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iFOREX Daily Analysis : August 14,2018

Published 08/14/2018, 04:52 AM
Updated 09/16/2019, 09:25 AM

As other currencies stabilized against the strong Dollar, the US Dollar Index (USDX) closed almost unchanged from Friday. Previously battered emerging market currencies saw a reversal from their losses in the morning trading on Tuesday, with significant improvements seen in the Turkish Lira (TRY) and South African Rand (ZAR).

Gold declined for the first time since March 2017 below the $1,200 level, while other metals such as silver and platinum were also significantly pressured, as platinum trades close to its 10 years low.

Cryptocurrencies continued their downturn, with Bitcoin falling below the $6,000 level to its lowest point since June. However other cryptocurrencies were seeing even higher losses, with Ethereum losing as much as 35% compared to the week before.

On Tuesday Industrial Production and Gross Domestic Product (GDP) data is expected from the European Union. In the US the publication of the NFIB Small Business Optimism Index and Import/Export Price data is expected.

Europe 50

European indices continues to see pressure from the fallout of the Turkish currency crisis and closed sharply lower on Monday.

Shares of German chemical and pharmaceutical company Bayer (DE:BAYGN) (-10.84%) fell to the lowest point since 2013 as the company was ordered to pay $290 million in compensation over complacency to warn about the risk of cancer from the controversial herbicide Glyphosate, which is produced by Monsanto (NYSE:MON), whose sale to Bayer was completed in June.

European equities were able to recover from their losses, following the bullish trend from Asia but also due to data from Germany, which indicated a GDP growth of 0.5% for Q2 of 2018.

On Tuesday France will publish its Consumer Price Index (CPI) statistic, Switzerland its Producer and Import Price Index, Germany the ZEW Survey on Current Conditions and Business Expectations, the EU on Industrial Production and GDP and the United Kingdom on Unemployment and Average Earnings.

Europe 50 Chart
Pivot:3427Support:339733773358Resistance:342734523475Scenario 1:short positions below 3427.00 with targets at 3397.00 & 3377.00 in extension.Scenario 2:above 3427.00 look for further upside with 3452.00 & 3475.00 as targets.Comment:as long as 3427.00 is resistance, look for choppy price action with a bearish bias.

Gold

Gold fell for the first time in 17 months below the $1,200 mark as investors sought currencies such as the US Dollar or Japanese Yen as safe haven in the volatile environment amidst the Turkish currency crisis.

The strong Dollar, which gained especially against emerging market currencies, makes gold more expensive in non-Dollar economies and can thus affect demand.

The decline in gold value comes along with a further fall in net futures long positions as reported by the Commodity Futures Trading Commission (CFTC) in its weekly Commitments of Traders (COT) report last Friday, with ‘long’ positions decreasing for the fourth consecutive week to now 12,700 (previously 35,300).

On Tuesday in the US data on Import and Export Prices is expected. Then on Wednesday data about Nonfarm Productivity, Business Conditions and Retail Sales will come in.

Gold Chart
Pivot:1201Support:11891184.51180Resistance:120112061209.5Scenario 1:short positions below 1201.00 with targets at 1189.00 & 1184.50 in extension.Scenario 2:above 1201.00 look for further upside with 1206.00 & 1209.50 as targets.Comment:the RSI is mixed to bearish.

WTI Oil

After a brief fall on Monday to a new 7-weeks low amid the escalating currency crisis in Turkey and fears of a global fallout, oil managed to recover and traded moderately higher at the beginning of the trading session on Tuesday helped by reports that Saudi Arabia reduced oil production despite an agreement with other OPEC countries and Russia to increase output.

Earlier oil was under pressure as the OPEC made an estimate that oil demand in 2019 would increase by 1.43 million barrels per day (bpd), which was around 20,000 bpd less than previously estimated by the cartel.

On Tuesday the American Petroleum Institute (API) will release oil stockpile figures, followed by the Energy Information Administration (EIA) on Wednesday.

WTI Oil Chart
Pivot:67.6Support:66.9566.566.1Resistance:67.667.9568.5Scenario 1:short positions below 67.60 with targets at 66.95 & 66.50 in extension.Scenario 2:above 67.60 look for further upside with 67.95 & 68.50 as targets.Comment:as long as the resistance at 67.60 is not surpassed, the risk of the break below 66.95 remains high. Key resistance at $67.60

US 500

Global indices including those from the US closed lower on Monday as concerns about the implication of the situation with the Turkish Lira spread through the global markets. However early trading on Tuesday saw futures pushing again higher, supported by strong performance in Asian stocks.

Especially basic materials (US Basic Materials ETF -1.02%) and financial companies’ (US Financials ETF -1.00%) stocks closed overall lower, while utilities (US Utilities ETF +0.09%) showed modest gains.

Tesla (NASDAQ:TSLA) (-0.1%) closed almost unchanged, while investors were uncertain how to take a post by CEO Elon Musk, where he explained the background of his Twitter message “funding secured” from last week, when he surprised the markets by announcing that the electric car maker would go private and off the exchanges. While the markets seemed relieved that with the Saudi Arabian sovereign wealth fund there is actually a backer, however there are still questions how far the actual commitment goes.

This week still some earnings are due to come in, such as from Cisco on Wednesday and Walmart (NYSE:WMT) and Nvidia on Thursday.

US 500 Chart Pivot: 2820.5 Support: 2820.5 2815 2805 Resistance: 2843 2848 2852.5 Scenario 1: long positions above 2820.50 with targets at 2843.00 & 2848.00 in extension. Scenario 2: below 2820.50 look for further downside with 2815.00 & 2805.00 as targets. Comment: as long as 2820.50 is resistance, expect a return to 2843.00. The index rebounded and broke above the 20-period and 50-period moving average.

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