Sample Category Title

Daily Pivots: (S1) 1.2187; (P) 1.2243; (R1) 1.2352; More...

Intraday bias in GBP/USD stays on the upside at this point. Current rally form 1.0351 should target 1.2759 medium term fibonacci level next. On the downside,e break of 1.1898 support is needed to indicate short term topping. Otherwise, outlook will stay bullish in case of retreat.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 0.9317; (P) 0.9378; (R1) 0.9430; More...

Intraday bias in USD/CHF stays on the downside as fall from 1.0146 is in progress. Next target is 61.8% projection of 1.0146 to 0.9355 from 0.9545 at 0.9056. On the upside, however, break of 0.9545 will indicate short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 might be a medium term down trend itself. Break of 61.8% retracement of 0.8756 to 1.0146 at 0.9287 will pave the way to 0.8756. In any case, risk will stay on the downside as long as 55 day EMA (now at 0.9690) holds.

Daily Pivots: (S1) 133.33; (P) 134.65; (R1) 135.67; More...

Intraday bias in USD/JPY stays on the downside. Fall form 151.93 is in progress for for 133.07 medium term fibonacci level or further to 55 week EMA. On the upside, break of 137.66 support turned resistance will turn intraday bias neutral first. However, near term risk will stay on the downside as long as 142.24 resistance holds, even in case of recovery.

In the bigger picture, a medium term top should be formed at 151.93. Fall from there is correcting larger up trend from 102.58. It's too early to call for bearish trend reversal. But even as a corrective move, such decline should target 38.2% retracement of 102.58 to 151.93 at 133.07, or further to 55 week EMA (now at 131.33). Some support should be seen around this zone to bring rebound. However, sustained break of 55 week EMA will pave the way to 61.8% retracement at 121.43.

Daily Pivots: (S1) 1.3424; (P) 1.3472; (R1) 1.3524; More....

Intraday bias in USD/CAD stays neutral at this point. On the upside, break of 1.3644 resistance will affirm the case that correction from 1.3976 has completed at 1.3224. Further rise should then be seen to 1.3807 resistance first. However, break of 1.3315 will resume the fall from 1.3976 through 1.3222 cluster support, which carries larger bearish implications.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Daily Pivots: (S1) 0.6747; (P) 0.6791; (R1) 0.6840; More...

AUD/USD's rally is resuming and intraday bias is back on the upside for 0.6871 fibonacci level. For now, outlook will remain bullish as long as 0.6641 support holds, in case of retreat. However, break of 0.6641 will indicate rejection by 0.6871 and turn bias back to the downside instead.

In the bigger picture, a medium term bottom is in place at 0.6160 already. But it's too early to call for trend reversal. Nevertheless, even as a corrective move, rise from 0.6169 should target 38.2% retracement of 0.8006 to 0.6169 at 0.6871. Sustained trading above 55 week EMA (now at 0.6922) will raise the chance of the start of a bullish up trend. However, rejection by 0.6781 or 55 week EMA, followed by 0.6521 resistance turned support and retain medium term bearishness.

Dollar's selloff continues in Asian session today as overall market sentiment is supported by further restriction easing in China. The improvement in sentiment is also reflected in some weakness in Yen and Swiss Franc. Australian Dollar and Canadian Dollar are trading generally higher, awaiting rate hike by RBA and BoC later in the week. Euro and Sterling are mixed for now.

Technically, Gold is also extending the rise from 161.51. Next target is 61.8% projection of 1616.51 to 1786.83 from 1728.48 at 1833.73. Sustained break there could prompt acceleration to 100% projection at 1898.80, which is close to 1900 handle. If happens, that could be a confirming signal of Dollar's selloff, which might be accompanied by EUR/USD's firm break of 1.0609 fibonacci level.

In Asia, at the time of writing, Nikkei is down -0.03%. Hong Kong HSI is up 3.46%. China Shanghai SSE is up 1.56%. Singapore Strait Times is up 0.49%. Japan 10-year JBG yield is up 0.0026 at 0.254.

BoE Dhingra: Interest rate should peak below 4.5%

BoE MPC member Swati Dhingra said in an Observer interview that interest rate in the UK should peak below 4.5% to avoid deepening and prolonging a recession.

"You do see a much deeper and a longer recession with rates being much higher. That is what I think we should all be worried about … are we going to end up lengthening and deepening the recession if the tightening continues at the pace it is?" she said.

She added that those expecting more large rate hikes are not considering the fall in investment and employment as projected for the new two years. "These are not trivial numbers. The market has clearly not realized how pessimistic that could be for the UK economy," she said. "The economic slowdown is here."

ECB Villeroy backs 50bps hike this month to finish first half of the game

ECB Governing Council member Francois Villeroy de Galhau said in an interview on Sunday, for this month's meeting, "it's desirable to bring rates to 2%, so a rise of 0.5 or 50 basis points."

Bringing interest rate to 2% will market the first half of the game of normalization. "In the second half of the match, rates will continue to rise but I can't say where this will stop," adding the the pace would be slower.

He also noted it would be "wise to start to reduce (the balance sheet) in 2023, beginning with the APP holdings in the "first half of the year, clearly but cautiously and progressively."

China Caixin PMI services dropped to 46.7, third month of contraction

China Caixin PMI Services dropped from 48.4 to 46.7 in November, below expectation of 48.8. PMI Composite dropped from 48.3 to 47.0, signalling a third successive monthly contraction in business activity. The rate of decline was the strongest since May.

Wang Zhe, Senior Economist at Caixin Insight Group said: "Manufacturing and services activity contracted in varying degrees, with the services sector hit harder by Covid outbreaks.... The prolonged pandemic has battered the economy. While the third wave has led to a softened slowdown on both supply and demand than the previous ones, there has been significant pain in the job market."

RBA and BoC to continue tightening

Two central banks will meet this week. RBA is expected to hike by 25bps to 3.10%, maintaining a "consistent" pace. The statement should reflect that tightening bias is maintained for another hike in February. But beyond that, the path would depend on the new economic projections to be published in February.

BoC is also widely expected to deliver another rate hike. But with interest rate more in restrictive level at 3.75%, the central are having more options, and thus opinions are divided. The chances of a 25bps and 50bps are roughly equal. Another consideration is whether the pause in tightening would start after this week's action, or next. So, there is room for some surprises.

Here are some highlights for the week:

• Monday: Australia AiG construction, MI inflation gauge; China Caixin PMI services; Eurozone PMI services final, Sentix investor confidence, retail sales; UK PMI services final; Canada building permits; US ISM services, factory orders.
• Tuesday: Japan labor cash earnings, household spending; RBA rate decision, Australia current account; UK PMI construction; Canada trade balance; US trade balance.
• Wednesday: Australia AiG services, GDP; China trade balance; Japan leading indicators; Swiss unemployment rate, foreign currency reserves; Germany industrial production; France trade balance; Italy retail sales; Eurozone GDP revision; US non-farm productivity; BoC rate decision.
• Thursday: Japan bank lending, current account, GDP final; Australia trade balance; US jobless claims; Canada Ivey PMI.
• Friday: New Zealand manufacturing sales; Japan M2; China CPI, PPI; Canada capacity utilization; US PPI, U of Michigan consumer sentiment.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6747; (P) 0.6791; (R1) 0.6840; More...

AUD/USD's rally is resuming and intraday bias is back on the upside for 0.6871 fibonacci level. For now, outlook will remain bullish as long as 0.6641 support holds, in case of retreat. However, break of 0.6641 will indicate rejection by 0.6871 and turn bias back to the downside instead.

In the bigger picture, a medium term bottom is in place at 0.6160 already. But it's too early to call for trend reversal. Nevertheless, even as a corrective move, rise from 0.6169 should target 38.2% retracement of 0.8006 to 0.6169 at 0.6871. Sustained trading above 55 week EMA (now at 0.6922) will raise the chance of the start of a bullish up trend. However, rejection by 0.6781 or 55 week EMA, followed by 0.6521 resistance turned support and retain medium term bearishness.

Economic Indicators Update

China Caixin PMI Services dropped from 48.4 to 46.7 in November, below expectation of 48.8. PMI Composite dropped from 48.3 to 47.0, signalling a third successive monthly contraction in business activity. The rate of decline was the strongest since May.

Wang Zhe, Senior Economist at Caixin Insight Group said: "Manufacturing and services activity contracted in varying degrees, with the services sector hit harder by Covid outbreaks.... The prolonged pandemic has battered the economy. While the third wave has led to a softened slowdown on both supply and demand than the previous ones, there has been significant pain in the job market."

Full release here.

ECB Governing Council member Francois Villeroy de Galhau said in an interview on Sunday, for this month's meeting, "it's desirable to bring rates to 2%, so a rise of 0.5 or 50 basis points."

Bringing interest rate to 2% will market the first half of the game of normalization. "In the second half of the match, rates will continue to rise but I can't say where this will stop," adding the the pace would be slower.

He also noted it would be "wise to start to reduce (the balance sheet) in 2023, beginning with the APP holdings in the "first half of the year, clearly but cautiously and progressively."

BoE MPC member Swati Dhingra said in an Observer interview that interest rate in the UK should peak below 4.5% to avoid deepening and prolonging a recession.

"You do see a much deeper and a longer recession with rates being much higher. That is what I think we should all be worried about … are we going to end up lengthening and deepening the recession if the tightening continues at the pace it is?" she said.

She added that those expecting more large rate hikes are not considering the fall in investment and employment as projected for the new two years. "These are not trivial numbers. The market has clearly not realized how pessimistic that could be for the UK economy," she said. "The economic slowdown is here."

Key Highlights

• EUR/USD is showing positive signs above the 1.0500 resistance.
• It broke a few hurdles near 1.0380 and 1.0480 on the 4-hours chart.
• GBP/USD extended gains and traded above the 1.2200 resistance.
• Gold price could rise further towards the $1,825 resistance zone.

EUR/USD Technical Analysis

The Euro started a fresh increase from the 1.0250 support zone against the US Dollar. EUR/USD cleared a major hurdle near 1.0380 to move into a positive zone.

Looking at the 4-hours chart, the pair settled above the 1.0450 zone, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The bulls even pushed the pair above the 1.0500 resistance and the last swing high at 1.0497. The pair is now showing positive signs above the 1.0500 level. On the upside, the pair is facing resistance near the 1.0580.

The next major resistance may perhaps be near 1.0620. A clear move above the 1.0620 and then 1.0650 might start another decent increase.

In the stated case, EUR/USD may perhaps test 1.0700. Any more gains could set the pace for a move towards the 1.0800 resistance zone.

An initial support is near the 1.0480 level. The next major support is near the 1.0440 zone. Any more losses might send the pair towards the 1.0350 support zone.

Looking at GBP/USD, the pair accelerated higher and surpassed the 1.2200 level. It seems like the bulls could aim a move towards the 1.2400 level.

Economic Releases

• Germany’s Services PMI for Nov 2022 - Forecast 46.4, versus 46.4 previous.
• Euro Zone Services PMI for Nov 2022 – Forecast 48.6, versus 48.6 previous.
• UK Services PMI for Nov 2022 – Forecast 48.8, versus 48.8 previous.
• US Services PMI for Nov 2022 – Forecast 46.1, versus 46.1 previous.
• US ISM Services PMI for Nov 2022 – Forecast 55.6, versus 54.4 previous.