General Market Comment
US indices closed mixed on Wednesday. Shares in the Household & Personal Products (-1.01%), Food, Beverage & Tobacco (-0.7%) and Consumer Durables & Apparel (-0.66%) sectors closed in the red zone while shares in the Transportation (+2.81%), Diversified Financials (+2.71%) and Insurance (+1.14%) sectors gained momentum. On the economic data front, MBA mortgage applications decreased by 2.5% in the week ending July 13 from +2.5% previously. In addition, housing starts decreased to 1.17M in June (estimated 1.32M) from a revised 1.34M in May. Finally, the Fed released its Beige book stating a modest expansion in the economic activity with employment continuing to rise at a moderate pace. There were shortages of qualified workers along with a modest to moderate increase in wages. Tariffs also contributed to the increase in metals and lumber. The S&P 500 (2,815.62) remains above its 20d moving average (2,757.90 – positive slope) and 50d moving average (2,746.59 – positive slope).
European markets are expected to start on a flat note.
Foreign Exchange
The US dollar was bearish against its major pairs on Wednesday with exception of the EUR and the GBP. On the economic data front, MBA mortgage applications decreased by 2.5% in the week ending July 13 from +2.5% previously. In addition, housing starts decreased to 1.17M in June (estimated 1.32M) from a revised 1.34M in May. Finally, the Fed released its Beige book stating a modest expansion in the economic activity with employment continuing to rise at a moderate pace. There were shortages of qualified workers along with a modest to moderate increase in wages. Tariffs also contributed to the increase in metals and lumber.
The Euro was bearish against its major pairs with exception of the GBP. Euro Zone CPI was up by 0.1% in June in the final estimation, from +0.5% in May. In the UK. Consumer prices were stable in June (expected 0.2%) from +0.4% in May.
The Australian dollar was bullish against its major pairs.
Commodities
After the close of Wall Street, WTI Crude Future (AUG 18) was up $0.8 to $68.9. The contract was below its 20D MA (@ $70.92) and below its 50D MA (@ $69.28). The US Department of Energy reported that, for the week ended 13 July, crude oil inventories increased 5836k barrels compared to the previous week.
Gold was about flat to $1227.7. The precious metal was below its 20D MA (@ $1251) and below its 50D MA (@ $1278). The 14d RSI below 30 (27.3) indicates gold was oversold.
Copper Future (SEP 18) on Comex was up 1.6c to 276.3c/lb. The contract was below its 20D MA (@ 289.48c) and below its 50D MA (@ 304.9c). The 14d RSI below 30 (26.75) indicates Copper Future (SEP 18) contract was oversold. In Europe, the London Metal Exchange reported its copper inventories decreased 2375 tons to 257350 tons.