iFOREX Daily Analysis : May 12 ,2017
iFOREX | May 12, 2017 07:39AM ET
The dollar showed little change against most major currencies on Thursday, as upbeat producer inflation and initial jobless claims data offset investors’ concerns that Trump’s decision to fire FBI chief James Comey, could cause a delay to the Trump administration's economic agenda, which includes tax reform and deregulation.
The U.S. Labor Department said its producer price index, which measures inflation before it reaches the consumer, rose 0.5% in April, above expectations for a 0.2% increase.
In a separate report, the Labor Department reported that initial jobless claims decreased by 2,000 to 236,000 in the week ended May 6, below economists’ estimates.
The number of Americans who filed for unemployment insurance dropped to a more than 28-year low, which fueled expectations that the Federal Reserve would hike interest rates in June.
Today, finance ministers and central bankers from G7 economies will descend on Italy to discuss a range of issues, with trade protectionism likely a key item on the agenda.
Later on, the U.S. will close the week with a series of reports including consumer prices, retail sales and consumer sentiment.
GBP/USD
The pound fell to the days lows against the dollar on Thursday after the Bank of England left interest rates on hold at current record lows and warned that living standards will fall this year as the headwinds from Brexit mount.
GBP/USD was down 0.61% to 1.2863 by 11.40 GMT from around 1.2919 ahead of the announcement.
The bank cut its forecast for growth for this year, saying it now expected economic growth of 1.9%, down from 2.0% three months ago.
Consumer prices , retail sales and consumer sentiment will be in focus for today.
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Gold
Gold prices traded slightly above the eight-week lows reached earlier this week, amid political turmoil in Washington, after President Trump unexpectedly fired FBI chief James Comey.
Gains in the precious metal were capped by better than expected producer inflation and labor market data from the U.S.
Markets will now be looking ahead to Friday’s G7 meeting as well as U.S. data on inflation and retail sales to gauge if the economy is on its way for another rate hike as soon as next month.
WTI Oil
Crude futures settled higher on Thursday, as investor sentiment remained positive amid a large drop in U.S. crude oil inventories while hopes for an extension of the OPEC-led deal received a boost.
Algeria and Iraq lifted hopes that the OPEC-led supply-cut agreement would be extended beyond June, after both nations said they would support a deal extension.
Crude prices have gained by more than 4% over the past two-sessions, however, overall sentiment remains bearish as the EIA raised its U.S. oil production forecast and lowered projection for average oil prices in 2017.
US 500
U.S. stocks were lower after the close on Thursday, as losses in the Financials, Telecoms and Consumer Services sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 0.11%, while the S&P 500 index fell 0.22%, and the NASDAQ Composite index lost 0.22%.
Some of the best performers of the session were Apple Inc (NASDAQ:AAPL), which rose 0.86% and Exxon Mobil Corporation (NYSE:XOM) which added 0.85%. On the contrary, Microsoft Corporation (NASDAQ:MSFT) did not perform so well, posting a drop of 1.23%.
Markets will now be looking ahead to Friday’s G7 meeting as well as U.S. data on inflation and retail sales to gauge if the economy is on its way for another rate hike as soon as next month.
Pivot: 2384 Support: 2384 2379 2375.5 Resistance: 2393 2397 2400 Scenario 1: long positions above 2384.00 with targets at 2393.00 & 2397.00 in extension. Scenario 2: below 2384.00 look for further downside with 2379.00 & 2375.50 as targets. Comment: the RSI is mixed with a bullish bias.
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