U.S. dollar index: The U.S. dollar index edged up 0.15 last week, finishing at 97.36 on Friday. Fundamentally, U.S. GDP was up 2.9% in 2018 and the European Central Bank expects only 1.1% growth in 2019, so the dollar should have the edge on trading higher the rest of this year. Complicating matters, trade talks with China show no finish line in sight, and it is interesting that the U.S. dollar index has stalled just short of 97.87, a traditional Fibonacci retracement of a 15.57-point drop that began in early 2017. How did Leonardo of Pisa know in the 13th century that the U.S. dollar would find resistance just below 97.87? I have no idea, but it makes markets a little more interesting.
June gold: June gold was down $2.90 last week, closing at $1,295.60 on Friday. The June contract peaked at $1,356.00 on Feb. 20 and has pulled back to the point where Friday's close sat precariously above its 100-day average and three-month low at $1,288.30. Fundamentally, the Fed is being cautious about raising interest rates further, and that should be helpful to gold prices. However, if June gold prices break below support at $1,288 -- possibly coinciding with a new high in the U.S. dollar -- gold would leave behind a lower high in February and look technically bearish for the rest of 2019.
June crude oil: June crude oil gained $2.87 a barrel last week to $63.15, its highest close in five months. Prices are still pushing higher after touching a low of $43.80 on Christmas Eve and luring managed futures funds into their smallest net-long holding in over two years. Noncommercials, including funds, have gradually added back net-long positions as prices have rebounded. The U.S. Energy Department expects world oil supply to increase 1% in 2019 and cover consumption by a razor-thin margin of 0.18 million barrels per day. If Leonardo has any say in the matter, traders should expect resistance at $63.71.
Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of commodities or commodity futures involves substantial risk and are not suitable for everyone.
Todd Hultman can be reached at Todd.Hultman@dtn.com
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