Market news

28 November 2022
  • 07:22

    Natural Gas Futures: Further upside on the cards

    Considering advanced prints from CME Group for natural gas futures markets, open interest partially reversed the previous daily build and went down by around 3.3K contracts on Friday. Volume followed suit and shrank by almost 195K contracts.

    Natural Gas: Immediately to the upside comes $7.60

    Friday’s strong decline in prices of natural gas was amidst diminishing open interest and volume and opens the door to the continuation of the underlying uptrend in the very near term and with immediate hurdle at the November high at $7.60 per MMBtu (November 23).

  • 07:05

    USD/JPY flirts with daily low, below mid-138.00s amid the global flight to safety

    • USD/JPY meets with a fresh supply on Monday amid reviving demand for the safe-haven JPY.
    • The narrowing of the US-Japan rate differential also underpins the JPY and weighs on the pair.
    • A modest USD strength could offer some support to the major and help limit any further losses.

    The USD/JPY pair struggles to capitalize on Friday's modest bounce and comes under some renewed selling pressure on the first day of a new week. The pair maintains its offered tone through the early European session and is currently flirting with the daily low, around the 138.30-138.25 region.

    The worsening COVID-19 situation drives haven flows towards the Japanese Yen, which is seen exerting downward pressure on the USD/JPY pair. In fact, China reported a record-high number of daily infections on Saturday, forcing the government to impose strict anti-COVID measures in several cities. Moreover, public discontent over the zero-COVID policy flared protests across China and raises concerns about a further slowdown in economic activity. This, in turn, keeps investors on the edge and boosts demand for traditional safe-haven assets.

    The flight to safety, along with growing acceptance of a less aggressive policy tightening by the Fed, continue to drag the US Treasury bond yields lower. This results in the further narrowing of the US-Japan rate differential, which provides an additional lift to the Japanese Yen. That said, a modest US Dollar strength extends some support to the USD/JPY pair. This, along with a big divergence in the monetary policy stance adopted by the Federal Reserve and the Bank of Japan, could help limit any further losses, at least for the time being.

    Despite a dovish assessment of the November FOMC meeting minutes, the US central bank is still expected to deliver another 50 bps rate hike in December. In contrast, BoJ, so far, has shown no inclination to hike interest rates. Moreover, BoJ Governor Haruhiko Kuroda reiterated that the central bank will stick to its monetary easing to support the economy and achieve the 2% inflation target in a stable fashion. In the absence of any relevant economic data, this warrants caution before placing fresh bearish bets around the USD/JPY pair.

    Technical levels to watch

     

  • 07:01

    Norway Retail Sales came in at -0.3%, above forecasts (-1.1%) in October

  • 06:58

    Silver Price News: XAG/USD pares intraday losses above $21.00 as options market portrays indecision

    Silver price (XAG/USD) bounces off the daily lows surrounding $21.00 to $21.25 as European traders brace for the key week on Monday. In doing so, the bright metal justifies the mixed signals from the options market, as well as the risk-off mood.

    That said, the one-month daily risk reversal (RR), a gauge of call options to put options, dropped in the last fortnight to the latest weekly print of -0.040. It’s worth noting, however, that the receding bearish bias appeared to have challenged the XAG/USD buyers.

    Even so, the broad risk-aversion wave, due to the Covid fears, seems to keep the pair buyers hopeful. That said, the record-high daily virus infections from China and the protests to ease the Zero-Covid policy seemed to challenge the market sentiment of late.

    On the contrary, alleged defense from Chinese authorities to safeguard equities appeared to trigger the XAG/USD’s latest rebound.

    Above all, silver remains on the bear’s radar as the options market flashes downbeat signals, even if being softer of late.

    Also read: EUR/USD Analysis: Bulls turn cautious near 200-DMA amid China’s COVID-19 jitters

  • 06:57

    Gold Price Forecast: XAU/USD's technical picture points to a loss of bullish momentum

    Gold was largely unchanged last week. XAU/USD‘s technical outlook points to a slightly bullish bias in the short term, FXStreet’s Eren Sengezer reports.

    $1,720 forms strong support

    “Gold seems to have lost its bullish momentum following last week's action with the Relative Strength Index (RSI) indicator on the daily chart retreating slightly below 60. Nevertheless, XAU/USD holds comfortably above the 20-period Simple Moving Average (SMA), suggesting that sellers remain on the sidelines for the time being.”

    “$1,780 aligns as initial resistance. With a daily close above that level, XAU/USD could test $1,800 and target $1,830 if it clears that resistance.”

    “On the downside, $1,720 forms strong support ahead of $1,700.”

     

  • 06:45

    EUR/USD Price Analysis: Bounces off 50-SMA but stays bearish below 1.0440 hurdle

    • EUR/USD pares intraday losses while also keeping bears hopeful.
    • Downside break of two-week-old support line, bearish oscillators favor sellers.
    • Fortnight-long resistance line, monthly high adds to the upside filters.

    EUR/USD licks its wounds near 1.0360, off the daily low surrounding 1.0340, as traders seek more clues to extend the early-day fall heading into Monday’s European session.

    The major currency pair’s latest rebound could be linked to a U-turn from the 50-SMA, currently around 1.0350 by the press time.

    However, bearish MACD signals and a clear downside break of the two-week-old ascending trend line, close to 1.0400 at the latest, keeps the EUR/USD pair sellers hopeful. Additionally, the steady RSI (14) also defends the bears despite the latest corrective bounce.

    Even if the quote crosses the 1.0400 support-turned-resistance, a downward-sloping resistance line from November 15, near 1.0440, will be crucial to challenge the pair buyers.

    Following that, the monthly high near 1.0480 could also act as an upside filter before portraying the rally targeting the late June peak surrounding 1.0615.

    On the flip side, a break of the 50-SMA support level, near 1.0350 as we write, could renew the downside momentum.

    In that case, the previous week’s low near 1.0220 and the early November’s swing high near 1.0100 should gain the market’s attention ahead of the 200-SMA level surrounding 1.0055.

    EUR/USD: Four-hour chart

    Trend: Further downside expected

     

  • 06:30

    Crude Oil Futures: Scope for further decline

    CME Group’s flash data for crude oil futures markets noted traders added just 715 contracts to their open interest positions at the end of last week, reaching the second consecutive build at the same time. Volume left behind the previous daily build and went down by around 312.4K contracts.

    WTI: On its way to $70.00?

    Prices of the barrel of WTI extended the downtrend on Friday amidst rising open interest, which is supportive of the continuation of the downside in the very near term. Against that crude oil prices could revisit the key $70.00 mark per barrel sooner rather than later.

  • 06:21

    USD/CHF aims to regain 0.9500 amid downbeat risk profile, Swiss GDP eyed

    • USD/CHF prints three-day uptrend as sour sentiment underpins US Dollar.
    • China-linked woes join pre-data anxiety to favor USD/CHF bulls.
    • Swiss Q3 GDP, Fed Chair Powell’s speech and US NFP are the key calendar events.
    • Headlines surrounding China are also important for clear directions.

    USD/CHF retreats from intraday high but stays on the bull’s radar for the third consecutive day, near 0.9465 heading into Monday’s European session. In doing so, the Swiss Franc (CHF) pair portrays the market’s risk-off mood ahead of the key data/events scheduled for publishing this week.

    Although alleged defense from Chinese authorities to safeguard equities appeared to trigger the USD/CHF pair’s latest pullback, the broad risk-aversion wave, due to the Covid fears, seems to keep the pair buyers hopeful. That said, the record-high daily virus infections from China and the protests to ease the Zero-Covid policy seemed to challenge the market sentiment of late.

    On the other hand, the cautious mood ahead of Switzerland’s third quarter (Q3) Gross Domestic Product (GDP), expected to grow by 1.0% YoY versus 2.8% prior growth, also seemed to have favored the USD/CHF bulls of late.

    Elsewhere, hopes that Federal Reserve Chairman Jerome Powell may sound hawkish during his firmer publish appearance since the November meeting, while also signaling the easy rate hikes, appear to have offered additional strength to the USD/CHF bulls.

    Furthermore, a record high online shopping by US citizens on Black Friday favored the US Dollar to pare recent losses. “US shoppers spent a record $9.12 billion online this Black Friday, a report showed on Saturday, as consumers weathered the squeeze from high inflation and grabbed steep discounts on everything from Smartphones to toys,” mentioned Reuters.

    Against this backdrop, US stock futures are down 0.70% intraday and the key Treasury bond yields also extend the latest south-run.

    Given the recent risk-off mood, the USD/CHF may remain firmer unless the Swiss GDP offers a positive surprise.

    Technical analysis

    A clear upside break of the two-week-old descending trend line, around 0.9450 by the press time, keeps the USD/CHF bulls hopeful of visiting the 200-DMA hurdle of 0.9636.

     

  • 06:17

    Gold Futures: A deeper pullback appears out of favour

    Open interest in gold futures markets extended the downtrend for yet another session on Friday, this time shrinking by nearly 4K contracts according to preliminary readings from CME Group. In the same line, volume remained choppy and went down by around 49.2K contracts.

    Gold: Next on the upside comes $1,786

    Friday’s downtick in gold prices was amidst diminishing open interest and volume, which should mitigate the probability of further weakness in the very near term. In case the rebound resumes, the next target comes at the November peak at $1,786 per ounce troy (November 15).

  • 06:06

    Gold Price Forecast: XAU/USD reclaims $1,750 as USD Index struggles to extend gains, US ADP eyed

    • Gold price has reclaimed $1,750.00 as the USD Index has failed to extend its recovery despite the risk-off mood.
    • The speech from Federal Reserve chair Jerome Powell will trim ambiguity over interest rate slowdown chatters.
    • Before United States NFP, US ADP Employment data will provide meaningful cues about the labor market status.
    • Gold price is expected to remain on the sidelines ahead of Federal Reserve chair Jerome Powell’s speech and US ADP data.

    Gold price (XAU/USD) has attempted a rebound after dropping below the critical support of $1,750.00 in the early European session. The precious metal has reclaimed the $1,750.00 hurdle again as the US Dollar Index (DXY) is struggling to extend its gains after sensing strength in the Tokyo session. The USD Index is failing to sustain above a two-day high at 106.40 despite a cautious market mood.

    The situation of unrest in China as households have been frustrated being at home following Covid-19 protocols for a tad longer period. This has spooked the entire global market. S&P500 futures are extending their losses continuously, portraying a risk-aversion theme. Meanwhile, the returns on US Treasury bonds have weakened further as investors have turned anxious ahead of the speech from Federal Reserve (Fed) chair Jerome Powell, scheduled on Wednesday. The 10-year US Treasury yields have dropped to below 3.63%.

    China’s unrest cripples Gold price recovery

    Intensifying protests by individuals against anti-Covid lockdown measures by the Chinese authorities to curtail infections have dampened the risk-appetite theme. This has led to a sheer decline in the risk-sensitive currencies but has supported the US Dollar. It is worth noting that the decline in gold price is fairly lower than fall risk-perceived assets. The catalysts that are impacting gold price majorly are a recovery in the US Dollar, and anxiety ahead of the speech from Federal Reserve chair Jerome Powell.

    Fed chair Jerome Powell’s speech to ease obscurity over 75 bps rate hike spell

    Chatters over a slowdown in the current rate hike pace by the Federal Reserve have gone rooftop. Whatever the decision the Federal Reserve will take in the December monetary policy on interest rates, the risk-sensitive assets have enjoyed a ball. Last week’s Federal Open Market Committee (FOMC) minutes cleared that Federal Reserve policymakers are favoring a deceleration in the rate hike pace to reduce financial borrowings and to observe the efforts yet made to slow down inflation.

    The speech from Federal Reserve chair Jerome Powell will provide cues to the market participants about whether the Federal Reserve will continue its 75 basis points (bps) rate hike spell or will shift to a lower rate hike extent. A softer tone used for interest rate guidance would strengthen Gold price ahead.

    United States ADP Employment- a crucial trigger ahead of US Nonfarm Payrolls

    This week, the United States Nonfarm Payrolls (NFP) data will be of significant importance. The extent of the change in employment level in the United States in November will have a critical impact on the interest rate decision by the Federal Reserve. But before that, investors will keep an eye on the United States Automatic Data Processing (ADP) Employment data. According to the estimates, the US economy has added 200k fresh jobs in the labor market, lower than the prior release of 239k.  

    The Federal Reserve is continuously tightening its monetary policy, which has resulted in weaker economic projections. Firms have postponed their expansion plans due to higher interest obligations. This has also forced them to postpone their demand for manpower.

    Gold technical outlook

    Gold price has displayed a steep recovery after testing the 38.2% Fibonacci retracement (plotted from November 3 low at $1,616.69 to November 15 high at $1,758.88) at $1,722.00 and has also crossed the 23.65 Fibo retracement at $1,746.50 on an hourly scale.

    The precious metal is hovering around the 50-period Exponential Moving Average (EMA) at $1,753.17, which indicates uncertainty over the short-term trend.

    Meanwhile, the Relative Strength Index (RSI) (14) has rebounded after sensing support of around 40.00, which signals that dips are explosively capitalized by the market participants.

     

  • 05:40

    AUD/USD Price Analysis: Daily closing below 0.6690 appears necessary for bears

    • AUD/USD pokes short-term key support confluence as it braces for the biggest daily loss in a week.
    • Convergence of 100-DMA, three-week-old ascending trend line probes sellers.
    • MACD, RSI conditions tease sellers to aim for a two-month-long horizontal support zone.

    AUD/USD bears jostle with short-term key support surrounding 0.6690 as bears try to retake control during early Monday morning in Europe. In doing so, the Aussie pair justifies the market’s risk-off mood as it prepares for the biggest daily fall in a week.

    That said, a joint of the 100-Day Moving Average (DMA) and an upward-sloping trend line from November 04, close to 0.6690, appears a tough nut to crack for the AUD/USD pair bears.

    It’s worth noting that the impending bear cross on the MACD and the RSI (14) retreat keeps sellers hopeful of breaking the 0.6690 support.

    Following that, a south-run towards a broad support region between 0.6550 and 0.6525, comprising multiple levels marked since late September, will gain the market’s attention.

    In a case where AUD/USD remains weak past 0.6525, the odds of witnessing a south-run toward the yearly low of 0.6170 can’t be ruled out.

    Alternatively, a descending trend line from September 13, close to 0.6775 by the press time, holds the key to AUD/USD buyer’s conviction.

    Should the Aussie pair remains firmer past 0.6775, it can quickly refresh the monthly high, currently around 0.6800, by targeting September’s top surrounding 0.6915.

    AUD/USD: Daily chart

    Trend: Further weakness expected

     

  • 05:17

    Asian Stock Market: China’s anti-Covid curb protests hurt sentiment, oil refreshes 11-month low

    • Asian indices have witnessed intense heat amid unrest in China due to the anti-Covid lockdown.
    • The USD Index is struggling to surpass the immediate hurdle of 106.40 as investors await US GDP data.
    • Oil prices have refreshed their 11-month low near $74.00 amid weaker projections.

    Markets in the Asian domain are facing immense pressure amid unrest in China on Covid-19 restrictions. Individuals have come to the roads protesting for a rollback of Covid-19 restrictive measures.

    The resurgence of Covid-19 in China has been sustained for several months and now households are frustrated and angry being at home without solid earnings to augment basic needs. The situation of protests in China along with slogans of ‘democracy not dictatorship’ has triggered the risk of civil war. This has triggered a risk-aversion theme in global markets, and, the Asia-Pacific region is facing immense heat. Meanwhile, state banks in China are heavily purchasing equities to propel battered markets.

    At the press time, Japan’s Nikkei225 slipped 0.50%, ChinaA50 plunged 1.88%, Hang Seng plummeted 1.86% while Nifty50 has gained 0.24% as the China+1 strategy is going to strengthen Indian equity markets.

    The US Dollar Index (DXY) is aiming to establish its business above the two-day high of 106.40 amid an improvement in safe-haven’s appeal. The USD index is expected to remain on tenterhooks ahead of the US Automatic Data Procession (ADP) employment data. As per the consensus, the US economy has added 200k jobs in November vs. the prior release of 239k. Accelerating interest rates and weaker economic projections have forced firms to postpone the recruitment process.

    On the oil front, oil prices have refreshed their 11-month low near $74.00 as weaker projections for aggregate demand in China have also impacted guidance for oil demand. China is a leading importer of oil and sluggish demand in China is propelling oil bears.

     

     

  • 05:17

    USD/INR Price News: Indian Rupee struggles around 81.70 as softer oil jostles with risk-off mood

    • USD/INR retreats from intraday high as softer oil prices favor INR bulls.
    • Covid woes weigh on the market sentiment as traders begin the key week.
    • India’s Q3 GDP will be crucial ahead of Fed Chair Powell’s speech, US NFP.

    USD/INR remains directionless around 81.70 as it drops from the intraday high during early Monday morning in Europe. In doing so, the Indian Rupee balances the positives from downbeat oil prices to the negatives emanating from China.

    WTI crude oil renewed the yearly low around $73.90, near $74.10 by the press time, as fears of increasing supply and less demand, mainly due to the Covid woes, join woes surrounding a limit on Russian oil prices.

    It should be noted that the record-high daily virus infections from China and the protests to ease the Zero-Covid policy seemed to challenge the market sentiment of late. On the same line could be the recently downbeat data from Beijing. China’s Industrial Profit dropped to -3.0% during the January to October period versus -2.3% marked for the January-September era.

    Reuters mentioned, “Infections rose as hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China's stringent COVID restrictions spread to several cities.” The news also quotes China’s National Health Commission to report a fifth straight daily record of 40,347 new COVID-19 infections on Nov. 27, of which 3,822 were symptomatic and 36,525 were asymptomatic.

    Amid these plays, the US stock futures drop nearly 0.70% while the US 10-year Treasury yields fall nearly two basis points (bps) to 3.65% by the press time.

    Moving on, India’s third quarter (Q3) Gross Domestic Product (GDP) figures, expected 2.6% YoY versus 13.5% prior, will be crucial for the USD/INR traders to watch on Wednesday amid economic fears. Following that, a speech from the Federal Reserve (Fed) Chairman Jerome Powell and the United States' monthly employment data for November, up for publishing on Thursday and Friday respectively, will be the key to fresh impulse.

    Technical analysis

    A daily closing beyond the 21-DMA hurdle surrounding 81.70 appears necessary for the USD/INR bulls to retake control.

     

  • 05:01

    GBP/USD: Mildly offered around 1.2050 amid Covid-led risk aversion, challenges to UK economy

    • GBP/USD prints two-day downtrend, struggles around the intraday low.
    • Record daily infections in China, protests to remove Zero-Covid policy weigh on sentiment.
    • Fears of widespread lockdowns in the UK supersede hopes of stimulus.

    GBP/USD bears attack short-term key support around 1.2050 during the second downbeat performance heading into Monday’s London open. In doing so, the Cable pair struggles to cheer the stimulus hopes amid fears of major strikes in the UK, as well as the Covid woes in China.

    “Britain's government intends to make 1 billion pounds ($1.2 billion) of public funding available for home insulation projects from early next year, widening access to assistance that was previously only available to poorer households,” reported Reuters.

    On the other hand, the Coronavirus fears escalate amid the record-high daily infections from China and protests over the government’s Zero-Covid policy. The reason could be linked to the alleged fire that killed around 10 people in Shanghai as they couldn’t leave the building because it was partially locked down, per the rumors spread on the internet. “Infections rose as hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China's stringent COVID restrictions spread to several cities,” mentioned Reuters. The news also quotes China’s National Health Commission as it stated, “China reported a fifth straight daily record of 40,347 new COVID-19 infections on Nov. 27, of which 3,822 were symptomatic and 36,525 were asymptomatic.”

    Elsewhere, Reuters reported that British public-sector pay will not be able to keep up with soaring inflation, transport minister Mark Harper said on Sunday, as the country faces a wave of industrial disputes. The news also mentioned, “Industrial action is becoming more widespread across Britain's transport network and last week Britain's Royal College of Nursing trade union announced dates for its members' first strike in more than 100 years.”

    During the last week, UK’s key activity numbers marked downbeat performance for November and keep the Bank of England (BOE) struggling for clear directions even as hawks expect more rate hikes.

    Against this backdrop, the S&P 500 Futures dropped half a percent while the US 10-year Treasury bond yields fell five basis points (bps) to 3.65% by the press time.

    Looking forward, risk catalysts could entertain the GBP/USD pair traders ahead of a speech from the Federal Reserve (Fed) Chairman Jerome Powell and the United States' monthly employment data for November, up for publishing on Thursday and Friday respectively.

    Technical analysis

    A daily closing below a two-week-old ascending support line, near 1.2030 by the press time, appears necessary for the GBP/USD bears to take control. Until then, the buyers targeting the August month high near 1.2300 could keep the reins.

     

  • 04:41

    EUR/USD finds barricades around 1.0360, resumes downside journey amid risk-off mood

    • EUR/USD is expected to resume its downside journey after surrendering the day’s low at 1.0340 as market mood sours.
    • The long-term US Treasury yields have dropped further below 3.65% as anxiety ahead of Fed Powell’s speech soars.
    • As the Fed is utterly dedicated to bringing price stability, a slowdown in the growth rate is highly recommended.

    The EUR/USD pair has faced barricades around 1.0360 after attempting a recovery post a sheer fall to near day’s low at 1.0340. The asset has sensed selling interest as a rebound in the risk-off impulse has weakened risk-sensitive currencies.

    The Euro bulls are having a bad day as protests in China by individuals having an agenda of rollback of Covid-19 lockdown measures have trimmed investors’ risk appetite. Meanwhile, the US Dollar Index (DXY) is struggling to sustain above a two-day high at 106.40 as investors are getting anxious ahead of the speech from Federal Reserve (Fed) chair Jerome Powell, which will be dictated on Wednesday.

    S&P500 futures are continuously facing immense pressure. The 10-year US Treasury yields have extended their losses below 3.65%. As the Fed is expected to decelerate the rate hike pace led by minutes from the Federal Open Market Committee (FOMC), released last week, the returns on US Treasury bonds are declining vigorously.

    The speech from Fed Chair will provide cues about the likely monetary policy action for December’s monetary policy. Apart from that, investors are focusing on the preliminary United States Gross Domestic Product (GDP) data.

    The preliminary GDP for the third quarter is seen unchanged at 2.6%. As the Fed is utterly dedicated to bringing price stability, a slowdown in the growth rate is highly recommended. A spell of improvement in the growth rates will continue to keep reign as inflation as it indicates robust demand from individuals, which doesn’t lead to a decline in price growth by the manufacturers and service providers.

    On the Eurozone front, investors are awaiting the release of the Eurozone inflation data. The headline HICP is expected to decline to 10.4% vs. the prior release of 10.6%. While the core HICP data that excludes oil and food prices is seen unchanged at 5%.

     

     

     

     

  • 04:07

    NZD/USD Price Analysis: Tests the critical support of 0.6200

    • China’s anti-Covid protest-inspired risk-off profile has weakened the New Zealand Dollar.
    • The US yields have dropped amid anxiety ahead of Fed Powell’s speech.
    • A momentum loss in the kiwi asset has been followed by a breakdown of 100-EMA.

    The NZD/USD pair has dropped to a short-lived cushion around 0.6200 in the Tokyo session. China’s anti-Covid lockdown protests-inspired volatility has spooked the sentiment of market participants. In the currency domain, commodity-linked currencies have sensed immense selling pressure being a trading partner of China.

    Meanwhile, the US Dollar Index (DXY) has tested a two-day high at 106.40 and is expected to sustain above the same. S&P500 futures have extended its losses further, portraying a risk-aversion theme. The 10-year US Treasury yields have tumbled below 3.65% amid anxiety ahead of a speech from Federal Reserve (Fed) chair Jerome Powell, which is due on Wednesday.

    On an hourly scale, the Kiwi asset has dropped after facing a loss in the upside momentum. The major dropped to near the round-level support of 0.6200, which was a resistance earlier. The upward-sloping trendline from November 3 low at 0.5741 will continue to act as major support for the counter.

    The Kiwi asset has dropped below the 100-period Exponential Moving Average (EMA) at 0.6215 while the 200-EMA at 0.6170 has not been challenged yet.

    Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which indicates more weakness ahead.

    Going forward, a drop below November 23 low at 0.6130 will drag the kiwi asset towards the horizontal support placed from November 13 low at 0.6074 and the psychological support at 0.6000.

    On the flip side, a break above Friday’s high at 0.6278 will drive the major towards August 1 high at 0.6353, followed by the round-level resistance at 0.6400.

    NZD/USD hourly chart

     

     

     

     

  • 03:36

    Gold Price Forecast: XAU/USD bears poke 200-EMA amid Coronavirus fears, US NFP, Fed Chair Powell eyed

    • Gold price snaps four-day uptrend, pressured around intraday low of late.
    • Coronavirus fears amplify risk-aversion as China keeps reporting record-high numbers.
    • Cautious mood ahead of the key data/events also underpins the XAU/USD weakness.
    • US Dollar stays firmer even as Treasury bond yields remain weak.

    Gold price (XAU/USD) drops nearly half a percent around $1,750 as bears cheer the first daily negative in five during early Monday. The yellow metal’s latest weakness could be linked to the market’s risk-off mood, as well as the US Dollar’s mild gains.

    Markets in the Asia-Pacific region are in the red, led by China, as the Coronavirus fears escalate in the dragon nation amid record-high daily infections and protests over the government’s Zero-Covid policy. The reason could be linked to the alleged fire that killed around 10 people in Shanghai as they couldn’t leave the building because it was partially locked down, per the rumors spread on the internet.

    “Infections rose as hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China's stringent COVID restrictions spread to several cities,” mentioned Reuters. The news also quotes China’s National Health Commission as it stated, “China reported a fifth straight daily record of 40,347 new COVID-19 infections on Nov. 27, of which 3,822 were symptomatic and 36,525 were asymptomatic.”

    It’s worth noting that the recently downbeat comments from the European Central Bank (ECB) Governing Council Member Gabriel Makhlouf also allowed the US Dollar to cheer remain firmer. That said, the US Dollar Index (DXY) prints mild gains around 106.40 by the press time.

    The risk-off mood could also be witnessed by the downbeat performance of the S&P 500 Futures, as well as five basis points (bps) of a decline by the US 10-year Treasury bond yields to 3.65%.

    Given the sour sentiment, the Gold price may witness further downside. However, a softer yield may stop the XAU/USD bears ahead of the key data/events. Among them, a speech from the Federal Reserve (Fed) Chairman Jerome Powell and the United States' monthly employment data for November, up for publishing on Thursday and Friday respectively, will be crucial for gold traders to watch. The reason could be linked to Powell’s first appearance since the latest Fed meeting.

    Should Mr. Powell hesitate in conveying his routine hawkish comments, as well as the US jobs report ease, the Gold price may witness recovery.

    Technical analysis

    Be it the failure to cross a two-week-old descending trend line or a U-turn from a downwards-sloping resistance line from November 18, the Gold price called back the bears amid the market’s pessimism.

    Also favoring the XAU/USD sellers are the bearish MACD signals, as well as the downbeat but not oversold RSI (14).

    However, the 200-EMA level surrounding $1,747 challenge the metal’s immediate downside, a break of which could quickly drag the metal prices towards weekly horizontal support near $1,733.

    Meanwhile, Gold buyers may initially confront the aforementioned resistance lines around $1,756 and $1,760 before highlighting the November 18 swing high near $1,768.

    In a case where the Gold price remains firmer past $1,768, the monthly high near $1,787 will be in focus.

    Overall, the Gold price returns on the bear’s radar but may remain there for a short time.

    Gold: Hourly chart

    Trend: Limited downside expected

     

  • 03:12

    White House Official: China needs vaccinations more than lockdowns

    Ashish Jha, US President Joe Biden’s response coordinator for the pandemic, said on ABC’s “This Week” on Sunday, China is unlikely to rein in the latest coronavirus outbreaks by lockdown restrictions unless an improved vaccination campaign is put in place.

    Key quotes

    “It’s going to be very, very difficult for China to be able to contain this through their Zero COVID strategy.”

    “I would recommend that they pursue the strategy making sure everybody gets vaccinated, particularly their elderly.”

    “That, I think, is the path out of this virus. Lockdowns and Zero COVID is going to be very difficult to sustain.”

    His comments come as several parts of China are grappled with protests against the countries restrictive measures, calling for President Xi Jinping to step down.

    Market reaction

    At the time of writing, risk sentiment remains heavy, with the US S&P 500 futures down 0.65% on the day while AUD/USD is losing 1% so far to trade at 0.6682.

  • 03:03

    USD/CNH Price Analysis: Bulls retreat from two-month-old hurdle

    • USD/CNH steps back after refreshing the highest levels in two weeks.
    • MACD turns the most bullish in a month, suggesting further upside.
    • Ascending trend line from November 15 restricts immediate declines.

    USD/CNH bulls take a breather around 7.2100, after refreshing a fortnight-high around 7.2600 level, during early Monday. In doing so, the offshore Chinese Yuan (CNH) pair witnesses a pullback from a two-month-old horizontal resistance area.

    However, the pair’s sustained trading beyond a two-week-old ascending trend line joins the strongest price-positive MACD signals in a month to keep the USD/CNH buyers hopeful.

    That said, a clear upside break of the 7.2600-2680 hurdle becomes necessary for the USD/CNH bulls to keep the reins.

    Following that, a run-up towards refreshing the all-time high marked earlier in the year around 7.3750 can’t be ruled out.

    It’s worth noting that the 7.3000 psychological magnet may act as an intermediate halt during the anticipated rally.

    On the contrary, a downside break of the previously mentioned support line, close to 7.1655 by the press time, could recall the USD/CNH bears.

    The same could direct the quote’s weakness towards the 50% Fibonacci retracement level of the August-October upside, near 7.0440.

    Even so, the 100-Day Moving Average (DMA) support near 7.0065, quickly followed by the 7.0000 round figure could challenge the pair’s further declines.

    USD/CNH: Daily chart

    Trend: Further upside expected

     

  • 02:51

    WTI renews yearly low as Coronavirus woes join fears of higher supplies, oil price cap

    • WTI holds lower ground nearly the yearly bottom, sidelined of late.
    • China renews record high daily Covid infections, protestors demand easing of virus-led restrictions.
    • Iraq teases more output ahead of OPEC+ meeting, EU-G7 discusses oil price cap on Russian energy exports.

    WTI crude oil drops to the fresh low of 2022 as bears poked $73.90 amid a broad risk-aversion wave, as well as fears of increasing supply and less demand, during early Monday. In doing so, the black gold also portrays the market’s fears of witnessing a limit on Russian oil prices.

    China reports another daily all-time high of Covid cases on Monday as it marked the 40,347 numbers to spot the grim conditions in the world’s second-largest economy. “Infections rose as hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China's stringent COVID restrictions spread to several cities,” said Reuters following that data.

    Elsewhere, Iraq's state news agency quoted Saadoun Mohsen, a senior official at the country's state oil marketer (SOMO), as saying on Saturday that the nation plans to add a total of 1 million to 1.5 million barrels a day by 2025, per Bloomberg. “Export capacity from southern ports is due to increase between 150,000-250,000 barrels a day from next year,” mentioned the news.

    Additionally weighing on the commodity price are the talks among the members of the Group of Seven Nations (G7) and the European Union (EU) continue to drag on the Russian oil price cap. As per the latest updates, the $65 per barrel is the sticking point as discussions are likely to resume on Monday.

    Amid these plays, the US stock futures drop nearly 0.70% while the US 10-year Treasury yields fall 3.7 basis points (bps) to 3.66% by the press time.

    To sum up, black gold could witness further downside as fears of demand depletion joins the hopes of higher supplies. However, talks surrounding the Russian oil price cap will be crucial for the near-term directions, in addition to the Covid-linked headlines.

    Technical analysis

    Double-top confirmation keeps WTI bears hopeful of witnessing the sub-$70.00 region on the chart.

    Also read: WTI Price Analysis: Bears poke $76.00 with eyes on further downside

     

  • 02:31

    AUD/JPY plummets below 92.50 as anti-Covid lockdown protests in China intensify

    • AUD/JPY has fallen like a house of cards to near 92.50 as protests against Covid-19 restrictions in China worsen.
    • Individuals in China are demanding democracy over dictatorship.
    • A de-growth in Australian Retail Sales has joined China’s civil protests in hammering the Aussie dollar.

    The AUD/JPY pair has witnessed an intense sell-off by the market participants as households’ protests in China against Covid-19 restrictions imposed by Chinese authorities have escalated. The risk barometer has fallen like a house of cards to near 92.50 after a gap-down opening to near 93.60.

    Individuals in a state of anger and frustration have come out on the roads as the Chinese administration was forced to roll back lockdown measures to contain the Coronavirus spread. The economy recorded the highest number of Covid-19 cases on November 26 at around 40,000. The general public is flaring red flags for the government, shouting slogans of ‘Xi Jinping goes down and demanding democracy against dictatorship.

    Escalating fears of civil risk are posing uncertainty for economic projections. China’s economy is already facing vulnerable economic growth and now civil protests will worsen the situation further. This has ignited a risk-off profile in the global markets. It is worth noting that Australia is a leading trading partner of China and China’s weaker economic prospects could have a significant impact on the Aussie dollar.

    Meanwhile, de-growth in Australian retail sales data has also weakened the Aussie dollar.  The economic data landed in negative territory at 0.2% vs. the consensus of 0.4% growth and the prior release of 0.6%. A slowdown in retail demand could cheer Reserve Bank of Australia (RBA) policymakers as it might cool down inflationary pressures ahead.

    Going forward, Australian monthly Consumer Price Index (CPI) data will remain in focus. The economic data is seen higher at 7.5% vs. the prior release of 7.3%. This might force the RBA chair Philip Lowe to reconsider the decision to a shift to lower rate hike structure.

    On the Japanese yen front, Japanese Prime Minister Fumio Kishida said on Monday, “It is critical for the government and the Bank of Japan (BOJ) to collaborate closely and respond flexibly in order to achieve long-term, stable inflation.” Inflationary pressures in Tokyo have shown strength after months of yen weakness and elevated energy costs, as reported by Bloomberg. The headline Consumer Price Index (CPI) in Tokyo escalated to 3.8% vs. the consensus of 3.6%. While core CPI jumped to 2.5% against the projections of 2.1%.

     

     

     

     

  • 02:31

    USD/JPY Price Analysis: Bearish around mid-138.00s inside fortnight-old triangle

    • USD/JPY takes offers to refresh intraday low inside a two-week-long symmetrical triangle.
    • Sluggish MACD challenges further downside, 50-SMA adds strength to the triangle’s resistance line.
    • Bulls remain unconvinced below 142.50, sellers could aim for 135.80-60 zone on defying triangle formation.

     

    USD/JPY stands on slippery grounds near 138.50 as risk-aversion intensifies during early Monday. Even so, the Yen pair remains inside a 12-day-old symmetrical triangle.

    That said, the sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator probe the USD/JPY bears as they approach the stated triangle’s support line, near 138.20 by the press time.

    Even so, the 138.00 threshold and the Relative Strength Index (RSI), located at 14, could challenge the pair sellers afterward.

    In a case where the USD/JPY stays bearish past 138.00, the odds of witnessing a slump towards the 135.80-60 support zone, comprising levels marked since early August, can’t be ruled out.

    Alternatively, a convergence of the 50-SMA and upper line of the aforementioned triangle highlights 140.00 as a tough nut to crack for the USD/JPY bulls.

    It should, however, be noted that a fortnight-old horizontal resistance near 142.30-50 will be crucial for the pair buyers as a break that could reverse the latest bearish trend.

    Overall, USD/JPY is likely to decline further but the downside room appears limited.

    USD/JPY: Four-hour chart

    Trend: Limited downside expected

     

  • 02:28

    China may end covid-Zero policy before April – Goldman Sachs

    Analysts at Goldman Sachs believe that China may bring an end to its covid-Zero policy before April, earlier than their previous forecast.

    Key quotes

    “China may end its covid-Zero policy before April -- earlier than widely expected - forecasts a 30% probability of China reopening before the second quarter of 2023.”

    “Some chance of a “disorderly” exit.”

    “The central government may soon need to choose between more lockdowns and more Covid outbreaks.”

    “Local governments have struggled to “balance quickly” controlling the spread of the virus while obeying recent measures mandating a more targeted approach.”

    “Still see a Q2 exit from Covid Zero as having the highest chance of happening -- around 60%.”

  • 02:11

    EUR/USD Price Analysis: Bears move in and eye a break towards key 1.0300 support

    • The bulls need to hold 1.0350 and get on the back side of the micro bearish trendline resistance.
    • Bears eye a break below 1.0300 for the days ahead.

    EUR/USD bears have moved in on the risk of the Chinese Communist Party losing power as protesters angered by strict anti-virus measures called for China’s powerful leader to resign. Markets have opened risk-off which is supporting the US Dollar, weighing on the euro as the following technical analysis illustrates: 

    EUR/USD Weekly chart

    While below 1.0480, the bias is for a downside correction into the support structure. A 50% mean reversion comes in near 1.0050.

    EUR/USD daily charts

    With that being said, an inverse head & shoulders could be in the making at this juncture. Bullish commitments around 1.0300/50 would be forming the right-hand shoulder of the bullish pattern.

    The bears will be back in control on a break of 1.0220.

    EUR/USD H4 charts

    The bulls need to hold 1.0350 and get on the back side of the micro bearish trendline resistance on the 4-hour chart or face risks of a break below 1.0300. 

  • 02:10

    RBNZ's Silk: Recession forecast shows it'd be shallow and technical

    Reserve Bank of New Zealand (RBNZ) Karen Silk, Assistant Governor, expressed her view on the economic, inflation and monetary policy outlook in her speech on Monday.

    Key quotes

    A forecast recession would be a shallow and technical one.

    Will be closely monitoring higher frequency data such as spending data, and the next CPI report to determine the move in February.

    Need to see inflation turn, inflation expectations to come down for a slowdown in tightening.

    New Zealand is not being substantially more aggressive than its peers.

    Market reaction

    Hawkish comments from RBNZ’s Silk fail to impress New Zealand Dollar bulls, as China-driven risk-aversion weighs heavily on higher-yielding Kiwi. The NZD/USD pair is trading at 0.6200, down 0.65% on the day.

  • 02:03

    AUD/USD slides over 1.0% as China’s Covid woes join worrisome Aussie data, RBA’s Lowe

    • AUD/USD braces for the biggest daily loss in six weeks amid multiple negatives.
    • Australia’s Retail Sales marked the first contraction of 2022, RBA Governor Lowe cites housing market fears.
    • China’s virus conditions worsen but protestors demand scrapping of Zero-Covid policy.
    • Qualitative catalysts will be more important for fresh directions.

    AUD/USD justifies its risk-barometer status as it slumps to 0.6680 during early Monday, marking more than 1.0% daily loss amid the sour sentiment. In addition to the risk-off mood, downbeat data from Australia and the grim comments from Reserve Bank of Australia (RBA) Governor Philip Lowe also favor the Aussie pair’s sellers.

    Markets in China are down nearly 3.0% as the Coronavirus fears escalate in the dragon nation amid record-high daily infections and protests over the government’s Zero-Covid policy. The reason could be linked to the alleged fire that killed around 10 people in Shanghai as they couldn’t leave the building because it was partially locked down, per the rumors spread on the internet.

    Elsewhere, Australia’s Retail Sales marked a negative growth of 0.2% MoM for October versus the 0.4% expected expansion and 0.6% previous increase. “Australian retail sales suffered their first fall of 2022 in October as rising prices and higher interest rates finally seemed to have an impact on spending power, a surprisingly soft result that supports a slower pace of rate hikes,” mentioned Reuters after the downbeat Aussie data.

    It’s worth noting that RBA Governor Lowe cited the wage-spiral risks and the housing market fears to exert more downside pressure on the AUD/USD prices.

    While portraying the mood, the US stock futures drop nearly 0.70% while the US 10-year Treasury yields fall 3.7 basis points (bps) to 3.66% by the press time.

    Given the risk-off mood and grim catalysts from Australia, AUD/USD is likely to witness further downside ahead of the nation’s recently initiated monthly inflation data, up for publishing on Wednesday. Following that, Thursday’s comments from RBA Governor Philip Lowe and Fed Chair Jerome Powell, as well as Friday’s US employment report for November, will be crucial to watch for clear directions.

    Technical analysis

    A daily closing below the 0.6690 support confluence, including the 100-DMA and a three-week-old ascending trend line, becomes necessary to recall the AUD/USD bears.

     

  • 01:50

    Japan’s PM Kishida: Govt and BoJ must work closely to achieve long-term price stability

    Japanese Prime Minister Fumio Kishida said on Monday, “it is critical for the government and the (Bank of Japan) BoJ to collaborate closely and respond flexibly in order to achieve long-term, stable inflation.”

    Additional quotes

    Agreed with BoJ’s Governor Kuroda to achieve the price target while also achieving structural wage growth.

    The government and the BoJ will base policy on the understanding of the 2013 joint statement.

    Market reaction

    Risk-off flows remain at full steam, accelerating the downside in USD/JPY following these comments. At the time of writing, USD/JPY is trading 0.31% on the day at 138.68.

  • 01:49

    GBP/JPY drops towards 167.00 as China-linked fears join woes of UK’s nationwide strikes

    • GBP/JPY takes offers to refresh intraday low, eyes the biggest daily loss in two weeks.
    • Virus concerns from China escalate amid record high infections, protests against Zero-Covid policy.
    • UK government struggles amid the wage increase in the public sector.

    GBP/JPY renews its intraday low around 167.00 during early Monday while bracing for the biggest daily fall in a fortnight as risk-aversion joins pessimism surrounding the UK’s economy.

    “British public-sector pay will not be able to keep up with soaring inflation, transport minister Mark Harper said on Sunday, as the country faces a wave of industrial disputes,” reported Reuters. The news also mentioned that industrial action is becoming more widespread across Britain's transport network and last week Britain's Royal College of Nursing trade union announced dates for its members' first strike in more than 100 years.

    Elsewhere, the news of the UK’s home insulation program and downbeat British data, as well as the Covid fears emanating from China, seem to weigh on the GBP/JPY prices.

    “Britain's government intends to make 1 billion pounds ($1.2 billion) of public funding available for home insulation projects from early next year, widening access to assistance that was previously only available to poorer households,” reported Reuters.

    In the last week, the UK’s key activity numbers marked downbeat performance for November and keep the Bank of England (BOE) struggling for clear directions even as hawks expect more rate hikes.

    On a different page, protests against China’s Zero-Covid policy in Shanghai and Beijing gain the market’s attention and weigh on the risk appetite, as well as on the GBP/JPY prices. China reported an all-time high of COVID-19 daily cases with nearly 40,000 new infections on Saturday. The dragon nation has been using the stringent policy to limit the virus spread but the outcome hasn’t been a positive one so far. Meanwhile, a deadly fire in a building was allegedly linked to the virus-linked lockdown measures and resulted in mass protests in Beijing and Shanghai.

    Amid these plays, the US stock futures drop nearly 0.70% while the US 10-year Treasury yields fall 3.7 basis points (bps) to 3.66% by the press time.

    Looking forward, risk catalysts will be crucial for GBP/JPY traders to watch for clear directions. It’s worth noting that the Bank of Japan’s (BOJ) favor for easy money can keep the GBP/JPY buyers hopeful despite the latest weakness.

    Technical analysis

    A two-month-old ascending trend line, around 166.50 by the press time, appears crucial challenge for the GBP/JPY bears. Meanwhile, a downward-sloping trend line from November 07, close to 169.00 by the press time, restricts the short-term recovery of the pair.

     

  • 01:42

    EUR/GBP oscillates around 0.8600 ahead of Eurozone Inflation

    • EUR/GBP is juggling around 0.8600 as the focus has shifted to Eurozone Inflation data.
    • ECB’s Lane claimed wages as the primary driver of inflation for the coming years.
    • Investors await UK PM Sunak’s first major foreign policy speech.

    The EUR/GBP pair is displaying back-and-forth moves in a narrow range around the 0.8600 figure in the Tokyo session. The asset has turned sideways as investors are awaiting the release of the Eurozone inflation data for further guidance, which will release on Wednesday.

    The asset is in a rangebound mode for the past week amid the unavailability of potential triggers. Now, the release of the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) will ease obscurity. As per the consensus, the headline HICP will decline to 10.4% vs. the prior release of 10.6%. While the core HICP data that excludes oil and food prices is seen unchanged at 5%.

    European Central Bank (ECB) Chief Economist Philip Lane said on Friday, “Wages will be the primary driver of inflation over the coming years.” An adjustment in nominal wages due to a cumulative increment in the cost of living will play out for several years. A time will arise when inflationary pressures will cool down but accelerated nominal wages will sustain, which would lead to a robust demand culture.

    Apart from that, investors await more development on the European gas price cap structure. Intercontinental Exchange (ICE) has warned that the finalization of the ceiling on European gas would force energy traders to stump up an additional $33 bln in margin payments, as reported by Financial Times. Such a large increase in margin requirements could “destabilize the market”,

    On the United Kingdom front, investors are shifting their focus towards the first major foreign policy speech from UK Prime Minister Rishi Sunak, which he plans to deliver on Monday in London's financial district.

    A report from Natixis on UK Pound citing “Sterling’s reserve currency role is under threat has spooked investors.  According to the report, the Sterling is a major reserve currency, accounting for 5% of global foreign exchange reserves while the United Kingdom accounts for only 3% of global GDP.

     

  • 01:42

    BOJ’s Kuroda: Tightening labor market will help drive up wages ahead

    Bank of Japan (BoJ) Governor Haruhiko Kuroda said in an appearance on Monday that “tightening labor market will help drive up wages ahead.”

    Additional quotes

    I expect wage pressure to gradually increase.

    It is hard to set real wage growth as a monetary target.

    There is no need to review the roles of the government and BoJ in the 2013 joint statement.

    Market reaction

    The upbeat remarks from the BoJ Chief are helping the Japanese yen, with USD/JPY falling 0.23% on the day to 138.79, as of writing.

  • 01:41

    Chinese markets in a route on risks to CCP, AUD/USD bears break out

    Chinese markets are tanking on the risk of the Chinese Communist Party losing power. 

    Protesters angered by strict anti-virus measures called for China’s powerful leader to resign and markets have opened risk-off. Authorities in at least eight cities struggled to suppress demonstrations on Sunday that represent a rare direct challenge to the ruling Communist Party.

    Police using pepper spray drove away demonstrators in Shanghai who called for Xi Jinping to step down and an end to one-party rule.

    The main contract for FTSE China A50 Index tumbled by more than 3%. Hang Seng Index opens down 3.26%, Tech Index dips 4.5%, tech stocks are dropping, -7%, Tencent, Meituan, and are down 5%.

    The US Dollar has benefitted from the risk-off moves: 

    AUD/USD has broken key trendline support:

     

  • 01:30

    USD/CAD Price Analysis: Further upside hinges on 1.3450 breakout

    • USD/CAD picks up bids to refresh intraday high.
    • Bulls jostle with a convergence of the 21-DMA and two-week-old resistance line.
    • MACD teases buyers, 100-DMA appears a tough nut to crack for the USD/CAD bears.

    USD/CAD renews intraday high around 1.3440 during the second daily run-up amid early Monday.

    In doing so, the Loonie pair buyers attack a convergence of the 21-Day Moving Average (DMA) and a downward-sloping from November 10, around 1.3440 by the press time.

    It should be noted that the pair’s successful trading above the 100-DMA and steady RSI joins the impending bull cross on the MACD to keep the USD/CAD buyers hopeful of crossing the 1.3440 hurdle.

    Following that, the 38.2% Fibonacci retracement of the pair’s August-October upside, near 1.3500, will challenge the USD/CAD bulls before directing them to the six-week-old resistance line around 1.3610.

    On the flip side, a two-week-old ascending support line, near 1.3320 could restrict the immediate downside of the USD/CAD pair before the 100-DMA support of 1.3275.

    In a case where the Loonie pair remains weak past 1.3275, the 61.8% Fibonacci retracement level of 1.3207, quickly followed by the 1.3200 round figure, could act as the last defense of the USD/CAD buyers, a break of which will make the pair vulnerable to plunging towards 1.3000 psychological magnet.

    Overall, USD/CAD is likely to portray further upside but the 1.3610 is a crucial resistance to watch for the pair traders.

    USD/CAD: Daily chart

    Trend: Limited recovery expected

     

  • 01:19

    USD/CNY fix: 7.1617 vs. the last close of 7.1635

    In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 7.1617 vs. the last close of 7.1635.

    About the fix

    China maintains strict control of the yuan’s rate on the mainland.

    The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

    Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

  • 01:10

    NZD/USD finds cushion around 0.6220, downside seems favored amid China’s Covid concerns

    • NZD/USD is aiming to build a cushion around 0.6220 after a gap-down open.
    • China’s anti-Covid curbs protests have impacted commodity-linked currencies.
    • This week, Fed Powell’s speech will be of utmost importance.

    The NZD/USD pair has built a cushion around 0.6220 after a gap-down opening as China’s anti-Covid lockdown protests hammered commodity-linked currencies. The kiwi asset has been declining for the past week after failing to test the round-level hurdle of 0.6300.

    Escalating civil risks in China as individuals have come on the roads, showing their denial against the no-tolerance Covid approach and dictatorship structure built by China’s leader Xi Jinping, has strengthened the risk-aversion theme in global markets. This has triggered a risk of economic growth and may add fuel to the already vulnerable real estate market. Soaring fears of civil risks could also lead to political instability that could dampen economic structure for a lengthy period.

    It is worth noting that New Zealand is one of the leading trading partners of China and unrest in China could impact New Zealand Dollar

    Meanwhile, the US Dollar Index (DXY) is enjoying liquidity from investors as safe-haven appeal has improved dramatically. The USD Index is hovering around 106.20 and is aiming for a volatility contraction as the downside is being supported by China’s anti-locking protests and the upside is capped by expectations of a halt in a bigger rate hike spell by the Federal Reserve (Fed).

    S&P500 futures are facing immense heat from market participants amid a risk-off market mood. The 10-year US Treasury yields have dropped again to near 3.68% amid anxiety ahead of a speech from Fed chair Jerome Powell, which is due on Wednesday. The speech from Fed Chair might clear ambiguity on rumors over a halt in the current rate hike pace by the Fed.

     

  • 01:10

    AUD/JPY bears approach 93.00 on Australia’s first Retail Sales contraction in 2022, risk-off mood

    • AUD/JPY remains pressured, prints the biggest intraday loss in two weeks.
    • Australia’s Retail Sales registered the first contraction of 2022 in October.
    • China’s Covid conditions and protests against the Zero-Covid policy weigh on the sentiment.
    • Downbeat yields also keep AUD/JPY bears hopeful ahead of the key data/events.

    AUD/JPY braces for the biggest daily loss as it drops to 93.30 during the aftermath of disappointing Australia Retail Sales figure, published early Monday. Also weighing on the risk-barometer pair is the downbeat sentiment, mainly due to headlines surrounding China.

    Australia’s Retail Sales marked a negative growth of 0.2% MoM for October versus the 0.4% expected expansion and 0.6% previous increase. “Australian retail sales suffered their first fall of 2022 in October as rising prices and higher interest rates finally seemed to have an impact on spending power, a surprisingly soft result that supports a slower pace of rate hikes,” mentioned Reuters after the downbeat Aussie data.

    The downbeat data justifies the early-day comments from Reserve Bank of Australia (RBA) Governor Philip Lowe and keep the AUD/JPY bears hopeful.

    Also read: RBA Lowe: Worries about the housing supply as the population grows

    Elsewhere, protests against China’s Zero-Covid policy in Shanghai and Beijing gain the market’s attention and weigh on the risk appetite, as well as on the AUD/JPY prices. China reported an all-time high of COVID-19 daily cases with nearly 40,000 new infections on Saturday. The dragon nation has been using the stringent policy to limit the virus spread but the outcome hasn’t been a positive one so far. Meanwhile, a deadly fire in a building was allegedly linked to the virus-linked lockdown measures and resulted in mass protests in Beijing and Shanghai.

    It’s worth noting that the downbeat performance of the US Treasury yields also weighs on the AUD/JPY prices. As per the latest readings, the benchmark US 10-year Treasury yields dropped two basis points (bps) to 3.68%. In doing so, the key bond coupons remain pressured after declining in the last three weeks.

    Looking forward, the risk catalysts are likely to direct short-term AUD/JPY move amid a light calendar for Monday. However, Australia’s monthly inflation data, comments from RBA Governor Philip Lowe and Fed Chair Jerome Powell, as well as Friday’s US employment report for November, will be crucial for a clear guide.

    Technical analysis

    A U-turn from the 21-DMA, around 94.00 by the press time, joins the AUD/JPY pair’s downside break of a six-week-old ascending trend line, close to 93.60, to keep the bears hopeful of visiting the 93.00 round figure.

     

  • 01:08

    GBP/USD Price Analysis: Bears eye the 38.2% ratio on break below 38.2% ratio

    • GBP/USD bears are moving in with eyes on the trendline support.
    • Bears need to break 1.2050 lows to make way for the 38.2% ratio. 

    GBP/USD is down on the day so far, losing 0.15%, with the price falling from a high of 1.2074 to a low of 1.2051 so far.

    The sour tone of OBR forecasts has weighed on GBP in the spot market since the Autumn Statement and now the US Dollar is edging higher across the board in a risk-off start to the week.

    The Greenback is correcting from multi-month lows on the prospects of the Federal Reserve moderating the pace of its policy tightening.

    The following illustrates the prospects of a deeper correcting in cable that targets the trendline support as follows:

    GBP/USD daily chart

    Bears moved in at around 1.2150 and there are prospects of a deeper correction over the coming days with eyes to 1.1965, or a 38.2% ratio, and then the trendline support:

  • 00:44

    AUD/USD declines towards 0.6700 amid weak Aussie Retail Sales and China’s Covid protests

    • AUD/USD remains muted on a negative growth in Retail Sales as China’s Covid-inspired risks carry enough weight.
    • Market sentiment has turned cautious amid anti-Covid lockdown protests.
    • The USD Index is holding its gains above 106.00 amid a decline in investors’ risk appetite.

    The AUD/USD pair has not responded well to the downbeat monthly Retail Sales data as reported by the Australian Bureau of Statistics. The economic data has landed in negative territory at 0.2% vs. consensus of 0.4% growth and the prior release of 0.6%. The Aussie asset is expected to decline to 0.6700 as weaker retail sales data will join anti-Covid lockdown protests in China.

    A slowdown in Retail sales might impact the Aussie dollar but will delight the Reserve Bank of Australia (RBA). A slowdown in retail demand usually propels a decline in the inflation rate. RBA Governor Philip Lowe is spending sleepless nights developing strategic plans to scale down inflation in Australia. The Australian inflation displayed a historic surge in its third-quarter report, which forced the RBA to escalate its inflation guidance to 8.0%.

    Apart from that, anti-Covid curb protests in China have triggered a risk-aversion theme. Commodity-linked currencies are facing sheer heat amid a decline in the risk appetite of investors. Frustration led by prolonged Covid-19 curbs by Chinese authorities has forced individuals to shout slogans of ‘XI Jinping goes down. A demand for democracy over dictatorship could propel civil risks in China.

    It is worth noting that Australia is a leading trading partner of China and China’s weaker economic prospects could have a significant impact on the Aussie dollar.

    Meanwhile, the US Dollar Index (DXY) is holding a majority of its gains above 106.00 amid an improvement in safe-haven’s appeal. S&P500 futures have extended their losses portraying a cautionary mood of the market participants. The 10-year US Treasury yields have resumed their downside journey ahead of the speech from Federal Reserve (Fed) chair Jerome Powell.

    The speech from Fed Chair, scheduled on Wednesday, will dictate the likely monetary policy action by the Fed in its December monetary policy meeting. Apart from that, United States Automatic Data Processing (ADP) Employment data will be of significant importance. The economic data is seen lower at 200k vs. the prior release of 239k.

     

  • 00:44

    Gold Price Forecast: XAU/USD snaps four-day uptrend as Covid woes sour sentiment

    • Gold price fades upside momentum amid risk aversion.
    • China’s coronavirus concerns, cautious mood ahead of the key data, events weigh on Gold price.
    • Federal Reserve Chairman Jerome Powell’s speech, United States Nonfarm Payrolls are crucial to watch for fresh impulse.
    • Risk catalysts are the key for intraday moves of the XAU/USD price.

    Gold price (XAU/USD) drops for the first time in five days while printing mild losses at around $1,750 during early Monday. In doing so, the yellow metal bears the burden of the market’s sour sentiment, as well as the cautious mood ahead of important data and events scheduled for publishing during the week.

    China coronavirus conditions trigger Gold price drop

    The virus woes in China escalated and joined the protest against the government’s Zero-Covid policy to add to the market’s pessimism, which in turn exerted downside pressure on the Gold price.

    China reported an all-time high of COVID-19 daily cases with nearly 40,000 new infections on Saturday. The dragon nation has been using the stringent policy to limit the virus spread but the outcome hasn’t been a positive one so far. On the contrary, a deadly fire in a building was allegedly linked to the strict virus-inspired lockdown measures and resulted in mass protests in Beijing and Shanghai.

    Considering China’s status as one of the key Gold consumers, negatives from the dragon nation won’t hesitate to push back the metal buyers.

    It’s worth noting that the People’s Bank of China (PBOC) cut the Reserve Requirement Ratio (RRR) by 25 basis points (bps) effective from December 5 but failed to impress the Gold buyers as the news was already priced in. Alternatively, downbeat prints of China’s Industrial Profit seemed to have favored the XAU/USD bears. That said, China’s Industrial Profit dropped to -3.0% during the January to October period versus -2.3% marked for the January-September era.

    US Dollar struggles ahead of the key catalysts

    Although the risk-aversion wave should have ideally underpinned the United States currency, which in turn could have been more bearish for the Gold price, the US Dollar Index (DXY) prints mild losses around 106.20 by the press time. The reason for the USD's downbeat performance could be linked to the cautious mood of the Greenback traders ahead of a speech from the Federal Reserve (Fed) Chairman Jerome Powell and the United States monthly employment data for November.

    It should be noted that Fed Chairman Powell’s speech will be the first after the US central bank’s latest Monetary Policy Meeting and hence will be observed closely for clear directions, especially after the recently dovish Federal Open Market Committee (FOMC) Meeting Minutes.

    Additionally, the US employment data for November keeps the Gold buyers hopeful as the headline Nonfarm Payrolls (NFP) is likely to ease to 208K versus 261K whereas the Unemployment Rate may remain unchanged at 3.7%.

    Other than the aforementioned catalysts, the second readings of the United States Gross Domestic Product (GDP) Annualized for the third quarter (Q3), expected to confirm the 2.6% initial forecasts, will also be important to clearly predict the Gold price.

    Gold price technical analysis

    Failures to cross the 50-Simple Moving Average (SMA) join the impending “bear cross” on the Moving Average Convergence and Divergence (MACD) indicator to keep the Gold sellers hopeful.

    It’s worth noting that a two-week-old descending trend line and an absence of oversold signals on the Relative Strength Index (RSI), located at 14, also suggest a further downside of the Gold price.

    That said, the 100-SMA level surrounding $1,737 appears immediate support for the XAU/USD bears to watch.

    Following that, the Gold price will have to conquer an upward-sloping support line from November 08, close to $1,733 by the press time, to keep the sellers on the table.

    In a case where the Gold price drops below $1,733, the odds of witnessing the $1,700 theshold on the chart can’t be ruled out.

    Alternatively, an upside clearance of the 50-SMA and the aforementioned resistance line, close to $1,760, appears necessary for the Gold buyers to retake control and aim for the fresh high of the monthly, currently around $1,787.

    Gold price: Daily chart

    Trend: Further downside expected

     

  • 00:36

    Aussie Retail Sales: Misses expectations, AUD remains pressured

    The primary gauge of Australia’s consumer spending, Retail Sales, has come out as follows:

    Australia October Retail Sales -0.2 pct MoM s/adj (Reuters poll +0.5 pct).

    AUD/USD update

    0.6700 area holds following failures at 4-hour resistance near the neckline of the M-formation. 

    About Retail Sales

    The Retail Sales released by the Australian Bureau of Statistics is a survey of goods sold by retailers is based on a sampling of retail stores of different types and sizes and it''s considered as an indicator of the pace of the Australian economy. It shows the performance of the retail sector over the short and mid-term. Positive economic growth anticipates bullish trends for the AUD, while a low reading is seen as negative or bearish

  • 00:30

    Australia Retail Sales s.a. (MoM) registered at -0.2%, below expectations (0.4%) in October

  • 00:15

    Currencies. Daily history for Friday, November 25, 2022

    Pare Closed Change, %
    AUDUSD 0.67471 -0.24
    EURJPY 144.749 0.43
    EURUSD 1.04115 0.04
    GBPJPY 168.131 0.27
    GBPUSD 1.20912 -0.13
    NZDUSD 0.62524 -0.16
    USDCAD 1.33714 0.28
    USDCHF 0.9444 0.15
    USDJPY 139.049 0.39
  • 00:05

    USD/JPY aims to test 140.00 as risk-off profile rebounds, Fed Powell’s speech eyed

    • USD/JPY is marching towards 140.00 as China’s anti-Covid lockdown-inspired fears have triggered negative sentiment.
    • China’s individuals are demanding democracy against dictatorship in their protests.
    • Fed Powell’s speech will provide more clarity on chatters over interest rate action in the December meeting.
    • Japan’s employment and Retail Trade data will remain in focus.

    The USD/JPY pair has sensed a decent buying interest after testing the 139.00 support in the early Tokyo session. The asset is aiming to extend its recovery towards the round-level resistance of 140.00 as the risk-off profile has come in action led by escalating civil risks in China.

    Individuals are shouting slogans of ‘XI Jinping Go Down’ as strict Covid-19 restrictions by the Chinese authorities to contain the spread have frustrated the general public. Covid-19 cases in China recorded a massive high of around 40,000 on November 26, therefore, the administration is bound to keep the zero-Covid policy in action.

    Escalated anti-Covid protests have triggered the risk of economic slowdown and further risk to already vulnerable real estate demand. Also, the demand for democracy not dictatorship from China’s individuals in a state of anger and frustration due to Covid-19 restrictions has underpinned the risk-aversion theme.

    The US Dollar Index (DXY) has extended its recovery to near 106.32 and is likely to remain solid. S&500 futures have displayed some sell-off in Tokyo, portraying a risk-off impulse in action. Meanwhile, the 10-year US Treasury yields are holding at 3.70% ahead of a speech from Federal Reserve (Fed) chair Jerome Powell.

    The speech from Fed Chair will provide more clarity on chatters over the conclusion of the 75 basis points (bps) rate hike structure by the Fed. As United States inflation has shown meaningful exhaustion in its October report, Fed policymakers have vouched for a ‘less-hawkish’ stance in December monetary policy meeting by the Fed.

    On the Tokyo front, investors are shifting their focus toward the employment data, which is due on Tuesday. The Unemployment Rate is expected to decline to 2.5% vs. the prior release of 2.6%. Also, the Jobs/Applicants ratio is expected to display an improvement.

    Apart from that, Retail Trade data will also remain in focus. The annual economic data is seen higher at 5.0% while monthly data could show a negative growth of 0.3%.

     

28 November 2022
Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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