iFOREX Daily Analysis : September 20,2017
iFOREX | Sep 20, 2017 06:30AM ET
The US Dollar was down on Tuesday against other major currencies (US Dollar Index) on Tuesday as the US current account balance, which represents the international trade between the US and other countries was with $-123.1 bn. below market expectations which expected a balance of around $-115.1 bn. The weak store sales numbers and the further confrontational comments from Trump about North Korea at the United Nations put the greenback under pressure.
Gold slightly recovered following the confrontational speech by Donald Trump at the United Nations. Gold was under pressure before by the relaxing of the geopolitical tensions and rising interest rates for bonds in the US.
Oil traded slightly down but received support by only a modest rise in crude oil supplies according to a report by the American Petroleum Institute as the newest figures show only an increase of 1.443 million barrels crude oil compared to 6.181 million barrels the week before.
US equity indices were again up with the S&P 500 (US 500) and the Dow Jones Industrial Average (US 30) again reaching all-time highs. The uptrend was primarily supported by banks and financial stocks as investors are hoping for indications of interest rate hikes from Wednesday Federal Reserve meeting. Tesla (NASDAQ:TSLA) traded 2.62% down after investment bank Jeffries downgraded it as overvalued as they doubt Tesla’s ability to achieve its financial targets.
Cryptocurrencies traded mostly down with the Bitcoin not able to hold at $4,000 and losing around 5% compared to Tuesday night. The downturn comes after its rapid recovery of over 30% from Friday where Bitcoin traded below $3,000 pressured by China’s restriction on cryptocurrency exchanges and ICOs (Initial Coin Offerings). Swiss financial market authorities announced on Tuesday that they are investigating fraud in cryptocurrencies where operators lacked required licenses. Austria’s financial market authority (FMA) also warned also about the lack of oversight and indicated that the cryptocurrency market might be a bubble where investors could lose a lot of money.
On Wednesday we will see the conclusion of the Federal Reserve meeting and guidance on the rate and quantitative easing policy. Germany will release its producer inflation figures and the United Kingdom retail sales figures. Further we will see from the US home sales data and Mortgage Bankers' Association figures published.
EUR/USD
EUR/USD traded up on Tuesday reaching the level of 1.20 where in the previous days a resistance seemed to be establishing.
The dollar was under pressure after higher than expected current balance deficit figures were published and the Redbook Store Sales numbers were down to 3.6% year over year compared to 4.5% in the previous results.
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On Wednesday mortgage and home sales numbers will be published, however this is likely to be overshadowed by the statements of the Federal Reserve after their two days meeting where market participants expect guidance on future rate and quantitative easing policies.
Pivot: 1.196
Support: 1.196 1.194 1.192
Resistance: 1.201 1.203 1.205
Scenario 1: long positions above 1.1960 with targets at 1.2010 & 1.2030 in extension.
Scenario 2: below 1.1960 look for further downside with 1.1940 & 1.1920 as targets.
Comment: the RSI is supported by a rising trend line.
Gold
Gold stopped its decline on Tuesday and traded mostly unchanged.
While rising US bond rates put pressure on Gold, the statement by Trump at the United Nations that the United States would destroy North Korea if “forced to defend itself or its allies”.
As Gold has some sensibility to interest rates the conclusion of Federal Reserve meeting could also have some effect on Gold.
Pivot: 1312
Support: 1304.5 1298 1293
Resistance: 1312 1319 1324
Scenario 1: short positions below 1312.00 with targets at 1304.50 & 1298.00 in extension.
Scenario 2: above 1312.00 look for further upside with 1319.00 & 1324.00 as targets.
Comment: the RSI is mixed and calls for caution.
WTI Oil
Oil traded slightly down on Tuesday and initially giving away some of the gains from the recovery which started last week but later recovering as the American Petroleum Institute Weekly Crude Oil Stock figures with an increase of only 1.443 million barrels compared to 6.181 million barrels last week.
On Wednesday the Energy Information Administration (EIA) publishes oil stockpile numbers which could further indicate the state of the recovery after the recent storms. As OPEC members are currently informally but publicly expressing support for extended production cuts markets may react to any announcement by influential OPEC members.
Pivot: 49.15
Support: 49.15 48.75 48.48
Resistance: 50.12 50.4 50.84
Scenario 1: long positions above 49.15 with targets at 50.12 & 50.40 in extension.
Scenario 2: below 49.15 look for further downside with 48.75 & 48.48 as targets.
Comment: the RSI is mixed to bullish.
US 500
US equities closed again higher with the S&P 500 (US 500) and the Dow Jones Industrial Average (US 30) closing again at a new all-time high.
The uptrend was supported by bank and financial stocks with the US Banks ETF trading up by 0.64% and US Financials ETF up by 0.84%. Market participant expect that the Federal Reserve meeting concluded on Wednesday will deliver signals of interest rate hikes, which would be seen positive by financial companies.
Tesla lost 2.62% on Tuesday after hitting a new all-time high on Monday, as investment bank Jeffries estimated an overvaluation of Tesla stocks by 27% as they expressed doubts about its projected profitability in the next few years.
Besides the Federal Reserve meeting on Wednesday Home Sales and mortgage market data will be released.
Pivot: 2499
Support: 2499 2496 2491
Resistance: 2509 2513 2519
Scenario 1: long positions above 2499.00 with targets at 2509.00 & 2513.00 in extension.
Scenario 2: below 2499.00 look for further downside with 2496.00 & 2491.00 as targets.
Comment: the RSI calls for a new upleg.
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