iFOREX Daily Analysis : February 07,2017

iFOREX Daily Analysis : February 07,2017

The U.S. dollar rose against many major currencies on Monday while the euro fell to one-week lows after European Central Bank President Mario Draghi gave hints that the bank will probably not scale back its stimulus program in the near future.

The Aussie gained in Asia on Tuesday as the central bank held steady as expected, while noting better economic conditions with its key trading partner, China.

The dollar posted its fourth straight weekly decline last Friday after the latest U.S. employment report showed that while jobs growth beat expectations last month wage growth remained tepid.

According to the Fed Rate Monitor Tool less than 10% of traders expect the Fed to raise interest rates at its next meeting in March. The chance of a June increase is seen at just below 50%.

The dollar was lower against the yen, with USD/JPY down 0.18% while it reached one-week highs against the sterling with GBP/USD hitting 1.2450. The pound came under pressure as a parliamentary debate on a law giving Prime Minister Theresa May the right to trigger Brexit got underway.

Today, the UK is to publish a report on house price inflation, Canada is to release reports on trade, building permits and business activity and the U.S. is also to release its latest trade figures.

The European Commission is to release its latest economic forecasts for the European Union.

EUR/USD

The dollar gained ground against the euro, with EUR/USD falling 0.43% to 1.0736.

In the euro zone, data on Monday showed that German factory growth hit a two-and-a-half year high in January, with factory orders jumping by 5.2%. It was the strongest increase since January 2014.

Another report showed that investor sentiment in the euro area deteriorated slightly in February, amid concerns that the Trump administration’s policies will act as a drag on global growth.

Today, the U.S. will release its latest trade figures and tomorrow the European Commission is to release its latest economic forecasts for the European Union.

EUR/USD Chart

Pivot: 1.0755Support: 1.068 1.065 1.0615Resistance: 1.079 1.0775 1.0755Scenario 1: short positions below 1.0755 with targets at 1.0680 & 1.0650 in extension.Scenario 2: above 1.0755 look for further upside with 1.0775 & 1.0790 as targets.Comment: the RSI has broken down its 30 level.

Gold

Gold prices gained on Monday, hitting the strongest level since November as investors sought the perceived safety of the yellow metal amid growing concerns over political risks around the globe. In addition, concerns over Donald Trump's presidential policies and a lack of clarity on the timing of future rate hikes sent the precious metal 2.14% higher last week.

Gold is currently trading above the $1230 per ounce level early on Tuesday, with the market focus shifted towards Trump policies and the direction of the dollar as well as on countries where anti-establishment movements are gaining traction ahead of elections.
Today, the U.S. will release its latest trade figures.

Gold Chart

Pivot: 1227Support: 1227 1221 1217Resistance: 1240 1245 1248Scenario 1: long positions above 1227.00 with targets at 1240.00 & 1245.00 in extension.Scenario 2: below 1227.00 look for further downside with 1221.00 & 1217.00 as targets.Comment: the RSI is bullish and calls for further advance.

WTI Oil

Oil prices were modestly lower on Monday, reversing earlier gains as prospects of rising U.S. production weighed on the market. News that the U.S. imposed fresh sanctions on some Iranian individuals and entities, days after the White House put Tehran "on notice" over a ballistic missile test, supported prices.

On Tuesday afternoon, the American Petroleum Institute will release its estimates of U.S. crude and refined product stockpiles. The figures are followed on Wednesday by official data from the U.S. Energy Information Administration. Analysts expect an inventory increase of 2.38 million barrels at the end of last week.

WTI Oil Chart

Pivot: 53.34Support: 52.74 52.54 52.25Resistance: 53.34 53.62 53.89Scenario 1: short positions below 53.34 with targets at 52.74 & 52.54 in extension.Scenario 2: above 53.34 look for further upside with 53.62 & 53.89 as targets.Comment: above 53.34 look for further upside with 53.62 & 53.89 as targets.

US 500

U.S. stocks were lower after the close on Monday, as losses in the Oil & Gas, Telecoms and Financials sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average fell 0.09%, while the S&P 500 index fell 0.21%, and the NASDAQ Composite index fell 0.06%.

Some of the best performers of the session were Boeing (NYSE:BA) Co which added 0.97% and United Technologies Corporation (NYSE:UTX) that was up 0.94% while the worst performers of the session were Verizon Communications Inc (NYSE:VZ) which fell 1.13% and Home Depot Inc (NYSE:HD) that declined 1.08%.

A major part of the drop on Monday, was led by the energy sector as oil prices dropped, while investors await the next run of major earnings reports and seek further clarity on President Donald Trump's economic policies.

US 500 Chart

Pivot: 2280 Support: 2280 2270 2263 Resistance: 2294 2299 2315 Scenario 1: long positions above 2280.00 with targets at 2294.00 & 2299.00 in extension. Scenario 2: below 2280.00 look for further downside with 2270.00 & 2263.00 as targets. Comment: the RSI lacks downward momentum.

RBA Leaves Key Interest Rate On Hold

For the 24 hours to 23:00 GMT, the AUD declined 0.1% against the USD and closed at 0.7655.

LME Copper prices declined 0.9% or $50.0/MT to $5786.0/MT. Aluminium prices rose 0.2% or $3.5/MT to $1812.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7671, with the AUD trading 0.21% higher against the USD from yesterday’s close, after the Reserve Bank of Australia (RBA), in its first meeting of the year, kept the benchmark interest rate unchanged at 1.5%, as widely expected, while noting better economic conditions in the nation.

The board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the Australian economy and to achieve the inflation target over time. The RBA stuck to its earlier forecasts for economic growth to come in around 3.0% annually for “the next couple of years” and that inflation would pick up to above its 2.0% target over the course of this year.

In other economic news, Australia’s AIG performance of construction index rose to a level of 47.7 in January, compared to a level of 47.0 in the prior month.

The pair is expected to find support at 0.7638, and a fall through could take it to the next support level of 0.7606. The pair is expected to find its first resistance at 0.7689, and a rise through could take it to the next resistance level of 0.7708.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

USD/CAD: Continues To Rise Inside Clear Falling Wedge Pattern

USD/CAD continues to rise inside the clear falling wedge chart pattern which was previously identified by Autochartist on the 4-hours charts. Autochartist rates the quality of this falling wedge at the 8 bar level – which is the result of the above-average initial trend (6 bars), significant uniformity (8 bars) and maximum clarity (10 bars). USD/CAD is expected to rise toward the upper resistance trendline of this falling wedge.

USD/CAD 240 Minute Chart

As can be seen from the following chart, Autochartist also recently identified the key resistance level 1.3189 (of the type Approach) on the 4-hour charts. Autochartist measures the significance of this resistance level at the 5-bar level – which corresponds to the five earlier price reversals from this price level. The fact that this resistance level coincides with the resistance trendline of the aforementioned falling wedge heightens the probability USD/CAD will continues to rise tomorrow.