Daily Market Report

[FOREX.com]

WTI crude oil mean reversion kicks in, ASX for 7100? Asian Open Nov 14th 2023​

Market Summary:​

• The British pound was the strongest forex major on Monday after hawkish comments from the BOE and a surprise move from the British PM, Rishi Sunak
• David Cameron, the former UK PM who rolled the dice with the promise of a Brexit referendum if voted into power, is back in in government as foreign minister. The move by PM Sunak is seen as a requirement for a more centrist, experienced politician.
• BOE chief economist Huw Bill said inflation remains too high and warned that there was no sign of a turn in domestically-driven services inflation. However, he also said that the BOE do not need to deliver another rate hike but to remain restrictive (which means higher rates for longer)
• US 1-year inflation expectations softened to 3.6% from 3.7% prior, according to the New York Fed survey, with the 3-year remaining stable at 3% and the 5-year down to 2.7%
• Whilst two Fed members were scheduled to speak, neither commented on monetary policy ahead of today’s key US inflation report
• RBA’s assistant governor Marion Kohler warned that inflation may take longer to return to target than originally thought, as strong demand has allowed businesses to pass on cost increases. There’s also a concern that higher inflation will lead to higher inflation expectations.
• USD/JPY reached a 1-year high on Monday in Asian trade before dropping over 70-pips in the US session. Whilst the initial reaction may have been to point the finger at the BOJ, in all likelihood it would have moved far more than 70 pips and this could simply be an options play
• WTI crude oil rose for a second day after the OPEC monthly oil market report said that fundamentals remained strong and blamed speculators for the recent fall in prices

Events in focus (AEDT):​

• 08:45 – New Zealand food price index
• 10:30 – Australian consumer confidence (Westpac)
• 11:30 – Australian business confidence (NAB)
• 18:00 – UK earnings, employment data
• 18:45 – SNB chairman Jordan speaks
• 19:00 – Spanish CPI, ECB Lane speaks,
• 19:45 – ECB’s Enria speaks
• 20:00 – IEA monthly report
• 21:00 – Eurozone GDP, employment, ZEW economic sentiment, German ZEW economic sentiment
• 21:30 – Fed Jefferson speaks
• 00:30 – US inflation

ASX 200 at a glance:​

• The ASX 200 cash index fell for a second day on Monday, with 10 of its 11 sectors also trading lower
• Energy stocks led the way lower, although a recovery in oil prices overnight could help support the sector today
• Gains from Wall Street and SPI 200 futures overnight point to an open back above 7,000 for the cash index today
• Our chart below shows a bullish engulfing day formed after a false break of the 6946.5 low
• Today I’m looking for evidence of a swing low on the intraday charts around the 7,000 area or 6980 to seek longs
• Next upside target area for the index could be the 7076 – 7100 zone

WTI crude oil technical analysis (daily chart):​

I’m glad to say that my contrarian short bias against oil worked out quite well, having broken below $80 and reached $75 by the 100% projection ratio. However, mean reversion is now underway following its extended move beneath the lower Keltner band and has rallied for the second day in the row. A move back to $80 seems quite likely, given the depth of the prior move lower.

The big question now is whether WTI crude oil will leave evidence of a swing high around the $80 handle (for a potential swig trade short) or retrace higher still. Take note that the Jan / April highs sit around a high-volume node (HVN), which can act as a magnet for prices. And as volumes were relatively low beneath $80, perhaps the deeper retracement towards $83 is on the cards for bulls to consider targeting (and bears wait to fade into).

View the full economic calendar

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD eyes breakout, bonds yields get smashed post CPI: Asian Open Nov 15th 2023​

Hopes that the Fed have reached their terminal rate were revived with a softer-than-expected US inflation report. Earlier comments from Fed officials (namely Powell) had rekindled concerns that the Fed may have another hike up their sleeve, yet with CPI and core CPI reads all undershooting consensus estimates, risk-on returned in a big way.


The volatility and one-directional moves seen on across markets sends a clear message to the Fed; markets aren’t buying the Fed’s narrative. A hold at the Fed’s December meeting is effectively fully priced in, up from 85.5% yesterday according to Fed fund futures. And I suspect the remaining Fed members this week will have trouble pushing back against Tuesday’s market moves, assuming that remains their plan.

• US CPI was flat in October at 0% m/m and slowed to a 3.2% y/y (3.3% expected, 3.7% prior)
• Core CPI rose 0.2% m/m, beneath its long-term average of 0.29% and slowed to 4% y/y (4.1% expected and prior)
• The USD was the weakest FX major, falling against all of its major peers whilst the risk-on session saw NZD and AUD as the strongest
• US bond yields fell sharply, with the 2 and 5-year falling over 20bp
• Wall Street gapped sharply higher, sending the Nasdaq 100 to a 3-month high and the S&P 500 and Dow Jones to 8-week highs
• AUD/USD enjoyed its best day this year with a 2% gain, and is considering a breakout above 65c leading into today’s wage price index report
• Gold rose to a 4-day higher after rebounding from its 200-day MA for a second day

Events in focus (AEDT):​

With AUD/USD probing a key resistance level, Aussie trader’s attention now shifts to today’s wage price index report for Australia and China’s data dump. With the RBA making hawkish noises after their hike, a hot WPI print and okay or better data from China could send the Aussie hold on to gains above 65c for the first in three months.

• 08:45 – New Zealand electronic card retail sales, visitor arrivals
• 10:50 – Japan GDP, capex
• 11:30 – Australian wage price index
• 13:00 – China fixed asset investment
• 15:30 – Japan industrial production, capacity utilisation
• 18:00 – UK inflation
• 21:00 – Euro industrial production, trade balance

ASX 200 at a glance:​

• The ASX 200 cash index enjoyed its best day in seven, with 9 of its 11 sectors rising (led by energy and materials)
• The softer US inflation figures saw SPI futures continue higher overnight, helping the Australian market nearly reach our 7100 target mentioned in yesterday’s report
• With risk-on expected to continue into today’s Asian session, a move to 7150 at a minimum seems feasible
• The next major resistance levels for bulls to eye are the 200-day MA at 7185 and the 7200 handle

AUD/USD technical analysis (daily chart):​

I’m pleased to see that the call for AUD/USD to hold above 63c and form a bullish reversal is playing out. A multi-week bullish divergence has now been coupled with a higher low and notable increase of bullish momentum. This strongly favours a bullish breakout in my books, leaving it more of a question of when and not if to my eyes.

Should China data and Australian wages become a non-event (or come in softer), it builds a case for a pullback within yesterday’s range. At which point bulls could seek ‘the dip’ to enter or evidence of a swing low on an intraday timeframe, to position for an anticipated breakout.



The 200-day MA and 66c handle are now in focus.

View the full economic calendar


-- Written by Matt Simpson


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD traders eye employment data, crude oil bears return: Asian Open Nov 16th 2023​

Market Summary:​

• Some measures of US price pressures continued to ease with producer prices softening alongside consumer prices this week. Core PPI was flat at 0% m/m in October and last month’s figure was downgraded to 0.2% from 0.3%.
• However, core retail sales rose 0.1% m/m (-0.2% expected) and last month’s figure was upgraded to 0.8% m/m from 0.6%. So whilst it is encouraging to see inflation measures ease faster than expected, consumers continue to defy higher rates and feed back into the ‘higher for longer’ Fed narrative.
• UK inflation softened to a 2-year low, which bought forward bets for the BOE’s first cut
• A larger-than-expected rise in crude inventories saw oil prices fall on Wednesday, despite better-than-expected data form China (barring property investment). Although Beijing vowed to inject ¥1 trillion yuan
• Australian wages grew at their fastest pace on record at 0.3% q/q in Q3, although as this came in as expected and likely driven by temporary factors, the Australian dollar failed to hold onto gains above 0.6522 resistance and formed an indecision candle.
• U.S. President Joe Biden met Chinese leader Xi Jinping had their first face-to-face meeting in a year on Wednesday to discuss military conflicts and artificial intelligence. Xi called the meeting the most “important bilateral relationship in the world”.
• Wall Street rose for a fourth day but the gains were minor compared to the post-CPI rally, suggesting the move higher is running out of steam.

Events in focus (AEDT):​

The Australian employment report is the main event in today’s Asian session. Whilst yesterday’s strong wages print was expected and assumed to be propped up by temporary factors, it may carry more weight if coupled with a strong set of employment figures today. The consensus estimate is for 20k jobs to be added, although it may need to deliver a punchy number to claw back the -39k full-time jobs lots in September. And whilst the unemployment rate fell to 3.6%, it was because the participation rate fell at its fastest pace since September 2021. Ultimately, traders want to see if today’s employment figure will reveal whether the RBA are more or less likely to hike, following this months hike and warnings that inflation may be slower to return to their target.

• 10:45 – Japan’s machinery orders, trade balance, foreign investment in bonds/stocks
• 11:00 – Australian CPI expectations (Westpac-Melbourne Institute)
• 11:30 – Australian employment report
• 12:30 – China’s house prices
• 15:30 – Japan’s tertiary industry activity index
• 22:00 – Fed Cook speaks
• 00:30 – US jobless claims, Philadelphia Fed manufacturing
• 01:15 – US industrial production, capacity utilisation

ASX 200 at a glance:​

• The ASX 200 delivered its best performing day in four months on Wednesday
• It also reached the 7100 upside target
• However, with SPI futures flat and bullish volatility for Wall Street receding, gains may be limited today unless the Australian employment report delivers a surprise

WTI crude oil technical analysis (daily chart):​

As noted in the weekly COT report, large speculators and managed funds have continued to increase their short exposure to WTI crude oil, and that is being reflected in price action. Despite sentiment still calling for it to be higher. Regular readers will note that my $80 and $75 bearish targets were achieved and I now have $70 back within my sights.

I had been deliberating a potential swing higher around $80 or $83, and must confess that I thought the single bearish hammer below $80 on Tuesday was ‘too soon’ to jump in. Yet ow prices are trying to get away without me. Therefore, I’ consider fading into moves back towards the 200-day average with a stop somewhere above $80 for an anticipated break beneath the cycle lows towards $70.

AUD/USD technical analysis (4-hour chart):​

Whilst the Australian dollar hit a 3-month high during Wednesday’s US session, it failed to hold on to the day’s gains to close flat and just beneath the breakout level of 0.6522 – making it a level to watch today. And as AUD/USD posted it’s strongest single-day rally this year on Tuesday, it may require a particularly punch set of numbers to see it break and hold above yesterday’s high on renewed RBA -hike bets. Should it break to new highs, the 0.6600 area comes into focus for bulls near the 200-day average.

However, we have a big resistance level to break first. And given the extended move, my bias is for an initial pullback. In which case bulls could seek evidence of a swing low around 0.6470 or 0.6440.

View the full economic calendar


-- Written by Matt Simpson


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

​

Bond auctions could trump data next week: The Week Ahead Nov 17th 2023​

In what seems like a while, the US economic calendar is relatively quiet with no top tier events. But US bond auctions should be on trader’s radars as they provide a look at how strong demand is (or not) for the ultimate US safe-haven asset. And if demand is low, it could send yields higher and shake a few equity bulls out of the tree and generally weigh on risk sentiment. We also have the RBA minutes and a potentially ‘live’ speech for the governor to keep tabs on.

The week that was:​

US inflation data was broadly lower than expected which reaffirmed expectations that the Fed had reached their peak rate, and brought forward hopes of a cut

• The US dollar index suffered its worst day of the year following the CPI report, and US bond yields were sharply to bolster bets that yields may have indeed peaked for the cycle
• Producer prices also softened and US jobless claims rose to a 2-year high to add to the bets that the Fed are done with hiking
• Wall Street rejoiced and pushed US indices to fresh cycle highs, seeing the Nasdaq 100 within a cast whisker of its July high, the Dow a 3-month high and the S&P 500 a 2-month high
• The headline UK inflation rate slowed to a 2-year low, bolstering bets that the BOE will be the first central banks to cut rates
• Australia’s wage price index rose at its fastest pace on record at 1.3% but, as it came in as expected and was driven by temporary factors, AUD/USD began retracing from its highs
• Japan’s GDP contracted in Q3 and corporate goods prices deflated for a second month
• China’s retail sales and industrial production figures beat expectations, which was a welcomed sign after better-than-expected GDP in Q3
• Yet continued weakness in the property market prompted a fresh round of stimulus form Beijing, who will inject ¥1 trillion yuan into the sector
• A Reuters report claimed that the BOJ could be “priming markets for an end to negative interest rates”, which could be as early as Q1 2024
• Weak data from the US and China fanned concerns for oil demand, sending crude oil to a fresh 4-month low and towards our lower $70 target

The week ahead (calendar):​

The week ahead (key events and themes):​

• US Thanksgiving
• US bond auctions
• FOMC minutes
• RBA minutes
• China’s loan prime rate
• OECD economic outlook

US Thanksgiving​

Whilst Thanksgiving is not a trading theme upon itself, it means that US markets will be closed on Thursday 23rd November. It’s also likely that US markets will be quiet on Friday as traders indulge in a four-day weekend. It also means that traders will be squaring up their books int to Wednesday.

However, I have noticed a tendency for US markets to rise heading into Thanksgiving, which make US indices markets to watch between Monday and Wednesday next week.

Trader’s watchlist: S&P 500, Nasdaq 100, Dow

US bond auctions​

Demand for US treasuries has gone from bad to worse this year, with investors demand higher yields for the supposed safe-havens due to the massive budget deficit of the US government. And that means bond auctions have continued to gain interest from traders as it provides a direct view of where the demand is (or isn’t) across the yield curve. If we see demand for bonds continues to dwindle, it signals that yields could go higher still. And that could take the wind out of the sales for US equity markets and provide another round of risk-off in general.

Or, as my colleague Scutty said so succinctly on Twitter/X…

Trader’s watchlist: Gold, S&P 500, Nasdaq 100, Dow, VIX, AUD/JPY, USD/JPY

FOMC minutes​

Whilst we cannot ignore the FOMC minutes, current market pricing has since killed off any hopes of another hike and we’re once again seeing headlines of the famous Fed ‘pivot’ once more. Softer CPI and PPI alongside jobless claims at a 2-year high has now removed concerns of another hike, which were fuelled by Powell’s recently hawkish comments. Still, the minutes may shed some light on any divisions among the rank and how ‘some members’ may vote next. But if US data continues to soften, it will likely overshadow what the minutes reveal or what hawkish push-back Fed members now make publicly.

RBA minutes, governor bullock speech​

When the RBA held their cash rate steady in September alongside a familiar statement, it was assumed the cash rate would remain at 4.1%. Yet this view changed when the minutes were released and deemed as more hawkish, before an uncomfortably strong CPI report all but confirmed the RBA’s incoming 25bp hike to 4.35% in November.

Yet once again, markets deemed the minutes as dovish. Given the RBA’s acting chief economist, Marion Kohler, has warned that inflation could take longer to return to their target, will be find the RBA’s minutes are once again deemed more hawkish than the statement implied? Possibly, so it is certainly something to be on guard for on Tuesday.

Take note that governor Bullock speaks ahead of the minutes on Tuesday, but as it is a panel discussion so unlikely to cover monetary policy comments.

However, Bullock also speaks at the Australian Business Economists dinner on Wednesday 22nd November, and this has the potential for her to sway market opinion following the minutes the day prior.

Trader’s watchlist: AUD/USD, NZD/USD, AUD/NZD, NZD/JPY, AUD/JPY, ASX 200

China’s 1 and 5-year loan prime rated (LPRs)​

Data from China was mixed this week. Whilst retail sales and industrial production provided better-than-expected numbers which will help towards Q4 GDP, the property sector remains a drag on the economy which prompted Beijing to pledge ¥1 trillion for the property sector. It may be possible that the PBOC keep their loan prime rates unchanged, given GDP was better than expected in Q3. But if they are to be lowered again, taken alongside the investment coming, it may help provide further support if not a rally for China’s equity markets.

above expectations this week, and the ¥1 trillion pledge by Beijing to support the property sector took the edge off of the weak investment data seen in the data. This helped Chinese equities markets lead the way higher on Wednesday, as they were also bolstered by soft US inflation data and relief that further Fed hikes may be over.

Trader’s watchlist: USD/CNH, USD/JPY, S&P 500, Nasdaq 100, Dow Jones, VIX, AUD/JPY

​

-- Written by Matt Simpson

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD, USD/JPY forecast: Asian Open – Nov 20, 2023​

With a bullish engulfing week and day for AUD/USD on Friday, can the Aussie muster up the strength for a breakout above key resistance? And if losses on USD/CNH are anything to go by, perhaps USD/JPY is preparing to follow suit.

Market Summary:​

• Wall Street held on to gains set early in the week but trade in small ranges near their multi-month highs. The question this week is whether there is enough juice in the tank to rally into Thanksgiving on Thursday, which tends to have been the case looking at stats over the past 36 years
• The US dollar was the weakest forex major last week and fell against all of its major peers, as markets are once again convinced that the Fed have no more hikes up their sleeve following weaker-than-expected inflation figures
• US bond yields continued to weaken which saw the 10-year yield fall to a 2-month low of 4.4%. Yet as it has fallen to trend support on the daily chart with a small doji on Friday, perhaps we’ll see some technical selling of bonds over the near-term which could be supportive of yields and the US dollar.
• The Japanese yen was the strongest FX major and formed which saw USD/JPY form a 2-week bearish reversal pattern, which begs the question as to whether we’re going to see further weakness ahead.
• With USD/CNH falling to a 3-month low, it could place upwards pressure on other APAC currencies such as the yen over the coming weeks
• UK retail sales contracted -0.3% in October to bolster bets that the BOE will be the first major central bank to cut rates in 2024
• It seems that no sooner had Bloomberg noted that crude oil had entered a technical bear market with a 20% fall, bulls rushed back to bid it higher. Time and time again I see this, prices move the opposite way as soon as ‘bull market’ and ‘bear market’ headlines hit the wire.
• Whilst I still see the potential for it to fall to $70, perhaps a move towards its 200-day MA around $78 is in order first.
• Gold’s rebound tapped the 1985 target, but Friday’s small gravestone doji hints at a probably swing high on the daily chart beneath the $2000 handle (bias is currently flat)

See how the S&P 500 has performed heading into Thanksgiving: Forward testing the S&P 500 around Thanksgiving

Events in focus (AEDT):​

• 12:15 – PBoC loan prime rate
• 16:00 – ECB Lane speaks
• 18:00 – German PPI
• 21:00 – EU construction output

ASX 200 at a glance:​

• The ASX 200 formed a bullish engulfing week and reached our 7100 target before pulling back to 7050.
• Thursday and Friday were down days, yet remained within Wednesday/s range and Friday’s lack of volatility suggests the ASX may be trying to form a swing low.
• Like AUD/USD, is it trying to muster up the strength for its next leg higher?
• From here, we’re looking for evidence of a swing low to form (perhaps a bullish engulfing candle or a bullish hammer on the 1-hour chart) to increase confidence it can retest and potentially break above last week’s high

AUD/USD technical analysis (daily chart):​

The Australian dollar formed a bullish engulfing week and closed just beneath the 0.6522 resistance level, which suggests a breakout could be pending. A bullish engulfing day also formed on Friday which places support at 0.6450. The question now is how bulls can get involve. Entering around current levels could lead to a false break, so perhaps low volatility retracement within Friday’s range could appal as it could increase the potential reward to risk ratio for an anticipated breakout, for a move towards the 66c handle near the 200-day EMA,

USD/JPY technical analysis (weekly chart):​

“Tops are a process bottoms are an event” springs to mind when I look at the USD/JPY weekly chart. Whilst the trend is clearly bullish, there is a hesitancy to break above the 2022 intervention high, and the past four week has seen two shooting stars and a 2-bar reversal form (dark cloud cover). And with USD/CNH selling, hawkish headlines for BOJ resurfacing and the US dollar weakening, perhaps a move lower is the path of least resistance over the coming week for USD/JPY. A break beneath the 10-week EMA could mark such an event.

View the full economic calendar


-- Written by Matt Simpson


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD, RBA mins in focus, Nasdaq tracks Thanksgiving seasonality: Asian Open Nov 21st 2023​

We're on the lookout for any hawkish undertone in today's RBA minutes - given the RBA's statement was deemed to be less hawkish than expected. Failure to do so could see AUD/USD hand back some of it's gains. The Nasdaq is also following its seasonal tendency to rise into Thanksgiving.




The Nasdaq 100 closed above 16,000 and at a 22-month high, which places it on track for its best month in 16 and fourth consecutive up wee. A combination of factors helped the tech sector rally, including expectations of positive earnings from Nvidia, a strong 20-year bond auction (which lowered yields) and the seasonal tendency for the Nasdaq to rally heading into Thanksgiving.

This chart shows average returns for the Nasdaq 100 in the three days either side of Thanksgiving. The most notable takeaway is that Wednesday – the day prior to Thanksgiving – has averaged the strongest returns with an 80.6% win rate, and Friday is the second best day for bulls in terms of average returns and win rate. Yet the subsequent Monday, traders appear to book their pre-holiday hype to send the Nasdaq lower 52.8% of the time with an average return of -0.29%.

If history is to repeat, perhaps we’ll see a down day on the Nasdaq on Tuesday. Yet whilst average returns are slightly negative, it has a win rate of 52.8% - which explains why median returns (or typical returns) are positive at 0.13%.

Nasdaq 100 technical analysis (daily chart):​

The Nasdaq has been on a great run and, as noted in yesterday’s COT report, asset managers have piled back into longs and trimmed short exposure to send net long exposure to a 6-yer high. These are hardly the signs of concerned investors. The daily char shows the Nasdaq closed just above 16k, and unless we see broad risk on continue on Tuesday then I suspect e may see a lower volatility candle or inside day form around the cycle highs – if the Thanksgiving seasonal patterns are anything to go by. Wednesday is generally the most bullish day, so perhaps there is another burst of energy waiting to happen.


However, take note that RSI (14) and RSI (2) are overbought and daily trading volume is diminishing despite the Nasdaq pushing higher. And with the potential for profit taking after Thanksgiving alongside overbought RSI’s, bulls may want to tread with caution over the near-term.

Market Summary:​

• The US dollar index flirted with a break of its 200-day MA before closing narrowly beneath it, and this has kept EUR/USD beneath the August 30 high (for now). Keep in mind that the US dollar has generally produced down days on the Monday, Tuesday and Wednesday heading into Thanksgiving before reversing course. So this is keeping us on guard for a potential bounce with the US dollar from Friday or next week.
• Crude oil rose for a second day as expectations continue to grow that OPEC will announce further oil production cuts next week.
• Gold fell in line with expectations yesterday after forming a Doji around 1985 resistance on Friday. Yet strong support levels around 1965 and the 10-day EMA saw prices rebound and recoup most of the day’s earlier losses.

Events in focus (AEDT):​

Today’s RBA minutes will be released at 11:30 AEDT / 0.1:30 GMT today and are worthy of a look. The RBA hiked by 25bp in November but the statement was not perceived as hawkish enough to warrant the priced-in expectations of a hawkish hike, which sent AUD/USD lower and the ASX 200 higher on the day. Yet if the prior meeting is anything to go by, the statement may provide the hawkish tone that the statement lacked.

Whilst governor Bullock is to speak ahead of the minute being released, the title does not imply it will be an opportunity to talk monetary policy. For that we may need to wait until Wednesday at 19:35 AEDT when she speaks on “A Monetary Policy Fit for the Future” at the ABE Annual Dinner, Sydney.

• 08:45 – New Zealand trade balance
• 10:00 – RBA governor Bullock speaks (no comments on monetary policy expected)
• 11:15 – BOE governor Bailey speaks
• 11:30 – RBA minutes (we’re on the lookout for a hawkish tone)
• 13:00 – New Zealand credit card spending
• 20:05 – BOE MPC member Pill speaks
• 21:15 – BOE MPC member Mann speaks
• 21:15 – MPC Member Ramsden speaks
• 21:15 – MPC member Haskel speaks
• 00:30 – Canada CPI (looking for further evidence that inflation continues to soften and keep the BOC in pause mode)

AUD/USD technical analysis (chart):​

We finally saw the break we have all been waiting for on AUD/USD, which was helped higher buy a combination of a weaker US dollar and stronger yuan. Yet the 200-day EMA provided resistance, and it may require hawkish RBA minutes and another lower USD/CNH to help it move directly towards the 0.66 target.

Hopefully we’ll see a pullback ahead of the minutes to improve the potential reward to risk ratio for bulls. If the minutes turn into a nothing burgher, bulls could seek evidence of a swing low around the 0.6500 – 0.6522 zone in anticipation of its next leg higher.

View the full economic calendar


-- Written by Matt Simpson

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US dollar bears running out of steam? AUD/USD, USD/JPY: Asian Open Nov 22nd 2023​

We watched with bated breath to see if USD/CNH would break its 200-day average on Tuesday and pave the way for the next bout of US dollar weakness. Yet with that key level holding as support, it leaves room for some US dollar strength, a higher USD/JPY and weaker AUD/USD.

By : Matt Simpson, Market Analyst

Market Summary:​

The release of the FOMC November minute did little to sway the opinion that the Fed have reached their terminal rate. Although expectations of a surprise were low given CPI and PPI data has softened since their last meeting and job claims had risen to a 2-year low, which overshadowed any hawkish message from the Fed.



Whilst participants noted that inflation remained unacceptably high above 2% with “limited progress” in bringing down core services excluding housing CPI, “all members” agreed interest rate decision would be made on a per-meeting basis – and data so far points towards no further hikes and a sooner cut. Fed fund futures currently imply the odds of a 25bp cut in May 2024 at 46.3%.

• I suspect the RBA are sat on another hike looking at the latest RBA minutes, although as before they’d prefer not to hike if they can get away with it. The tone of the minutes has shifted to the hawkish side with Bullock at the helm, and the RBA seem concerned that demand continues to support higher prices and that rising house prices indicates that “policy was not especially restrictive”
• AUD/USD came close to reaching my 66c target before pulling back from that key level like clockwork, as USD/CNH failed to break its 200-day average.
• Perhaps the RBA should take note that Canada’s inflation levels are coming in below target, which keeps the BOC in pause mode and raises hopes that AU inflation could follow suit to remove the RBA’s hawkish bias.
• We’re seeing signs that the dollar bearish move is running out of steam and could potentially be due a bounce. EUR/USD formed a 2-bar bearish reversal around the August 30 high, USD/JPY bounced from key support at 147.33 and USD/CNH is holding above its 200-day MA.
• The seasonal tendency for the US dollar index is for it to soften ahead of Thanksgiving and strengthen thereafter, although given the selloff already seen and the fact key levels suggests the dollar strength may arrive a little early
• Gold traded briefly above $2000 before closing just beneath it, which keeps that key level in focus for traders over the near-term
• Crude oil rose for a third day but already the rebound is losing steam ahead of Next week’s OPEC meeting. Markets have responded to chatter of oil production cuts, but could this be a classic buy the rumour, sell the fact setup? I suspect OPEC will have to come out swinging to send oil prices materially above $80, until then it may make a decent level to fade into.

Events in focus (AEDT):​

• No major economic data is scheduled today’s Asia session
• 19:35 – Speech by Michele Bullock, RBA Governor – A Monetary Policy Fit for the Future – at the ABE Annual Dinner, Sydney. The Governor will talk about the recent monetary policy decision and progress on the implementation of recommendations of the Review of the Bank.
• 20:00 – BOE and ECB financial stability reports
• 00:00 – US jobless claims data

ASX 200 at a glance:​

• The ASX 200 formed a second small bullish day, although its lack of bullish volatility makes it less convincing we’re heading towards a strong bullish move
• A weak lead from Wall Street and flat SPI 200 futures makes for an uneventful open today for the cash market
• Bias is currently and today’s range is likely to be low due to the Thanksgiving holiday (unless a new catalyst arrives)

USD/JPY, AUD/USD, USD/CNH technical analysis (daily chart):​

We were keeping a close eye on how USD/CNH behaved around its 200-day average on Tuesday, as it appeared to be a make-or-break moment for the US dollar and sentiment across Asian FX. Yet with USD/CNH failing to break beneath its 200-day MA, USD/JPY was allowed to recoup its earlier losses and close the day flat with a long bullish pinbar candle. Meanwhile, AUD/USD formed a bearish pinbar just beneath 66c (in line with yesterday’s bias) and closed beneath its 200-day EMA. Overall, I see the potential for the US dollar retrace higher to help support USD/CNH, USD?JPY and weigh on AUD/USD over the near-term. And if the US dollar seasonality plays out after Thanksgiving, the dollar could continue to strengthen into next week before reversing. At which point I’ll be seeking bullish setups on AUD/USD around support levels and seeking to fade into USD/JPY for its next leg lower.

View the full economic calendar


-- Written by Matt Simpson

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Gold falters around $2k, crude oil looks set for a pre-OPEC bounce: Asian Open Nov 23rd 2023​

Gold has formed a double top around $2000 which leaves the potential for a pullback before its next leg higher. And crude oil shows the potential for a bounce towards $80 or $82 ahead of next week's OPEC meeting.
By : Matt Simpson, Market Analyst

Market Summary:​

RBA governor Michele Bullock warned that domestic demand is increasingly becoming the main driver for price pressures and that trimmed mean (the RBA’s preferred measure) remains too high. And the correct response to that is tightening policy. For me the message is simple; if Aussies keep spending and soaking up the higher prices that companies are more than happy to pass on, expect higher interest rates.



The final consumer sentiment report from University of Michigan showed 1-year CPI expectations ticked higher to 4.5% from 4.4%. Whilst this is not ideal for those calling for Fed cuts in 2024, consumers are easily swayed by headlines and politic in a given month and we could easily see these expectations reverse in a couple of weeks when the flash report is released.



Once again, Wall Street rallied the day ahead of Thanksgiving which saw the Nasdaq 100 reach and exceed yesterday’s 16,000 and 16,100 targets before pulling back to form a small bearish hammer on the daily chart. With the US on holiday Thursday and a half day for markets on Friday, volatility and trading volumes may well be lower than usual. With that said, such conditions are ideal for wild swings if the correct catalyst arrives.

Events in focus (AEDT):​

• Japan - Workers Day
• United States - Thanksgiving Day
• 09:00 – Austrian flash manufacturing and services PMI
• 16:00 – Singapore CPI, industrial production
• 19:30 – German flash manufacturing and services PMI
• 20:00 – Euro flash manufacturing and services PMI
• 23:30 – ECB Publishes Account of Monetary Policy Meeting

ASX 200 at a glance:​

• The ASX 200 unfortunately performed as expected on Wednesday; low volatility and ultimately directionless
• Due to Thanks giving in the US, the odds of another low volatility day seem high for the ASX unless markets are treated to a fresh catalyst

Crude oil technical analysis (daily chart):​

Prices fell an impressive -25% since the September high, although the technical bear-market fall didn’t quite reach the lower $70 target. A false break of $75 has also since seen a potential higher low in form of a bullish hammer on the daily chart, so I suspect crude oil will now try and reach for $80 at a minimum – a break above which opens up a deeper bounce to $82 / the Jan and April highs.

Gold technical analysis (daily chart):​

Softer yields and the dollar have been a clear benefit for gold prices, all thanks to softer US economic data that has brought forward the case for the Fed’s first cut in 2024. The move lower in the US dollar looks overextended, and the seasonal pattern for the US dollar index is to weaken into Thanksgiving and strengthen in the days following it. And with an effective 4-day weekend looming in the US, gold currently lacks the legs to commit fully above $2000.



A small bearish inside day formed just beneath the key level of $2000 to bring a double top into the mix. I wouldn’t want to be long at these levels, and a break beneath $1985 brings a countertrend move into the mix. Quite how deep a pullback may become is down to how far the US dollar can bounce – or if it does at all. But a move to $1960 seems feasible, at which point bulls could seek evidence of a swing low to seek bullish setups in anticipation of a break above $2000.

View the full economic calendar


-- Written by Matt Simpson


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

US dollar set to bounce? Crude oil bulls eye $80, ASX 200 bears eye 6950. Nov 24th 2023​

The US dollar held a key support level on Thursday, which could provide the platform for a bounce today if all goes well. Crude oil continues to hint at its own potential bounce, whilst the ASX 200 appears to have formed a swing high on the daily chart.

By : Matt Simpson, Market Analyst

Market Summary:​

• Volatility was typically low on Thursday with the US celebrating Thanksgiving, which resulted in the usual tight ranges on low trading volumes
• Japan was also on a public holiday, although traders return to their desks today – just in time for a key inflation report this morning
• USD/JPY was flat for the day and traded within the upper range of Wednesday’s bullish day, although 150 is the clear level for bulls to conquer nearby
• The US dollar index closed back above its 200-day average for a second day, after forming a 3-day bullish reversal pattern. If the dollar index sticks to its seasonal tendency, it has a higher probability of trading higher over the next two days after thanksgiving
• ECB policy makers are cautiously optimistic that inflation is falling faster than expected, although they further hikes remain an option should they be necessary according to the latest ECB minutes
• The US dollar may not have followed its seasonal tendency of rising on Thanksgiving day, but it did hold above its 200-day average following a 3-day bullish reversal pattern.
• Take note that the Friday (today) and Monday following Thanksgiving have provided positive average and median returns for the US dollar. If the US dollar can hold above its 200-day average today, my bias is for a near-term bounce ahead of its next leg lower

US dollar index technical analysis (daily chart):​

With the US dollar holding above its 200-day average, I see the potential for a bounce as long as it continues to hold above it. A move to the highs around 104.50 seems achievable which could take the wind out of the sale for EUR/USD, GBP/USD, AUD/USD and the like. At which point I’d then be looking for evidence of a swing high ahead of the dollar’s next leg lower.

Events in focus (AEDT):​

• 10:30 – Japanese CPI
• 10:50 – Japan’s foreign investment in bonds and stocks
• 11:30 – Japan’s PMIs
• 18:00 – German GDP
• 20:00 – ECB’s Christine Lagarde speaks
• 00:30 – Canadian retail sales, manufacturing sales
• 01:45 – US manufacturing, services and composite PMI (S&P global)

ASX 200 at a glance:​

Crude oil technical analysis (daily chart):​

Prices fell an impressive -25% since the September high, although the technical bear-market fall didn’t quite reach the lower $70 target. A false break of $75 has also since seen a potential higher low in form of a bullish hammer on the daily chart, so I suspect crude oil will now try and reach for $80 at a minimum – a break above which opens up a deeper bounce to $82 / the Jan and April highs.

Gold technical analysis (daily chart):​

Softer yields and the dollar have been a clear benefit for gold prices, all thanks to softer US economic data that has brought forward the case for the Fed’s first cut in 2024. The move lower in the US dollar looks overextended, and the seasonal pattern for the US dollar index is to weaken into Thanksgiving and strengthen in the days following it. And with an effective 4-day weekend looming in the US, gold currently lacks the legs to commit fully above $2000.

A small bearish inside day formed just beneath the key level of $2000 to bring a double top into the mix. I wouldn’t want to be long at these levels, and a break beneath $1985 brings a countertrend move into the mix. Quite how deep a pullback may become is down to how far the US dollar can bounce – or if it does at all. But a move to $1960 seems feasible, at which point bulls could seek evidence of a swing low to seek bullish setups in anticipation of a break above $2000.

ASX 200 technical analysis (daily chart):​

It appears that the rally on the ASX 200 has ran out of steam, and bears are returning to the table. Bulls have failed to retain control since the ASX reached my 7100 target, and momentum has turned lower. A small bearish doji formed on Wednesday which also marked a lower high and Thursday’s range opened at the high of the day and closed at the low. Given the lower high respected trend resistance from the August high, I suspect the path of least resistance over the near-term is lower.

Bears could seek to fade into minor rallies beneath 7060 for an initial move to 7,000 – a break beneath which brings the 6950 lows into focus.

Crude oil technical analysis (1-hour chart):​

I outlined a bullish bias for crude oil yesterday, based on a bullish daily hammer that also formed a higher low on high volume and trapped bears with a false break of $70. Whilst we’re yet to see a convincing bullish follow through, it is worth noting that Wednesday’s price action held above the $75 handle and 2023 open price.



The 1-hour chart shows that prices rebound from $74 yesterday and much of the volume was seen around this key level, once again indicating that bears are trapped and there is demand around that key level. With prices now trying to establish support around the weekly pivot point, I’m looking for a break above $77 to confirm its next leg higher towards $80, near the weekly R1 pivot. Q2 open and round number.

View the full economic calendar


-- Written by Matt Simpson

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY bulls eye break of 150, Crude oil is flat for the year: Asian Open Nov 27th 2023​

A sharp reversal on USD/JPY last week brings a potential break above 150 in to focus, assuming the US dollar can find a bid and USD/CNH continues to hold above its 200-day MA. Meanwhile, crude oil has handed back all of its 2023 gains and it is a very fine line before the bias for a move to $80 becomes invalidated.

By : Matt Simpson, Market Analyst

Market Summary:​

• Wall Street rallied for a fourth week, although upside momentum was waning near cycle highs for US indices during the shortened Thanksgiving week
• Trading volume are expected to pick up again for US markets as traders return to their desks after the long weekend, although we’re now approaching month end which can also lead to some erratic price action. With that said, the Monday following Thanksgiving has averaged negative returns for the S&P 500 and Nasdaq 100.
• The US dollar was the weakest forex major last week as traders remained convinced that the Fed may be forced to cut rates sooner and that no more hikes were coming this cycle
• Keep in mind that the US dollar tends to post positive returns on the Monday and Tuesday following Thanksgiving.
• Traders will keep a close eye on bond auctions this week to see if demand for them will increase for a second week and further suppress yields to boost appetite for risk
• The weaker US dollar helped AUD/USD close at a 15-week high and is on track for a decisive bullish engulfing month. However, it has found resistance around its 200-day MA – just below beneath the 66c handle, so I currently have a neutral view on the Aussie until further notice
• Gold prices didn’t break below 1985 to trigger my near-term pullback bias, instead opting to close just above $2000 on Friday
• Yet until we see a break above the cycle highs around $2,000, the potential for a pullback remains on the table in my view

Events in focus (AEDT):​

• 12:30 – China
• 00:00 – US building permits
• 02:00 – US home sales

ASX 200 at a glance:​

• The ASX 200 formed a very small bearish pinbar / inside week to show a hesitancy to commit in either direction
• However, a lower high formed on Wednesday beneath a bearish trendline from the August high, which keeps the potential of another leg lower on the table
• SPI futures rose 0.2% on Friday so the cash market is expected to hope slightly higher today
• A break beneath last week’s low brings 7,000 into focus for bears

USD/JPY technical analysis (chart):​

After USD/JPY fell over -3% in six days yet formed a bullish pinbar at a key support level, momentum has turned higher. In fact a 3-day bullish reversal pattern called a Morning star formed on the daily chart, although volatility dropped on Thursday and Friday over Thanksgiving. Yet this lower period of volatility could be construed as bulls taking a breather ahead of their next attack. The trouble now is that we have the 150 handle nearby which might initially provide resistance. One approach for bulls to consider is to see if prices can retrace towards 148.80 and seek to enter in anticipation of a break above 150, to increase the potential rewards to risk ratio. However, if we see bearish volatility return around 150 then it could indicate an important swing high and the ‘C’ wave an on ‘ABE’ correction from the 151.90 high has begun.

Crude oil technical analysis (chart):​

I outlined a bias for crude oil to bounce towards $80, but as we can see that has not exactly happened ye5t. However, prices did hold above the $75 – 2023 open price zone, so if oil can retain that level of support today then perhaps it still stands a chance. What I don’t like is how prices turned lower in the final two hours of trade in Friday to this support level, so I’m prepared for a gap lower today and break of the Thursday pinbar low to invalidate the near-term long bias. However, if prices can hold support today and break above $77 – perhaps a move to $80 (or even $82) can be achieved ahead of its next leg lower.

View the full economic calendar
-- Written by Matt Simpson
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.