This article is daily technical analysis from Ray Shen.
The U.S. index pared losses as the U.S. economy pulled back from the downturn, with manufacturing activity contracting for a fourth straight month after a generally disappointing reading. But the latest payrolls data was upbeat, helping it to recover some of its losses. U.S. President Donald trump’s latest rant this week has been taken for granted by investors, with markets not reacting much to his comments and macro data being more closely watched. While China’s manufacturing PMI unexpectedly rose, readings from other economies around the world showed that both manufacturing and services were not immune to trade friction.
The us dollar index stopped falling and rebounded around 97.40 and is currently trading around the 200-day moving average of 97.65. The latter trend is expected to rebound and go higher. The short-term pressure above is in the 98.00 line, and then the pressure above is around 98.50.
The pound’s surge was spurred by opinion polls suggesting the ruling conservative party would win an outright majority in the general election on December 12, and that a strong conservative government would be strongly supportive of Brexit and would bring much-needed political stability. The conservatives have said that if they win a majority, they plan to set out the legislative process by December 19, then reintroduce the legislation needed to ratify Johnson’s Brexit deal to parliament by Christmas and pass it in time to leave on January 31.
Sterling stood above the 1.30 mark and recorded a seven-month high of 1.3166 in mid-session. Now, as the price is far away from the track of the BOLLING channel, it is wary of the risk of a fall, with short-term support at 1.3100 below, then 1.3000 below, short-term pressure at 1.3200 above, then 1.3300 above, and the new high for the year at 1.3381.
Bank of Japan governor Haruhiko Kuroda said no further monetary easing was under consideration, but added that he would not hesitate to ease policy further if momentum to achieve the price stability target was lost as there was “ample room” for further easing. He said the central bank’s ultra-loose monetary policy was aimed at hitting an inflation target, not responding to government spending, and warned there should be no complacency in getting Japan’s fiscal house in order.
Japan’s government has approved a massive stimulus package, with the cabinet approving a y26tn ($239bn) stimulus package, including y13.2tn in fiscal spending, aimed at preventing overseas risks from hurting exports and domestic demand. The government said the new stimulus package would boost real gross domestic product by 1.4 per cent in the fiscal year to March 2022.
The USD/JPY giving up all of last week’s gains, with short-term pressure at 109.00 above and 109.50 above, short-term support at 108.00 below and 107.50 below.
The Canadian dollar briefly rose to a near one-month high as the prospect of a bank of Canada rate cut receded. The bank of Canada said future policy actions would depend on its assessment of the disruptive impact of the trade conflict on sources of growth, particularly consumer spending and housing activity. The bank of Canada said investment spending rose unexpectedly strongly in the third quarter and said it would assess the extent to which this signalled a return to investment momentum.
The general trend of usd/cad tends to be volatile, with short-term pressure above the 200-day moving average around 1.3280, then around 1.3350, short-term support below 1.3200, then around 1.3150.
Although the us data were generally disappointing, the non-farm payrolls report was good and the fed’s interest rate cut was removed. The U.S. labor department’s monthly jobs report on Friday showed the unemployment rate fell to its lowest level in nearly half a century and wage gains held steady at the highest level in nearly a decade. The figures suggest that consumers will continue to support the longest expansion in us history, now 11 years in a row. The fed is expected to stress the resilience of the U.S. economy at its December 10–11 policy meeting, and interest rate futures markets suggest it will stay on hold until at least July 2020.
After five months of strong inflows, total global gold ETF holdings edged down 1 percent to a net outflow of $1.3 billion (30.1 metric tons) in November from a record high the previous month, according to the latest data from the world gold council. “Expectations for further fed rate cuts continue to cool, which is also weighing on gold,” the report said.
Gold price range concussion downward, the current range of volatility between 1480 and 1460, below the key support at 1445, if it falls below is expected to slide to the vicinity of the 1400 mark, if the effective breakthrough up, is expected to see a high to 1500 integer mark.
New York crude ended up nearly 6 percent and hit a fresh three-month high as OPEC+ agreed to increase output by 75 percent in early 2020, meaning supply could tighten next year. Saudi Arabia and Russia on Friday led a deal that saw OPEC and its Allies commit to one of the biggest production cuts in a decade in an effort to avert a fresh supply glut and prop up prices. Energy prices also benefited from signs of expansion in Chinese manufacturing activity, declining U.S. inventories and strong non-farm payrolls data.
New York crude oil station 59.00 pass, the above short-term pressure at line 60.00, then the upper pressure at 62.00, below short-term support at 58.00, then below support at 57.00.
PS: Today focus
15:00 quarterly adjustment of Germany’s trade account for October (100 million euros)
17:00 Sentix investor confidence index for December
In the week of December 9–15, when the fed releases its interest-rate decision and its chart, ms lagarde will chair the European central bank’s policy meeting for the first time. The polls open in Britain’s general election on Tuesday. Data focus, China and the us CPI, UK GDP, us retail sales, etc. There will also be speeches by key officials, including IMF managing director giorgieva.
Key words Monday (9 December), Tuesday (10 December) : lowe’s, China CPI, UK GDP, bank of England stress test, georgieva
Key words Wednesday (11 December): New Zealand financial and economic report, us CPI, fed resolution, Powell
Key words on Thursday: ECB resolution, lagarde, UK election, boros
Key words Friday (Dec. 13): U.S. retail sales, Williams
The above views are for reference only, not for ordering basis. Investment is risky, so proceed with caution.