to websites of exchanges that offer cryptocurrencies such as bitcoin. The rally was more likely supported by the upcoming hard fork in Bitcoin that's happening on October 25th.
Investors are waiting for the release of minutes of the September Federal Reserve policy meeting later in the session. The Fed had signaled at the meeting that it may raise interest rates for a third time this year even with inflation staying below its 2 percent goal. Earlier in the day, a speech from Dallas Fed President Robert Kaplan will be in focus.
EUR/USD
The dollar extended its losses against the euro on Tuesday, as a number of geopolitical concerns continue to pressure market sentiment, while in the European front, solid trade data from Germany and rising expectations of tightening in the ECB’s monetary policy program push the euro higher.
Meanwhile, diplomatic tensions between the U.S. and Turkey persisted following the suspension of visa services between the two countries.
On Wednesday, market focus will be shifted towards the Fed’s minutes of its September meeting for possible clues on the next rate hike.
Pivot: 1.1785
Support: 1.1785 1.176 1.1735
Resistance: 1.186 1.189 1.1915
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Scenario 1: long positions above 1.1785 with targets at 1.1860 & 1.1890 in extension.
Scenario 2: below 1.1785 look for further downside with 1.1760 & 1.1735 as targets.
Comment: the RSI shows upside momentum.
Gold
Gold rose for a third day on Tuesday, hitting a two-week high, supported by weakness in the US dollar.
Geopolitical uncertainty increases demand for safe-haven gold but growing expectations that the Federal Reserve will hikes rates for the third time this year still adds pressure on the market.
In addition, speculation that the promised US tax plan introduced by President Donald Trump would stall, together with a strong euro, add further pressure on the dollar.
The minutes of the last Fed meeting will be in the spotlight for gold traders today.
Pivot: 1285
Support: 1285 1281 1279
Resistance: 1294 1297 1301
Scenario 1: long positions above 1285.00 with targets at 1294.00 & 1297.00 in extension.
Scenario 2: below 1285.00 look for further downside with 1281.00 & 1279.00 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
WTI Oil
Crude oil prices had their best day in two weeks as sentiment turned positive after Saudi Arabia pledged to cut its November crude oil exports by 7% or 560,000 barrels a day, compared with the same period last year in order to strengthen the market rebalancing process.
The gap between supply and demand in oil markets is expected to narrow further in the coming months amid a surge in global demand growth which has lifted oil prices above $50 a barrel.
Later Wednesday, the American Petroleum Institute (API) is to release its estimates of crude and refined product inventories at the end of last week, followed by official data on Thursday from the Energy Information Administration (EIA).
Pivot: 50.7
Support: 50.7 50.45 50
Resistance: 51.2 51.5 51.75
Scenario 1: long positions above 50.70 with targets at 51.20 & 51.50 in extension.
Scenario 2: below 50.70 look for further downside with 50.45 & 50.00 as targets.
Comment: the RSI lacks downward momentum. The prices remain bullish above the horizontal support at 50.70, and are likely to challenge the resistance at 51.20, representing Oct 5 top.
US 500
The main US indices were higher on Tuesday, as gains in the Utilities, Consumer Goods and Financials sectors led shares higher. Some of the best performers of the session were Wal-Mart Stores Inc (NYSE:WMT) which rose 4.47% and Coca-Cola Company (NYSE:KO) that was up 1.01%.
Some of the worst performers of the session were UnitedHealth Group Incorporated (NYSE:UNH) (NYSE:UNH), which fell 0.83%, Cisco Systems Inc (NASDAQ:CSCO) that declined 0.62% and Procter & Gamble Company (NYSE:PG) that was down 0.54%.
In terms of fundamental economic data the focus will be on Wednesday’s minutes of the Fed’s last meeting for clues on whether geopolitical tensions, hurricanes and a bad employment report from the U.S. will affect the banks’ decision to hike rates one more time this year.
Pivot: 2540
Support: 2540 2534 2529
Resistance: 2553 2558 2565
Scenario 1: long positions above 2540.00 with targets at 2553.00 & 2558.00 in extension.
Scenario 2: below 2540.00 look for further downside with 2534.50 & 2529.00 as targets.
Comment: the RSI is mixed with a bullish bias. The prices stand firmly above the support at 2540 (Oct 9 low), and may post a consolidation before further advance.
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