Daily Market Report - 1st Dec 2020

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EURUSD

The EUR/USD pair reached a November high of 1.2002 this Monday, quickly retreating afterwards to close the day in the red around 1.1940. The American currency surged after Wall Street’s opening, helped by falling US indexes and profit-taking as the month came to an end. Investors are looking beyond encouraging coronavirus vaccine news, as Moderna reported a 94% effectiveness, while several countries are rushing to allow the emergency use and begin vaccination this December.

On the data front, Germany published the preliminary estimate of November inflation, which came in worse than anticipated, falling by 0.3% YoY, and interrupting EUR’s rally. US data was mixed, as Pending Home sales fell 1.1% in October, missing expectations, while the November Chicago PMI contracted to 58.2. The November Dallas Fed Manufacturing Business Index printed at 12, better than the 7.4 expected.

This Tuesday, Germany will publish the November unemployment rate, while Markit will publish the final readings of its November Manufacturing PMIs. The US will also release the official ISM Manufacturing PMI, foreseen at 57.9 from 59.3 in the previous month.

The EUR/USD pair is far from bearish, despite it closes the day in the red. The 4-hour chart shows that the price is still developing above all of its moving averages, now approaching the 20 SMA at around 1.1930. Technical indicators are flat within positive levels, indicating the absence of selling interest. Speculative interest will probably continue to challenge the 1.2000 barrier, although the pair needs to break above 1.2011 to confirm a new leg higher.

Support levels: 1.1920 1.1880 1.1840 

Resistance levels: 1.2010 1.2050 1.2090

USDJPY

The USD/JPY pair traded as low as 104.38 this Monday, as the greenback started the week with the back foot, falling against most of its major rivals. The tide changed with London’s fix, as profit-taking lifted the dollar. The pair ignored the poor performance of Wall Street, as the three major US indexes spent the day in the red. US Treasuries provided little directional clues holding around Friday’s closing levels.

Japan published the preliminary October Industrial Production estimate, which was up 3.8% MoM, slightly below expected, and down by 3.2% YoY, much better than anticipated. October Retail Trade in the country surged by 6.4% YoY against the expected -7.7%. The country also published October Housing Starts, which declined 8.3% YoY, slightly better than expected. Early Tuesday, Japan will publish the October unemployment rate and the November Jibun Bank Manufacturing PMI, foreseen unchanged from the preliminary estimate at 48.3.

The USD/JPY pair trades near a daily high of 104.38, but its bullish potential is limited. The 4-hour chart shows that the pair is trading below a directionless 100 SMA but has managed to recover above its 20 SMA. Technical indicators have corrected from daily lows but lost directional strength around their midlines and are now flat. Bulls can have better chances if the pair breaks above 104.65, the immediate resistance level.

Support levels: 103.90 103.50 103.15

Resistance levels: 104.65 105.00 105.40  

GBPUSD

The GBP/USD pair seesawed between gains and losses, ending the first day of the week with modest gains around 1.3340. The lack of progress on Brexit is affecting the bull’s determination, as the clock keeps ticking towards December 31 without any progress. This Monday, Irish Foreign Minister Simon Coveney warned that a trade deal between the UK and the EU would likely fail if there’s no agreement on fisheries, saying that is a more difficult issue than a level playing field. Meanwhile, the European Commission spokesperson said that whether there is a Brexit deal or not, people and businesses need to be prepared as things will change.

This Tuesday, Markit will publish the final reading of the November UK Manufacturing PMI, foreseen unchanged at 55.2.

The GBP/USD pair is neutral, according to intraday technical readings. The 4-hour chart shows that it’s stuck around a flat 20 SMA while above a bullish 100 SMA. The Momentum indicator is crossing its midline into positive levels, while the RSI indicator is flat around 54. Speculative interest is on hold ahead of some Brexit clarity, with the pair expected to remain range-bound.

Support levels: 1.3320 1.3285 1.3240 

Resistance levels: 1.3410 1.3460 1.3495

AUDUSD

The AUD/USD pair traded as high as 0.7406 at the beginning of the day but begun retreating afterwards, to accelerate its decline during US trading hours. The pair is heading into the Asian opening trading near a daily low of 0.7346, weighed by the sour tone of US indexes. Australian data released at the beginning of the day was mixed, but enough to prove support to the local currency.

TD Securities Inflation improved from 1.1% YoY to 1.4% in November, while the monthly reading printed at 0.3%. Company Gross Operating Profits rose by 3.2% in Q3, missing expectations of 4.5%. This Tuesday, the focus shifts to the RBA, as the central bank is having a monetary policy meeting. Policymakers are likely to remain on hold after cutting rates to a record low of 0.1%. They could provide some fresh clues on their economic outlooks, although the country will release its Q3 Gross Domestic Product early Wednesday, which means the market’s reaction may be delayed.

The AUD/USD pair is at risk of extending its decline, according to the 4-hour chart, although its bearish potential remains limited, at least as long as it holds above 0.7290. The 4-hour chart shows that it has broken below its 20 SMA, while the larger moving averages remain well below the current level. The Momentum indicator is now flat around its 100 level, while the RSI heads south at around 46.

Support levels: 0.7330 0.7290 0.7250

Resistance levels: 0.7370 0.7415 0.7450  

CRUDE WTI

WTI faced selling pressure as OPEC+ failed to announce an agreement on Monday. Citing three OPEC+ sources familiar with the matter, Reuters reported on Monday that OPEC will continue to debate output cuts on Tuesday and will try to reach consensus with Non-OPEC producers. "The 180th Meeting of the OPEC Conference has adjourned for today," OPEC noted in a statement.

"Member Country delegations will reconvene for further deliberations tomorrow (December 1)." Also, earlier in the day, Algeria's energy minister, Abdelmadjid Attar, said that OPEC members have agreed to extend the current output cut by three months and noted that they will try to convince non-OPEC producers. As the OPEC+ agreement will play a vital role in the direction of WTI price, markets also followed the demand report from the US. The monthly report published by the US Energy Information Administration showed on Monday that the US' total oil demand in September was 6.8%, or 6240,000 barrels per day, lower than last year and put additional weight on WTI.  

Next supports can be seen at 45.00$, 43.88$ and 43.00$ respectively while the resistances can be followed at 47.00$ and 48.50$.

Support Levels: 45.00$ 43.88$ 43.00$

Resistance Levels: 46.00$ 47.00$ 48.50$  

DOW JONES

Month-end profit-taking pushed Dow Jones into the negative territory on Monday. At this point, only the vaccine news is keeping the risk appetite alive while the grim reality of pandemic lockdowns and surging number of new cases with fatalities is ignored. On the other hand, around 12-million Americans could lose unemployment benefits next month if the CARES act is not extended. While the Biden administration will take over the White House on 20th of January, the Congress must deliver the stimulus deal before the year-end.   

From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.

Support Levels: 28,400 28,000 27,770

Resistance Levels: 29,500 30,000 30,500

XGAAGAGGA

Silver tested sub-$22.00 on Monday but managed to re-gain the physiological level as the buyers kicked in. Under normal conditions, the retracement seen in the USD index DXY should support precious metal’s prices. However, lately, this correlation broke and both precious metals and USD faced selling pressure. This year’s COVID pandemic crushed Silver prices to a new record low against Gold, spurring a surge of investment demand. March’s buyers have now doubled their money with Silver while the white metal returned 34% on a yearly basis. On the other hand, Silver broke its lower comfort level between $22.09 and $25.60. In case if this move persists, Silver might move towards $20.00 levels. 

Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the targets up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.

Support Levels: $22.90 $20.75 $18.42

Resistance Levels: $25.21 $26.00 $27.00 

GOLD

Gold continued its down foot trading on Monday as the traders preferred to bet in risk assets and industrial metals such as Copper. While month-end profit-taking triggered a technical correction in the US indexes, the USD index DXY had marginal gains but stayed below the 92.00 level. The extreme optimism surrounding the markets pushed Gold almost 13% from its August highs. At this point, the short-term traders were banking on the fiscal stimulus while the long-term traders were relying on the monetary stimulus from the Fed. On the other hand, recent positive US data readings might shrink the size of the expected stimulus deal.

In terms of technical levels, over the $1,765 (May 2020 peak), the resistances might be followed at $1,785$ (2012 multi-time peak), $1,800 and $1,822 levels. Below $1,765, the supports can be followed at $1,750 (December 2012 peak), $1,738 (April double top) and $1,700.

Support Levels: $1,750 $1,738 $1,700    

Resistance Levels: $1,785 $1,800 $1,822

MACROECONOMIC EVENTS

* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

Please remember that trading financial markets carry a high degree of risk to your capital. It is possible to lose more than your initial stake. Leveraged products may not be suitable for all investors, therefore please ensure you fully understand the risks involved and seek independent advice if necessary.

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