What the U.S. Dollar's Strength Means for Markets

E-mini S&P (September) / E-mini NQ (September)

S&P, yesterday’s close: Settled at 4614.50, up 8.00

NQ, yesterday’s close: Settled at 15,857.50, up 10.00 

E-mini S&P futures ripped to a new high settlement into month-end but are again struggling to hold against what has developed as major three-star resistance at 4619.25-4625.50. E-mini NQ futures also enjoyed a strong finish yesterday, settling at a two-week high. The new month kicks off with a bang today, and this week. From the economic calendar, we look to ISM Manufacturing for July at 9:00 am CT, along with JOLTs Job Openings for June. Final SPGI Manufacturing PMI is released beforehand at 8:45 am CT. Last night, the private Caixin Chinese Manufacturing survey whiffed 49.2 versus 50.3 expected and set a soft tone for risk-assets overnight. The RBA left interest rates unchanged, but signaled more tightening will likely be required. Also, German and Italian Unemployment data came in a bit better than expected.

From the earnings calendar, Merck, Toyota, Pfizer, and Caterpillar all beat top and bottom-line estimates and are broadly higher ahead of the opening bell. Uber also reported this morning and though revenues were shy, profitability continues to be a terrific story. The stock is +4% after the company also raised guidance. Bill Baruch joined the CNBC Halftime Report Friday and spoke about Uber.

Price action across E-mini S&P and E-mini NQ futures is back to first key supports and where yesterday’s late session surge took place. As the first hour of trade unfolds today, our Pivot and point of balance will be crucial in helping determine a potential shift in momentum. Below here, there is strong support in each index at 4588.75-4589.75 in the E-mini S&P and 15,710-15,739 in the E-mini NQ. A break below these levels, will open the door for a retest into our line in the sand supports.

Bias: Neutral/Bullish

Resistance: 4614.50**, 4619.25-4625.50***, 4631-4634.50***, 4554.75**, 4667.75-4671.75***

Pivot: 4606-4609.25***

Support: 4595.25-4597.75**, 4588.75-4589.75***, 4560.50-4565.75***, 4541.75-4545.25***, 4531-4536.75**, 4493.75-4507.50***

NQ (Sept)

Resistance: 15,847-15,858**, 15,895-15,905***, 15,959-16,009****

Pivot: 15,800-15,825 

Support: 15,762-15,774**, 15,710-15,739***, 15,571-15,610***, 15,511-15,519***, 15,444-15,475****

Crude Oil (September)

Yesterday’s close: Settled at 81.80, up 1.22

Crude Oil futures finished July with a bang, not adding another 1.5% yesterday, tallying a +10.4% since the July 17th settlement. Last night’s weaker than expected private Caixin manufacturing survey from China has broadly pushed the commodity complex on its backfoot, but the energy complex is trading resiliently. U.S. inventory data will start making waves today and early expectations for tomorrow’s official EIA are -0.071 mb Crude, -0.049 mb Gasoline, and -0.261 mb Distillates.

Yesterday’s high of exactly $82, closed in on our major three-star resistance target of 82.52-82.71. Price action is battling at our momentum indicator, denoted as our Pivot and point of balance, for the first time since Friday afternoon, and this can signal some near-term exhaustion. From here, the bulls ideally want to build a floor at major three-star support at 80.39-80.70 in order to continue the rally in the back half of the week.

Bias: Bullish/Neutral

Resistance: 81.75-81.80**, 82.52-82.71***

Pivot: 81.44-81.50

Support: 80.39-80.70***, 79.90-80.13**, 79.03-79.46***

Gold (December) / Silver (September)

Gold, yesterday’s close: Settled at 2009.2, up 9.3

Silver, yesterday’s close: Settled at 24.972, up 0.477

Gold and Silver futures finished out a strong, yet choppy month, on a very positive note. However, yesterday’s strength has quickly faded, and this comes on the heels of the Caixin China Manufacturing PMI miss, which has weakened the Chinese Yuan versus the U.S. Dollar, with the CME’s Yuan (Renminbi) gaining 40bps to a five-session high. To make matters worse, the U.S. Dollar is broadly higher, as the Japanese Yen hits the lowest level since July 7th, while yields also edged higher. This brings us to the two critical data points from the U.S. today, ISM Manufacturing and JOLTs at 9:00 am CT.

Gold futures are now negative on the week, trading below Friday’s 1999.9, while Silver is closing in on its mark at 24.495. Through this morning’s slate of economic data, the pivot and point of balance will be critical for each, and continued price action below there will leave the tape heavy.

Bias: Neutral

Resistance: 2001-2002.8**, 2009.2-2012***, 2019.6**, 2027-2028.6***

Pivot: 1994.5-1995.1

Support: 1983.9-1987.9***, 1973.3-1975.8***

Silver (September)

Resistance: 24.91**, 24.97-25.11***, 25.32**

Pivot: 24.67-24.75    

Support: 24.40-24.58**, 24.27-24.39***, 23.28-23.59***