The U.S. Dollar retreated on Monday due to weaker economic figures. Both the ISM services PMI and factory orders came out below expectations at 50.3 and 0.4% respectively.
In the stock market, U.S. major indices closed lower with the S&P500 coming off its highest intraday level in nine months and finishing 0.2% lower. Moreover, the Dow fell 0.59% while the Nasdaq closed slightly lower, losing 0.09%.
Data compiled by Bespoke Investment Group showed that the S&P500 index is trading currently at extremely overbought conditions relative to its 50-day moving average which can cause a potential downside correction ahead of the FOMC rate decision meeting scheduled for next week.
On the other hand, gold managed to bounce near the key technical support of $1935 reversing a big part of the losses registered following the NFP release on Friday before settling above the $1960 mark. Meanwhile, Oil prices pared gains after starting the week with an upside gap that reached $75 a barrel. WTI prices filled the gap and stabilized near the $71.80 level as investors digested the recent supply cut from Saudi Arabia announced at the latest OPEC+ meeting.
During the Asian trading session, the Reserve Bank of Australia surprised market participants with a 25 bps rate hike to 4.10%, the Australian Dollar immediately reacted positively following the release, gaining ground against its major peers.
As of today, there will be only a few economic releases to focus on. In the Eurozone, retail sales are expected to have risen from -1.2% to 0.2% on a monthly basis while in Canada, the Ivey PMI is due to rise from 56.8 to 57.2. However, all eyes will be on the upcoming rate decision by the Bank of Canada due tomorrow.
Finally, below we will be looking at the weekly chart of the Dollar index (DXY) which shows the importance of the 100.00-101.00 zone that continues to provide strong support to the Greenback.
Economic Analyst
Amine Hiani
