iFOREX Daily Analysis : October 18 ,2017
iFOREX | Oct 18, 2017 05:06AM ET
The dollar rose to a one-week high against most majors on Tuesday on speculation that U.S. President Donald Trump could nominate a Federal Reserve president who would be more willing to raise interest rates at a faster pace.
The dollar was also supported by U.S. two-year Treasury yields hitting nine-year highs on Tuesday. Yields climbed as well on growing expectations that Trump favored Stanford economist John Taylor to head the U.S. central bank.
Sterling fell below $1.32 for the first time since last week, after comments by Bank of England gave hints of a delay in interest rate hikes.
Earlier on Tuesday, official data showed Britain's inflation rate hit 3 percent, above the BoE's 2 percent target but in line with expectations.
The price of oil was almost unchanged as expectations of a ramp up in U.S. production weighed on sentiment while easing conflict in Northern Iraq between Iraqi and Kurdish forces lessened concerns over potential supply disruptions in the region.
In cryptocurrency markets Bitcoin fell on Tuesday as traders appeared to lock in profits after a rally which saw the digital currency trade close to all-time highs.
Demand for bitcoin, however, remained strong as n October 25, Bitcoin Gold will split off from Bitcoin to create a new cryptocurrency which seeks to ease the current mining monopolies present in Bitcoin.
Today, ECB President Mario Draghi is to deliver the opening remarks at the banks conference in Frankfurt, the UK is to publish its latest employment report and later in the day, the U.S. is to release data on building permits and housing starts.
EUR/USD
Pressured by a stronger dollar, the euro fell to a one-week low on Tuesday, at $1.1734 , having fallen almost 3 percent since hitting a 2-1/2-year high last month.
The euro did not receive any support by the German ZEW economic sentiment data that fell short of forecast by coming at 17.6 points, below an expected 20.1 points.
In the U.S. a report on Tuesday showed import prices posting their biggest gain in 15 months in September, and steadily rising underlying imported inflation.
For today, the focus is on Eurozone’s inflation data as well as industrial production and import prices from the U.S.
Pivot: 1.1785
Support: 1.174 1.1715 1.169
Resistance: 1.1785 1.1815 1.185
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Scenario 1: short positions below 1.1785 with targets at 1.1740 & 1.1715 in extension.
Scenario 2: above 1.1785 look for further upside with 1.1815 & 1.1850 as targets.
Comment: the RSI is mixed to bearish.
Gold
Gold prices fell on Tuesday following a sharp rise in the dollar on better-than-expected economic data and growing speculation that the next head of the Federal Reserve will favour a more aggressive stance on monetary policy.
Gold prices continued to fall below $1,300 as the dollar gains on signs that the U.S. economy is on track for a solid quarter of economic growth.
In the week ahead, investors will focus on U.S. housing data to assess the economic impact of the hurricanes which hit the southern U.S. last month.
Thursday’s data on third quarter Chinese growth will also be closely watched.
Pivot: 1291
Support: 1281 1279 1276
Resistance: 1291 1296 1300
Scenario 1: short positions below 1291.00 with targets at 1281.00 & 1279.50 in extension.
Scenario 2: above 1291.00 look for further upside with 1296.00 & 1300.00 as targets.
Comment: even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.
WTI Oil
Crude oil inventories fell by by more than expected on Tuesday, according to data from the American Petroleum Institute (API), however, prices remained almost unchanged after reports from the Energy Information Administration indicated that U.S. producers will increase output.
In the Middle East, the conflict in Northern Iraq between Iraqi and Kurdish forces eased, reducing concerns over potential supply disruptions in the region.
For Wednesday, the Energy Information Administration (EIA) will provide official data on crude oil inventories.
Pivot: 52.2
Support: 51.65 51.38 50.95
Resistance: 52.2 52.4 52.85
Scenario 1: short positions below 52.20 with targets at 51.65 & 51.38 in extension.
Scenario 2: above 52.20 look for further upside with 52.40 & 52.85 as targets.
Comment: the upward potential is likely to be limited by the resistance at 52.20. The prices are very close to the key horizontal resistance at 52.20, and are likely to post a new decline. In addition, the RSI is mixed to bearish.
US 500
The main U.S. indices were mixed on Tuesday, as gains in the Healthcare, Utilities and Telecoms sectors led shares higher while losses in the Financials, Consumer Goods and Basic Materials sectors led shares lower.
Some of the best performers in the session were UnitedHealth Group Incorporated (NYSE:UNH) which rose 5.53%, Johnson & Johnson (NYSE:JNJ) which added 3.43% and Nike Inc (NYSE:NKE) that was up 1.23%.
Some bad performances were seen by Goldman Sachs Group Inc (NYSE:GS) which fell 2.61%, General Electric Company (NYSE:GE) that declined 0.73% and Caterpillar Inc (NYSE:CAT) that was down 0.71%.
The earnings reporting is in the spotlight this week, and with the S&P 500 already up 14 percent so far this year, investors are hoping results and guidance will justify the relatively high valuation of stocks.
Pivot: 2550
Support: 2550 2547 2542
Resistance: 2558 2562 2565
Scenario 1: long positions above 2551.00 with targets at 2558.00 & 2560.00 in extension.
Scenario 2: below 2551.00 look for further downside with 2548.00 & 2546.00 as targets.
Comment: the RSI advocates for further upside. The prices remain supported by an intraday rising trend line. The horizontal level at 2551 acts as a strong support role.
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