The US dollar has been on the rise against the basket of major currencies since Friday, after US monthly retail sales data reported the biggest increase in consumer spending in a year, prompting new speculation of a Federal Reserve interest-rate increase this year.
Today in the US, the NAHB Housing Market Index, which reports home sales and housing market trends in the United States will be released. If the result beats market expectations, then the US Dollar may get bid in the short term.
On early Monday, the Yen fell on a lower-than-expected reading from the Producer Price Index (PPI). Instead of falling 3.7% as forecast, the Japanese PPI (m/m) witnessed a 4.2% decline in April, compared with a 3.8% drop in the previous release.
Pound Sterling has been seeing volatile moves as the EU referendum campaign heats up. In addition to IMF’s caution on the possible consequences of a British vote to leave the EU, the Bank of England (BoE) also warned that UK leaving from the EU would cause substantial harm to its economy and currency.
Data in Canada continued to disappoint markets last week with a poor capex intentions survey pointing to a large investment drop in energy and manufacturing in 2016. In addition to the CAD’s strong appreciation and oil production disruptions due to the tragic wildfires, these poor results pose large downside risks to second quarter growth and increase the probability that the Bank of Canada (BoC) may start discussing a cut in interest rates.
Oil prices jumped over 1 percent on Monday after Goldman Sachs said the market had ended almost two years of oversupply following global oil disruptions and flipped to a deficit. Today, Brent crude futures were trading at $48.50/barrel, up 67 cents, or 1.4 percent, from their last settlement.
Gold rose for a second session on Monday, as slowing economic growth in China and weakness in Asian stock markets lifted the safe-haven appeal of the precious metal. Gold is currently trading at $1282.26/ounce, up 0.33% compared with its previous close.
Technicals
EURUSD
In general, the euro is on track to weaken against the USD after the resistance of 1.16165 was formed on May 03. The reading of DI+ and DI- are 3.4529 and 22.5065, respectively, suggesting a selling position. In addition, the downtrend is very strong as indicated by ADX (14)’s reading of 54.7356. The pair is expected to consolidate for a while and then turn downwards.
Trade suggestion
Buy Digital Call Option at 1.13023
Buy Digital Put Option at 1.12788
GBPJPY
GBPJPY is bouncing back from the support of 155.642, hovering between levels 38.2% and 61.8% of the Fibonacci retracement. With RSI (14) near the average, the stable trend is supposed to last for a period of time. After that, the price may surge higher, breaking the level 23.6% of the Fibonacci retracement. A long position is encouraged.
Trade suggestion
Buy Digital Call Option at 156.824
Buy Digital Put Option at 157.580
USDCAD
The Loonie is currently strengthening against the greenback. The level 38.2% of the Fibonacci retracement was tested a few days ago but is still holding as the pair failed to close under this area. Besides, ADX (14) stands at 39.8178 with DI+ far higher than DI-, implying a strong uptrend. Hence, it is believed that USDCAD is pulling back for some consolidation before surging up.
Trade suggestion
Buy Digital Call Option at 1.29441
Buy Digital Put Option at 1.29103
GOLD
The precious metal has been moving gingerly for several days. The two moving averages have just met, giving no clear direction on the price movement. However, the stochastics chart shows that the %K line (blue line) has already entered the overbought territory. Therefore a reversal into a downtrend is expected to happen soon, after the price tests the resistance of 1286.95.
Trade suggestion
Buy Digital Call Option at 1278.07
Buy Digital Put Option at 1286.23
COPPER
On Thursday, COPPER tested the support of 2.0574 – the lowest level in about three months. After that, the commodity has been moving sideways. The signal trend indicator has been suggesting a short position since May 03 with a fall of 1383 points, up to now, since the signal was generated. The price is anticipated to attempt a bounce back soon.
Trade suggestion
Buy Digital Call Option at 2.1088
Buy Digital Put Option at 2.0880
SP500
After attempting to cross over the level 61.8% of Fibonacci retracement once again and reaching the resistance of 2084.55, the index has dropped back. Bears seem dominant as the RSI (14) is currently reading at 39.1191. The red arrow has already appeared above the price chart, hinting a short position. The price is expected to break level 0 of the Fibonacci retracement.
Trade suggestion
Buy Digital Call Option at 2033.96
Buy Digital Put Option at 2044.63
