GBPNZD, H4 | Potential Bearish Reversal

Type: Bearish ReversalKey Levels:Resistance:1.97657Pivot:1.96901Support:1.94053Preferred Case:Price is reacting at the graphical overlap, we can then expect price to make a reversal. We can expect price to drop from pivot level in line with 61.8% Fibonacci projection towards 1st Support in line with 127.2% Fibonacci projection and 38.2 % Fibonacci retracement.Alternative Scenario:Alternatively, price might push up to the 1st resistance in line with 78.6% Fibonacci projection.

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BTCUSD, H4 | Short-term Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 53613.64Pivot: 49485.42Support: 47219.93Preferred Case:We can expect price to bounce from pivot level in line with 38.2% Fibonacci retracement towards 1st Resistance in line with 161.8% Fibonacci projection and 61.8% Fibonacci retracement.Alternative Scenario:Alternatively, price could push further down from pivot level to 1st Support in line with 50% Fibonacci retracement.

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US Treasury Market – Key Technicals Tested Again

US10YR, Daily

Bonds are posting moderate losses as risk appetite picks up again, and the markets continue their chop. Treasuries are underperforming against European and Asian markets. The 2-year yield is 4 bps cheaper at 0.627%, with the 10-year up 5 bps at 1.405%, while the 30-year is 4 bps higher at 1.725%. The likelihood of a faster pace of tapering, the potential move up in rate liftoff, and the advent of supply are also pressuring. European bonds are in the red too, though more modestly with the Gilt and Bund 0.8 bps higher at 0.751% and -0.384%, respectively. Asian bonds rallied, with the JGB down 1.5 bps at 0.033%, while Antipodean rates closed over 3 bps richer. U.S. equity futures are mixed with the Dow 0.61 firmer and the S&P 500 up 0.21%, while the NASDAQ is -0.48% lower. There is still a lot of uncertainty over Omicron.

European bourses are higher paced by the IBEX’s 1.25% gain, while the FTSE is 0.98% higher and the DAX up 0.47%. The markets overlooked a plunge in German manufacturing orders and are pricing out a BoE rate hike next week. Asia was mostly in the red with the Hang Seng dropping -1.76%, while the Nikkei was down -0.36%, with the CSI -0.17% lower. Chinese shares were mostly weaker, taking a well telegraphed RRR cut from the PBoC in stride as regulatory pressures were back in focus, even as China’s securities watchdog tried to play down fears over the withdrawal of Chinese companies from American exchanges. Evergrande woes were back in the spotlight too with more coupon payments due this week. The US calendar is empty today and thin this week with CPI on Friday the star. Other data includes the final reading on Q3 productivity, the October trade report, and JOLTS. The Treasury auctions $112 bln in coupons, beginning with Tuesday’s $54 bln in 3-year notes. There is no Fedspeak scheduled until Chair Powell’s FOMC press conference on December 15.

Technically, the US10YR treasury remains weak and trades below the key 50-day moving average for a 72nd consecutive day, but continues to test this level from the underside for a 6th consecutive day, with 131.00 proving a key resistance level. The 20-day moving average was breached and broken on “Omicron Day” (November 26) and posted a new 17-day high on “NFP Day” Friday (December 3).  A breach and hold of the 50-day moving average could then test the November high and the 38.2 Fib level at 131.75, 132.00 and then the 50.0 Fib level at 132.45. Should the 50-day moving average resistance hold,  again, then short-term support could be found at the 23.6 Fib (130.90), the 20-day moving average at 130.65, 130.00 and the November low at 129.50.

 

 

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Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Imbalance in the US Labor Market Forces the Fed to Put Brakes on Expansion

The headline figure of November NFP - employment gains – came much weaker than expected. However, details of the report were positive for the markets. The labor force continues to slowly return to jobs and the outstripping growth of vacancies restrains the growth of employment. This works as a major constraint for economic growth and drives up costs in the form of higher wages that will eventually fall back on consumers, which increasingly worries the Fed.Job growth in the United States fell short of expectations by almost half, amounting to 210 thousand. The previous figure was revised to 82 thousand, but the impact on market expectations was small. The number of jobs in manufacturing increased by 60 thousand, but the service sector greatly slowed down the growth of jobs - only 175 thousand. The leisure and hospitality sector struggle to recover, but the manufacturing sector has added a solid 60,000 jobs. Employment is closing the gap from the pre-covid level, but it is still far from the norm - 3.9 million jobs.The main problem for the US labor market now, which, paradoxically, increasingly requires tightening monetary policy, is a significant outweighing of demand over supply. The NFIB reports about 10 million job openings, and a net 48% of small businesses report they cannot find workers. The labor force participation rate is recovering poorly and is now at 61.8%. The US is now facing unprecedented inflationary wage pressures: according to the same NFIB, 44% of firms have raised wages in the past three months to attract workers. Net 32% of businesses said they intend to raise salaries over the next three months. These two indicators are at their maximum since the beginning of the information collection period, i.e., since 1975:One of the reasons why employment is growing slowly is the increase in household wealth by $26 trillion between 2019 and June 2021. This is almost $78 thousand for every American which explains low incentive to find a work, a good savings buffer has been accumulated.The latest comments from Fed officials clearly show that the central bank will accelerate the pace of QE tapering as the threat of inflation grows. This is happening against the background of the threat of the spread of the new covid strain, that is, the risks of economic growth are beginning to combine with monetary policy that is less and less friendly for the markets, which sharply limits the possibilities of a rally in stock indices. Long-term Treasuries are beginning to price in this scenario as investors buy up securities anticipating lower near-term returns, so the yield on bonds is rapidly declining and is now at its lowest since September:

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Weekly Market Outlook 06-12-21

In this Weekly Market Outlook 06-12-21, our analyst looks into the trading week ahead, possible market moving data releases across the globe and the technical analysis to accompany it!

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Market Spotlight: EURAUD Continuation Trade

EURAUD On The UpThe recent breakout higher in EURAUD has seen the market blowing through several key levels. The rally has recently stalled into a retest of the broken bull channel and the 1.6163 level resistance. However, with around 75% of the retail market currently short, there is plenty of room for the current rally to continue. Additionally, the risks around the COVID backdrop are skewed towards greater downside for the higher-beta AUD meaning that any deterioration in Omicron news flow is likely to send the pair higher. Bulls can look for a breakout above 1.6163 targeting a run back up to the 1.6419 highs.Keep An Eye OnThe big focus will be the RBA meeting later tonight. Following a slew of better-than-expected data recently, there are upside risks going into the meeting. However, given the fresh uncertainty over Omicron and the high likelihood of fresh Aussie lockdowns on the horizon, it seems reasonable to expect the RBA to remain on hold at this point. Consequently, the focus will be on the guidance . If the RBA sounds overly alarmed by Omicron, this will weigh on AUD near term.

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Has the “jam tomorrow” bubble popped already?

Fund managers have had a good year so far. John Stepek looks at what to expect from markets until year end.

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What Does The November NFP Mean For The Fed?

NFPs UnderwhelmIf Friday’s US data left you scratching your head, don’t worry; you’re not alone. Without even knowing the numbers from the release, one glance at the price action around the data (DXY, equities, bonds, we’re looking at you) would tell you that it was not a clear-cut release at all. On the headline NFP reading, expectations were sorely underwhelmed with a print of just 210k, well beneath the 553k the market was looking for and down sharply on the prior month’s 546k. Average hourly earnings were a bust also; the reading fell back to 0.3% from the prior and expected 0.4% reading.Unemployment Rate Hits Pre-Pandemic LowsAside from those two glaring misses, there were some positives in the report, however. The unemployment rate was seen cratering lower to 4.2% from the prior month’s 4.6%, coming in well below the 4.5% expected. At this level, the US unemployment rate is now down to its lowest level since early 2020, before the pandemic took hold. Additionally, the labour participation rate was seen moving back up to 61.8%, back up to its highest level since early 2020 also.Fed ImplicationsSo, a mixed bag of data indeed. What does this mean for the Fed and what does this mean for the Dollar? While on the face of it, a big earnings miss like this might seem like reason enough to think that the Fed will maintain the current pace of tapering ( $15 billion per month). However, given the inflationary backdrop, there is pressure on the Fed. Additionally, while it is true that the NFP missed, given that jobs were still added (around the 200k) mark, and with the unemployment rate moving sharply lower, this likely gives the Fed enough room to increase the pace of tapering, if it so chooses.CPI Up NextThe big focus now will be on the US CPI report due on Friday. This will be the key to gauging the Fed’s move at the upcoming December FOMC next week. If CPI comes in above forecasts once again, the Fed will all but certainly be stepping up the pace of tapering, sending USD firmly higher. On the other hand, if CPI comes in a little weaker then this will give the Fed scope to hold fire for now, maintaining tapering at $15 billion per month, sending USD a little lower near term.Technical ViewsDXYThe recent rally in DXY reversed just shy of a test of the 97.08 level, with price moving back into the bull channel. For now, 95.83 is holding as support. However, should the current bounce prove to be a lower high, any break below the 95.83 level will turn focus to a test of 94.63 next and the bull channel support. To the topside, a break above 97.08 will turn focus to 97.90 next.

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XAUUSD : Week Ahead 06 – 10 Desember 2021

Gold prices against the US Dollar on Friday closed up +0.89% , while Silver against the US Dollar closed up +0.70% . Precious metal prices posted modest gains over the weekend, after a weaker-than-expected non-payrolls report fueled speculation the Fed may not accelerate its tapering move. In addition, slumping equities boosted safe-haven demand for the precious metal. Gold prices also found support from falling T-note yields, after the 10-year T-note yield fell to a 2-1/4 month low of 1.333% .

Stock indexes on Friday settled slightly lower, with the USA500 falling to a 1-1/2 month low and the USA100 sliding to a 1-1/4 month low. The plunge in tech stocks over the weekend weighed on the overall market with Adobe closing down more than -8%, Dexcom closing down -7%, Tesla closing down -6%, and Nvidia & Advanced Micro Devices closing down more than -4%. US stock indexes gathered some support, after the Senate late on Thursday passed an interim spending bill to prevent a US government shutdown. Omicron concerns also weighed, with six states reporting cases of the Omicron variant with a 7-day average of US Covid infections rising to highs of 1-3 /4 month at 100,835 on Thursday. St. Louis Fed President Bullard’s hawkish comments for the Fed’s policy impacted stock prices, when he said he supported the Fed to accelerate the pace of reductions.

XAUUSD, D1

XAUUSD,D1  – The price of Gold against the US Dollar last week was traded in a range between 1761.85-1808.63 with a total decline of 0.30%. Signals favoring a rise in asset prices next week, would be a test of the trend line on the relative strength index (RSI) or a rebound from the latest low that served as minor support at 1761.85. If cancellation of the option goes up, the asset price will fall and a break of the 1761.85 price level will target 1750.00  before moving further to the 1721.59 support level  and the year’s low of  1676.77.

On the upside, a break of the 1808.63 minor resistance will target the 1834.00 resistance and the asset price will have to sit back above the 1834.00 resistance  to confirm the value growth. However, the price of 1800.00 will temporarily become a dynamic resistance, where we could see the 200-day exponential moving average stretch at this price level.

XAUUSD, H4

XAUUSD,H4 – Temporary intraday bias looks neutral below the round number 1,800.00  but selling pressure cannot be ignored, especially since the price is below the 200 EMA moving average. A break of the 1761.85 minor support will trigger some selling to the direction of the price is lower at 1750.00. As long as the support at 1761.81 or the lower trendline holds, it is possible that we will see some price fluctuations continue next week. On the upside, there will be need to be a test of the 1800.00 round number and 1808.63 minor resistance before being able to retest the 1834.00 resistance level . The divergence bias is clearly visible, but it cannot be used as a reference, as long as the price is still within minor resistance.

Overall, asset prices tend to be more towards consolidation which is confirmed from transaction data in the form of slim body monthly candles.

Click here to access the Economic Calendar

Ady Phangestu

Market Analyst

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Precious Metals Monday 06-12-2021

GoldGold prices have started the week in a muted fashion following a mixed set of US employment data on Friday. The headline US NFP figure came I well below expectations at 210k versus 553k expected. Average hourly earnings were also below forecasts at 0.3% versus 0.4% expected. However, while two of the key readings missed, the unemployment rate was seen falling back to 4.2% from 4.6% prior, well below the 4.5% the market was looking for. Following the labour market readings, the US ISM services number for November was seen coming in well above expectations at 69.1, well above the 64.9 the market was looking for.While there were clearly some strong points in Friday’s data, the overall tone is likely not strong enough to convince the market that the Fed will taper further in December. Given the fresh threat and uncertainty from Omicron, it seems reasonable to expect that the Fed will look to hold policy at current levels while it assesses the impact of the new variant. With this in mind, there is room for gold prices to rotate higher near term if we start to see USD weakening further.SilverSilver prices remain weak following the recent uptick in USD and the fall back in equities seen in response to news of the Omicron variant. Looking ahead, there are clear two-way risks for silver. Any further strengthening of the Dollar and further weakness in equities will likely weigh on silver. This might be fuelled by the upcoming US CPI report on Friday if further excessive price pressures are seen. On the other hand, if CPI misses and USD retreats, this would allow silver to rebound near term. More broadly, Omicron updates also need to be tracked as any deterioration in the news flow will eb negative for silver near term.Technical ViewsGoldGold prices are currently sitting just above the 1763.88 level for now, and above a retest of the broken bear channel. With MACD and RSI both bearish, there are risks of a further break lower, opening the way for a test of 1700. However, while 1763.88 holds, 1826.71 is the initial upside target for bulls.SilverThe breakdown in silver has seen the market breaking out of the rising channel from YTD lows. Price is now testing support at the 22.3205 support, however, with both MACD and RSI bearish, the focus is on a further break lower towards the 21.2174 level next.

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Investment Bank Outlook 06-12-2021

CIBCKey Headlines The bitten Bitcoin, China RRR cut on the way, concern that the Chinese government crackdown on big tech will extend into 2022, hawks turned to doves, Saudi Arabia boosted the prices of its crude, signalling confidence in the demand outlook.FX FlowsSmall recovery for US equity futures, S&P500 up more than 0.44%, Dow futures +0.6%. Bitcoin has stabilised but difficulty to reach above $50k.Mixed risk sentiment, US e-minis are up but most of Asian equity indices are in red. Hang Seng Tech Index fell as much as 2.35% amid concern that the Chinese government crackdown on big tech will extend into 2022. Alibaba ended the morning -5.8%.Japanese were buyers of AUD¥ ahead of Tokyo open, they bought another round when there was a brief pull back to 79.10. Fresh $Yen bids were rumoured to be placed near 112.80-85 and offers linked to exporters at 113.10. Difference in monetary policies should keep USD supported.AUD$ has broken key levels 0.7100 convincingly, we tested 0.6995 very briefly and AUD¥ demand helped bring the AUD$ higher. There was also some buying of AUDNZD. I believe leveraged names will be looking to fade the AUD$ move, likely nearer to 0.7080. Total of A$1.8bn worth of 0.6900 AUD$ put strikes mature later this week.More Covid news from the weekend – new cases on the rise in Southern Europe like Italy and Spain. Death rates in Spain and Italy remain comparatively very low, but have also started to creep upwards. EUR$ traded lower, not a lot can be said about the flows.BoE meeting next week should seal the fate of the GBP. On Friday, Michael Saunders, a hawkish external MPC member issued a warning that Omicron virus added uncertainty to the economic outlook, reinforced expectations that BoE would hold policy rate at 0.1%.ING BankFriday's November US jobs report has kept the narrative alive of the Fed wanting to push ahead with quicker tapering and early tightening even as the full effects of the Omicron variant are unknown. As we were noting last week, the dramatic flattening of the US 2-10 year US Treasury curve typically sees underperformance of the commodity complex (true in G10), while the Japanese yen and Swiss franc were the only two currencies stronger against the dollar over the last week.This week could see a subtle shift in direction. Friday will see the US November CPI release, expected at a new cyclical high of 6.7% year-on-year with upside risks. That should keep short-dated US yields and the dollar supported. But weekend comments from Chief US Medical Advisor, Anthony Fauci, that Omicron looks more transmissible but less severe could provide some breathing room for risk assets. That could mean somewhat of a comeback for the commodity currencies of Australia, Canada (which also have policy meetings this week) and Norway. This could potentially see a reversal of the euro and Japanese yen cross rates, with both currencies having performed well in a risk-averse environment.

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Three stocks that should profit from the dash for digital growth

Professional investor Christopher Versace of the Digital Infrastructure and Connectivity UCITS ETF picks three digital growth stocks to buy now.

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JD Wetherspoon: why investors should head to the pub

Pub group JD Wetherspoon is a solid operator, and is due a bounce when the pandemic eases. Matthew Partridge picks the best way to play it.

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Dollar Edges Higher; Euro Hit by Weak German Factory Orders

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