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Commodities plunged harshly amid the American trading hours, especially crude oil, which…

Commodities plunged harshly amid the American trading hours, especially crude oil, which was down more than 10%

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Market Focus

Global equities plummeted on Friday, with a new COVID variant discovered in South Africa raising concerns that new lockdown policies could be imposed, hindering the recovery of the economy once it gets widely spread. In Asia, Japan’s Nikkei 225 dropped 2.53%, and Hong Kong’s HSI slumped 2.67%. In the US, Dow Jones slid 2.52% to 34900.79, and the Nasdaq Composite declined 2.23% to 15491.66.

The World Health Organization is urging caution after two South African health experts, including the doctor who first sounded the alarm about the omicron variant, indicated that symptoms linked to the coronavirus strain have been mild so far.

“Understanding the level of severity of the omicron variant will take days to several weeks,” WHO said in a statement Sunday, adding that “there is currently no information to suggest that symptoms associated with omicron are different from those from other variants.”

The latest variant wreaked havoc in global markets on Friday, and early signs in Asia suggest an uneasy start to the new week as traders digest omicron’s initial impact and spread. Equity futures for Japan, South Korea and Australia pointed lower, while currencies were generally steady. The South African Rand strengthened.

The U.K. government will convene an urgent meeting of Group of Seven health ministers on Monday to discuss the latest developments, according to the country’s Department of Health. In the U.S., President Joe Biden will give an update also on Monday, the White House said.

Main Pairs Movement

After a warm and cosy Thanksgiving holiday, the global forex market got smashed as the unexpected fresh panic toward the newly found COVID variant frustrated sentiments. Commodities plunged harshly amid the American trading hours, especially crude oil, which was down more than 10%. The dollar index also dropped 0.74% due to concerns that Fed may postpone the interest rate hike schedule to July from June 2022.

Benefitting from the weakness of the Greenback, most major currencies posted gains against their American peer. Cable ended its weeklong decline and gained a mild 0.14% to 1.3337, and the euro pair even surged around 100 pips to regain the 1.1300 level. Safe-haven currencies were the best performers during Friday’s chaos, with USD/CHF plummeting 1.21% and USD/JPY diving to 1.82%, once breaching the key level 113.00. On the flip side, commodity-linked currencies got left behind oil prices crashed. AUD/USD went down 1.04%, while USD/CAD surged 1.11%.

Gold price got a roller-coaster ride on Friday, as the price first stretched north on the Europe session, and then rolled down accordingly after the US dollar’s fall amid the dismal Wall Street opening. Oil price got wrecked the most, as both WTI and Brent nosedived more than 10%, back to the price levels two months ago. WTI closed the day at $68.16, and Brent at $72.86.

Technical Analysis

EURUSD (4- Hour Chart)

EUR/USD advanced and gathered upside traction on Friday, continuing its previous rebound from 2021 lows under the 1.119 level. The pair started to see heavy buying in the early European session and touched a fresh weekly high near the 1.130 area at the time of writing. EUR/USD was supported by US dollar weakness, currently rising 0.87% on a daily basis. The falling US dollar is mainly due to the resurgence of coronavirus concerns, as a new variant appeared in Southern Africa. Investors now worry that if the new Covid-19 variant does spread globally and damages the global economic recovery, this will leave the Greenback more vulnerable to dovish Fed policy expectations. However, gains for the EUR/USD pair seem to be limited, as the dovish ECB and rising Covid-19 cases both acted as a headwind.

On the technical side, the RSI indicator is at 62 as of writing, suggesting that the bullish momentum should persist for a while before there’s a trend reversal. The MACD is also sitting way above the signal line, which means a strong upward trend for the pair. Looking at the Bollinger Bands, the price rose out of the upper band, therefore a trend continuation could be expected. In conclusion, we think the market will be bullish as the pair is eyeing a test of the 1.1374 resistance.

Resistance: 1.1374, 1.1464, 1.1608

Support: 1.1186, 1.1115

GBPUSD (4- Hour Chart)

After dropping to a yearly low near 1.328 area, GBP/USD rebounded slightly back on Friday. The pair was trading lower and struggled in negative territory during the Asian session, but was then surrounded by bullish momentum after the European session started. At the time of writing, the cable has reversed its intraday loss with a 0.02% gain for the day. GBP/USD gained some bullish traction today amid weaker US dollar across the board, as the benchmark 10-year US Treasury bond yield is falling nearly 7% and weighing heavily on the greenback. Meanwhile in the UK, after the new Covid-19 variant appeared in Southern Africa, the British Health Secretary Sajid Javid announced on Friday that flights from six African countries will be banned from now on.

For the technical aspect, the RSI indicator is at 39 as of writing, suggesting that the downside appears more favoured as the RSI still holds below the midline. As for the Bollinger Bands, the price is falling after touching the moving average, therefore the downward trend should remain. In conclusion, we think the market will be bearish given that its technical correction today could be temporary since the fundamental outlook doesn’t yet point to a steady recovery.

Resistance: 1.3390, 1.3514, 1.3607, 1.3698

Support: 1.3188

USDCAD (4- Hour Chart)

Following its previous three-day slide, USD/CAD rebounded sharply to the 1.278 area on Friday amid falling oil prices. The pair continued to climb higher most of the day and touched the highest level since September 22. USD/CAD had pulled back since then and surrendered some of its intraday gains, currently rising 0.86% on a daily basis. Despite the Greenback tumbling 0.75% today, USD/CAD still rallied amid risk-off market mood. The new South African Covid-19 variant, which has more mutations and evades vaccines, are pushing countries across the world to start implementing travel restrictions. Therefore the concerns about fuel demand sent the oil prices below $70 while underpinning the USD/CAD pair.

For technical analysis: the RSI is at 66 as of writing, suggesting the bullish momentum should persist for a while before there’s a trend reversal. Meanwhile, the MACD is now sitting above the signal line, which means an upward trend for the pair. As for the Bollinger Bands, the price has moved out of the upper band, dropping immediately back inside the band, therefore the suggested strength is negated. In conclusion, we think the market will be bearish as long as the 1.2828 resistance line holds. The pair is likely to experience technical correction after accelerating the upward move.

Resistance: 1.2828

Support: 1.2645, 1.2585, 1.2493

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The Eurozone’s October inflation rate has hit a 13-year high of 4.1%,…

The Eurozone’s October inflation rate has hit a 13-year high of 4.1%, well above the European Central Bank’s 2% target

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Market Focus

The Eurozone’s October inflation rate has hit a 13-year high of 4.1%, well above the European Central Bank’s 2% target, prompting some investors to bet that the European Central Bank will raise interest rates next year. But the Council of the European Central Bank believes that many of the factors driving inflation higher this year may subside next year, albeit at a slower pace than recently predicted.

Although the possibility of raising interest rates as early as next year is small, investors can still look forward to the European Central Bank’s December meeting. Most people expect that the central bank will decide on the fate of the 1.85-trillion bond purchase plan launched last year in response to the epidemic and stop new purchases in March 2022.

As a compromise between the doves and the hawks, the European Central Bank will continue to supplement the monthly pace of the asset purchase plan of 20 billion euros with a fixed-scale envelope of approximately 200 billion euros. In addition, the European Central Bank has also proposed a new bond purchase plan that can cope with market fluctuations.

Main Pairs Movement

As the US market was closed for the Thanksgiving holiday, the market is quiet on Thursday. The market will shorten working hours on Friday, and trading is expected to continue to be quiet.

GBP/USD fell to a new low of 1.33053 in 2021 and closed at 1.33181. Affected by concerns about Brexit, the price trend has hardly changed and maintains a downward trend.

USD/JPY remained above the 115.3 area. With the Thanksgiving holiday, the momentum of the dollar has eased, and the yen has received some respite. At the time of writing, the currency has fallen below the 115 level and hovered at 114.9.

After touching the 1.1190 area for two consecutive days, EUR/USD surged to 1.1229 today and closed above 1.1200. It seems that it has finally gained some support and successfully rebounded.

The gold market is also very calm, with precious metals stable at around $1,790 per troy ounce. Crude oil prices fell slightly, but WTI crude oil prices remained above $78.00 per barrel. 

Technical Analysis

EURUSD (4- Hour Chart)

After the previous day’s slide to a 2021 low under the 1.119 level, EUR/USD regained bullish momentum and rebounded back on Thursday. The pair was trading higher at the start of the day and touched a fresh daily high near 1.123 area, but now has pulled back slightly at the time of writing. EUR/USD was supported by US dollar weakness, currently rising 0.14% on a daily basis at the time of writing. In the US, markets are likely to be flat due to the Thanksgiving holiday, and the greenback dropped to the 96.74 area after reaching yearly tops. In Europe, the ECB has published its Account of Monetary Policy Meeting today, which unsurprisingly highlighted that net purchases under the PEPP could be expected to come two an end by March 2022.

On the technical side, the RSI indicator is at 33 as of writing, suggesting that the bearish momentum should persist for a while before there’s a trend reversal. Looking at the Bollinger Bands, the price is falling from the moving average, which means that the downward trend is likely to persist. In conclusion, we think that the market will be bearish as the pair is heading to re-test the 1.1186 support, a break below that level would target 1.1115 support that touched in June 2020.

Resistance: 1.1275, 1.1374, 1.1464

Support: 1.1186, 1.1115

GBPUSD (4- Hour Chart)

GBP/USD updated its yearly low on Thursday, following a previous slide to the 1.331 area for the fifth day. The pair climbed higher during the Asian session and touched a daily high, but then failed to preserve its bullish momentum. At the time of writing, Cable has stayed in negative territory with a 0.04% loss for the day. The GBP/USD pair remained under pressure despite US dollar weakness, but the Greenback’s corrective pullback should be alleviated amid growing market expectation of a more aggressive policy from the Fed due to rising inflationary pressures. Meanwhile, the worsening situation over the post-Brexit fishing rights between France and UK continues acting as a headwind for the cable.

For technical analysis: the RSI indicator is at 33 as of writing, suggesting that the downside appears more favoured as the RSI is still holding below the midline. Meanwhile, the MACD indicator is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, the price still stays between the lower band and moving average, therefore the downward trend should remain. In conclusion, we think that the market will be bearish as a drop to the 1.32 area appears likely.

Resistance: 1.3390, 1.3514, 1.3607, 1.3698

Support: 1.3188

USDCAD (4- Hour Chart)

USD/CAD declined on Thursday, continuing its slide from a monthly high near the 1.275 area that touched earlier this week. During the early European session, the pair started to see fresh buying and reached a daily top above the 1.267 level. USD/CAD had pulled back since then and surrendered its intraday gains, and is currently posting a 0.14% loss on a daily basis. Weaker US dollar across the board today has dragged the pair lower, though market conditions are currently very thin amid the Thanksgiving holiday. On top of that, the recovery in oil prices acted as a tailwind for the commodity-linked Loonie.

For the technical aspect, the RSI indicator reads 46 as of writing, suggesting tepid bear movement ahead. Looking at the MACD indicator, the MACD is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, the price dropped off the upper band and then crosses below the moving average, the lower band then becomes the loss target. In conclusion, we think the market will be bearish as the pair is eyeing a test of the 1.2585 support.

Resistance: 1.2475, 1.2849

Support: 1.2585, 1.2493, 1.2387

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According to its CPI report, U.S. inflation surged to its highest level…

According to its CPI report, U.S. inflation surged to its highest level in 30 years in October

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Market Focus

US indices edged higher on Wednesday as technology stocks rebounded due to the slowdown in bond yields rises. The recent increase in yields is due to President Joe Biden’s renomination of Jerome Powell as chairman of the Federal Reserve on Monday. After the 10-year US Treasury bond yield closed at 1.55% last Friday, it traded above 1.68% this week. However, the ratio fell to about 1.64% on Wednesday.

At closing, the S&P 500 Index rose 0.23% to close at 4,701.46, the Nasdaq Composite Index rose 0.44% to 15,845.23, and the Dow Jones Industrial Average fell only 9.42 points to close at 35,804.38. The Nasdaq Composite Index, which is dominated by technology stocks, outperformed the broader market, mainly due to the 1.1% increase in the stock price of Facebook’s parent company Meta, the increase in Apple’s stock price by 0.33% and the TSLA increase by 0.63%.

There are slightly more falling stocks in the S&P 500 index than rising stocks. The gains in technology, real estate, and energy stocks outpaced declines in banks, materials companies and other parts of the market. Currently, several companies have released their latest quarterly reports. Computer manufacturer HP rose 10.10% after announcing solid financial results, Autodesk shares fell 15.5% after the design software company warned investors that its pace of recovery is being affected by supply chain issues and inflationary pressures. As crude oil prices remained relatively stable and natural gas prices rose, energy stocks rose. Devon Energy rose 3.8%.

Main Pairs Movement

After a series of U.S. data suggesting that inflationary pressures remain high and that the Fed is about to take action to deal with it, demand for the U.S. dollar continues.

According to its CPI report, U.S. inflation surged to its highest level in 30 years in October. In addition, at the FOMC meeting held yesterday, the statement showed that if inflation continues to heat up, they will be prepared to adjust the pace of production cuts and raise the target range of the federal funds rate in advance. However, since the announcement was not unexpected, the market response was very limited.

Affected by local data and the European Central Bank’s inaction, the EUR/USD fell below the pivot support level of 1.1200 and failed to hold. In addition to market sentiment, another factor affecting the euro is the resurgence of the coronavirus in Europe.

GBP/USD is facing bearish pressure again and is currently in the 1.33362 area. The USD/JPY reached a new high of 115.51 in 2021 and remained stable near the close. AUD/USD is currently trading below 0.7200, and USD/CAD is trading near 1.2670.

Technical Analysis

EURUSD (4- Hour Chart)

After the previous day’s slight rebound from a sixteen-month low, EUR/USD was surrounded by heavy selling pressure again on Wednesday. The pair was flirting with 1.124 area to start the day and touched a daily top in the early European session, but then dropped to under 1.120 level amid US dollar strength. EUR/USD now remained under pressure, losing 0.41% on a daily basis at the time of writing. The US Weekly Initial Jobless Claims released today decline to 199K, which was better than the market expectation of 260k. The upbeat data supported the Greenback and push the DXY index higher above 96.8. In Europe, the Germany IFO Business Climate eased to 96.5 in November, therefore the dismal report weighed on the EUR/USD pair.

For the technical aspect, the RSI indicator 23 figures as of writing, suggesting that the pair is in the oversold zone, a trend reversal could be expected. As for the MACD indicator, a death cross just formed on the histogram, which means a short-term downward trend for the pair. Looking at the Bollinger Bands, the price is moving alongside the lower band, therefore the downward trend is likely to persist. In conclusion, we think the market will be bearish as the pair already broke below the previous 1.1226 support, now eyeing a test of the 1.1115 support that was touched in June 2020.

Resistance: 1.1275, 1.1374, 1.1464

Support: 1.1115

GBPUSD (4- Hour Chart)

GBP/USD declined on Wednesday as it continues to maintain its bearish tone for the fourth day. The pair started to see fresh selling in the early European session and is now trading at the lowest level since December 2020 and posting a 0.31% loss for the day. The stronger US dollar across the board keep acting as a headwind for Cable, as the upbeat US economic data and hawkish Fed expectations both lent support to the greenback. Meanwhile, the deadlock over the post-Brexit arrangement in Northern Ireland and fishing rights still weigh on the GBP/USD pair, but France will continue discussions with the UK over post-Brexit fishing access before any retaliatory measures are taken.

On the technical side of things, the RSI indicator 29 figures as of writing, suggesting that the pair is in the oversold zone, a trend reversal could be expected. Looking at the MACD indicator, the MACD is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, the price just touched the lower band, suggesting that the bearish tone will be intensified if the price moves out of the band. In conclusion, we think that the market will be bearish as the recent downward momentum might still be far from being over, and the next 1.3188 support awaits.

Resistance: 1.3514, 1.3607, 1.3698

Support: 1.3188

USDCAD (4- Hour Chart)

After falling from a monthly high near 1.275 area yesterday, USD/CAD edged higher on Wednesday amid renewed US dollar strength. During the American session, the pair pulled back from a daily top touched earlier in the day and surrendered its modest intraday gains. USD/CAD was last seen trading at 1.2672, currently posting a 0.01% gain on a daily basis. The risk-off market sentiment and better-than-expected US job data both spurred demand for the greenback, which is sitting at the highest level since July 2020. On top of that, falling oil prices put pressure on the commodity-linked loonie and pushed the USD/CAD pair higher.

On the technical side, the RSI is at 53 as of writing, suggesting tepid bull movement ahead. However, the MACD is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, because the price dropped off the upper band and then crossed below the moving average, the lower band has become the loss target. In conclusion, we think the market will be bearish as the pair is eyeing a test of the 1.2585 support.

Resistance: 1.2475, 1.2775, 1.2849

Support: 1.2585, 1.2493, 1.2387

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