iFOREX Daily Analysis – 15/11/2016
iFOREX | Nov 15, 2016 04:49AM ET
The dollar extended gains to hit an eleven-month high against the other majors currencies on Monday, as optimism over the economic implications of a Trump presidency continued to boost demand for the greenback.
The dollar continued to strengthen amid hopes that increased fiscal spending and tax cuts under a Trump administration will bolster economic growth and inflation. Expectations for higher U.S. interest rates also remained intact amid optimism that a pick-up in growth will allow the Federal Reserve to tighten borrowing costs.
Elsewhere, USD/JPY rallied 1.51% to 108.29, the highest since June 3, even if in Japan data overnight showed that the economy grew at a faster than expected pace in the third quarter, with GDP expanding by 2.2% on a year-over-year basis, but the report also indicated that domestic demand remained weak.
Today Germany and the wider euro zone are to publish preliminary estimates of third quarter growth; the ZEW Institute is to report on German economic sentiment; the U.K. is to release a report on consumer inflation, while later in the day Bank of England Governor Mark Carney and other bank officials are testify on inflation and the economic outlook to the Treasury Committee; and the U.S. is to release data on retail sales and a report on manufacturing activity in the New York region.
USD/MXN
The Mexican peso remained under pressure, not far from Friday’s record-lows of 0.0467.
Mexico has an array of tools to face down financial volatility in the wake of the U.S. presidential election, Finance Minister Jose Antonio Meade said on Monday, after Donald Trump's victory sent the peso currency into a tailspin.
The government can use a windfall stemming from the Mexican central bank's foreign exchange gains on the peso, as well as some 110 billion pesos ($5.3 billion) in its oil stabilization fund, to ensure public finances are stable, Meade said.
Trump's win sparked fears because of threats he made in the campaign to dump the 1994 North American Free Trade Agreement (NAFTA) if he could not recast it in the United States' favor, sending the peso to a record low of more than 21 per dollar.
Support: 19.73 19 18.54
Resistance: 21.39 22 22.8
Scenario 1: long positions above 19.7300 with targets at 21.3900 & 22.0000 in extension.
Scenario 2: below 19.7300 look for further downside with 19.0000 & 18.5400 as targets.
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Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold
Gold prices fell to a more than five-month low on Monday, extending four straight sessions of losses as market players continued to dump the yellow metal in wake of Donald Trump’s victory in the U.S. presidential election.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
After a historic week in which U.S. politics dominated market sentiment, now investors will get back to the business of watching the Fed and economic data as expectations mount for a December rate hike.
Support: 1211 1200 1184
Resistance: 1238 1251 1270
Scenario 1: short positions below 1238.00 with targets at 1211.00 & 1200.00 in extension.
Scenario 2: above 1238.00 look for further upside with 1251.00 & 1270.00 as targets.
Comment: the RSI lacks upward momentum.
WTI Oil
Oil fell to its lowest in three months on Monday, as the prospect of another year of oversupply and weak prices overshadowed chances that OPEC will reach a deal to cut output.
Donald Trump's surprise victory in last week's U.S. presidential election has boosted stocks and the dollar, but undermined much of the commodities complex, including oil, which has sagged as expectations that the world's largest exporters will agree to reduce output this month have waned.
Now energy traders will eye fresh weekly information on U.S. stockpiles of crude and refined products, due for today and Wednesday, to gauge the strength of demand in the world’s largest oil consumer.
Support: 43.45 43 42.65
Resistance: 44.63 45 45.65
Scenario 1: long positions above 43.45 with targets at 44.63 & 45.00 in extension.
Scenario 2: below 43.45 look for further downside with 43.00 & 42.65 as targets.
Comment: the RSI shows upside momentum.
US 500
Monday on Wall Street, the Dow Industrials set a record high, led by financial stocks, on bets on higher interest rates and looser consumer protections. Gains in broader indexes were capped by declines in the technology sector.
Bank stocks were the leading force on Wall Street, with the S&P 500 bank index ending at its highest level since March 2008. However, a drop in the biggest tech companies, which also carry the largest market capitalizations, offset the gains and the S&P 500 ended flat.
At the closure in the NYSE, the Dow Jones industrial average rose 0.11%, the S&P 500 lost 0.01% and the Nasdaq Composite dropped 0.36%.
Support: 2140 2100 2078
Resistance: 2183 2200 2216
Scenario 1: long positions above 2140.00 with targets at 2183.00 & 2200.00 in extension.
Scenario 2: below 2140.00 look for further downside with 2100.00 & 2078.00 as targets.
Comment: the RSI is mixed to bullish.
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