Sample Category Title

For the 24 hours to 23:00 GMT, Gold declined 0.27% against the USD and closed at USD1226.40 per ounce on Friday, amid strength in the US dollar.

In the Asian session, at GMT0400, the pair is trading at 1230.10, with gold trading 0.30% higher against the USD from Friday’s close.

The pair is expected to find support at 1224.23, and a fall through could take it to the next support level of 1218.37. The pair is expected to find its first resistance at 1233.53, and a rise through could take it to the next resistance level of 1236.97.

The yellow metal is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Silver declined 0.94% against the USD and closed at USD14.25 per ounce on Friday, tracking losses in gold prices.

In the Asian session, at GMT0400, the pair is trading at 14.38, with silver trading 0.95% higher against the USD from Friday’s close.

The pair is expected to find support at 14.19, and a fall through could take it to the next support level of 14.01. The pair is expected to find its first resistance at 14.49, and a rise through could take it to the next resistance level of 14.60.

The white metal is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Crude Oil declined 1.30% against the USD and closed at USD50.68 per barrel, amid mounting worries over excess global supply. Additionally, fresh figures from Baker Hughes disclosed that the number of active oil rigs rose for the fifth-straight month by 2 to 887 in the week ended 30 November.

In the Asian session, at GMT0400, the pair is trading at 53.55, with oil trading 5.66% higher against the USD from yesterday’s close.

The pair is expected to find support at 50.85, and a fall through could take it to the next support level of 48.15. The pair is expected to find its first resistance at 55.05, and a rise through could take it to the next resistance level of 56.55.

Crude oil is trading above its 20 Hr and 50 Hr moving averages.

Key Highlights

• The Euro failed to break the 1.1400 resistance and declined against the US Dollar.
• There are two major bearish trend lines in place with resistance at 1.1375 and 1.1410 on the 4-hours chart of EUR/USD.
• The Euro Zone CPI (Prelim) for Nov 2018 increased 2% (YoY), less than the last 2.2%.
• Today, the Euro Zone Manufacturing PMI for Nov 2018 will be released, which is forecasted to remain at 51.5.

EURUSD Technical Analysis

This past week, the Euro recovered from the 1.1265 support zone against the US Dollar. However, the EUR/USD pair struggled to break the 1.1400 resistance and later declined.

Looking at the 4-hours chart, the pair traded just above the 1.1400 level and tested the 200 simple moving average (green, 4-hours). Sellers defended more gains, resulting in a downside push below the 1.1375 and 1.1350 support levels.

The pair even broke the 50% Fib retracement level of the last wave from the 1.1267 low to 1.1402 high. Moreover, there was a close below the 1.1350 level and the 100 simple moving average (red, 4-hours).

The pair is clearly under pressure below 1.1350 and it seems like it could decline further. The main support on the downside is at 1.1265, below which the pair could decline towards the 1.1220 support zone.

On the upside, there are many hurdles near 1.1350-60 and the 100 SMA. Moreover, there are two major bearish trend lines in place with resistance at 1.1375 and 1.1410 on the same chart. A successful close above 1.1400-1.1410 is needed for buyers to gain strength in the near term.

Fundamentally, the Euro Zone CPI (Prelim) for Nov 2018 was released recently by the Eurostat. The market was looking for an increase of 2% in the Euro Zone CPI compared with the same month a year ago.

The result was in line with the forecast as the Euro Zone CPI increased 2%, but it was less than the last 2.2%. Moreover, the Core CPI increased 1%, less than the market forecast of 1.1%.

Therefore, the EUR/USD pair may continue to struggle to clear the 1.1400 resistance area and it could consolidate above 1.1220 in the short term.

Economic Releases to Watch Today

• Germany’s Manufacturing PMI for Nov 2018 – Forecast 51.6, versus 51.6 previous.
• Spanish Manufacturing PMI for Nov 2018 – Forecast 51.6, versus 51.8 previous.
• Euro Zone Manufacturing PMI Nov 2018 – Forecast 51.5, versus 51.5 previous.
• UK Manufacturing PMI for Nov 2018 – Forecast 51.5, versus 51.1 previous.
• US Manufacturing PMI for Nov 2018 – Forecast 55.4, versus 55.4 previous.
• US ISM Manufacturing PMI for Nov 2018 – Forecast 57.8, versus 57.7 previous.

STOCKS

The unexpected Trump-Xi patchup of sorts yesterday has triggered a strong pick-up in the Shanghai (2643, +2.14%) and the Nikkei (22634, +1.28%) today. Most Equity indices are expected to do well today, but still need to break above some important Resistances in order to move onto higher ground.

However, there is important Resistance at 2650 to be reckoned with on the Shanghai for today-tomorrow. A break thereof is needed to negate whatever little chances of a fall towards 2500-2450 might be left.

Decent rally in the Nikkei (22634, +1.28%), past 22500. Might target 23000 if it sustains.

The Nifty (10876.75, +18.05, +0.17%) is quoted at 10976 in line with our expectation of a test of 11000 for today. It might now enter into a bit of a sideways consolidation before an eventual break above 11000. Overall, India is outperforming the USA and China just now.

The DAX (11257.24, -40.99, -0.36%) had been subdued/ consolidative on Friday as well. Maybe it will now pick up today to rise towards 11600 as expected.

Friday had seen a decent rise in the Dow (25538.46, +199.62, +0.79%), and can move up some more today as well, but has important Resistance at 25750-60, which could trigger some profit-taking as well.

COMMODITIES

Major commodities are trading higher today, starting the month on a positive note.

Crude prices have risen possibly on news of a 90-day pause on additional trade tariffs between China and USA. Markets expect announcement of oil supply cuts by OPEC in its meeting with Russia on 6th Dec. Before that we may see some positive trades in the Crude this week.

Brent (62.45) and WTI (53.75) are trading in the green and could be in a possible sideways mode, indicating that the fall in the current downmove could be over. While Brent remains above 62, it could move higher to test 64-65 in the near term. WTI could be headed towards 55-56 just now.

Gold (1229.10) has been strangely trading very narrow and almost stable for an extended session contrary to expectations. Difficulty to break above 1230 is a concern just now and could be vulnerable to another fall back to 1210-1200. Medium term direction of whether the price could remain above 1230 or move higher towards 1250 may be decided by this week or latest next week without further extension of the current sideways range-move.

Silver (14.36) is trading just at immediate resistance on the daily chart. While the resistance holds, we could see a dip back towards 14.00-13.75 in the near term before eventually breaking on the upside towards 15.

Copper (2.8460) has come up sharply and could test immediate resistance near 2.85. This is crucial level to keep an eye on as a break above 2.85 on the upside would boost further upmove in the longer run towards 2.90 or even higher. But a failure to break above 2.85 could again push the price back towards 2.65/70 in the next 1-2 weeks. Preference is for an upmove above 2.85.

FOREX

Some relief has set into the markets after news stated a pause in introduction of new tariffs as US-China trade talks are likely to intensify. This has helped in lifting up the market sentiment which had been weighed down by the US-China trade war tensions that could lead to economic slowdown.

Almost all currencies are trading weak against the US Dollar except Aussie.

Dollar Index (96.96) is overall in an uptrend. 96.60/50 are important support levels that could pull back the index towards 97.50-97.75 in the near term.

Euro (1.1351) is trading in the narrow 1.13-1.14 region on the daily candles. While resistance at 1.14 holds, Euro looks sideways to bearish for the near term.

Dollar Yen (113.60) has come off from levels just below resistance at 114 and while that holds, Dollar-Yen looks bearish towards 113. Immediate view is bearish.

Pound (1.2770) is trading sideways just above important support at 1.27. In the near term, 1.27 is likely to hold pushing the index higher towards 1.2850.

Aussie (0.7358) saw a sharp gap up opening breaking above the immediate resistance near 0.7350. While the currency trades higher above 0.7350, a further rise towards 0.7345 is on the cards for the near term. View is bullish.

Dollar Rupee (69.60) is likely to hold above support at 69.40 today and eventually move towards 70 and higher in the near term. After the recent and sharp fall in the last couple of weeks, some sideways to upward correction is possible now in the near term.

INTEREST RATES

US Yields (2Yr 2.83%, 5Yr 2.87%, 10Yr 3.04%, 30Yr 3.33%) do not seem to be breaking below important Supports like 2.80% on the 2Yr and 3.00% on the 10Yr yet. With Crude seeing a good rally today, we have to see if the US Yields also see a bit of a rally ahead of the FOMC, now that Powell's speech and the FOMC Minutes are past.

The Indian 10Yr GOI (7.6066%) is still trending lower, albeit at a slower pace, and may still target 7.55%, taking the Indo-US 10Yr Spread (4.6136%) lower as well.

Just a day after the cease-fire agreement with China. Trump just tweeted that China has agreed to "reduce and remove tariffs on cars" from the US. And the current tariff is 40%.

It's uncertain what Trump means by "reduce and remove". Would China just reduce but not remove the auto tariffs? Or technically speaking, is removing tariffs considered reducing tariffs too? Or China is going to reduce tariffs for some cars and remove tariffs for others? Anyway, here is Trump's tweet.

https://twitter.com/realDonaldTrump/status/1069441198157455360

The Australian Industry Group Performance of Manufacturing Index dropped sharply by -7 to 51.3 in November. That's the lowest level since October 2017. It's still the twenty-six months of uninterrupted recovery and expansion, longest streak since 2005. Also from Australia, building approvals dropped -1.5% mom in October, below expectation of -1.4% mom. Company operating profits rose 1.9% qoq, below expectation of 2.9% qoq. From New Zealand terms of trade index dropped -0.3% qoq, below 0.1% qoq expectation.

But overall, AUD/USD couldn't care less about the weak data. It surges sharply today on news of US-China trade war ceasefire. AUD/USD should now be in medium term rebound to 0.7446 fibonacci level.

Japan PMI manufacturing was finalized at 52.2 in November, revised up from 51.8. Markit noted that new orders rise at joint-weakest rate in just over two years. Also production growth moderates and business confidence drops for sixth month running.

Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:

"The fall in Japan's manufacturing PMI tells us that October's bounce-back was indeed a transitory jump back to normality following weather-related disruptions in September. The underlying picture remains subdued, with momentum tilting towards a slowdown. New orders rose at just a slight pace as goods producers raised concerns about the demand environment. Subdued sales performances reflected fragile conditions both domestically and abroad. According to firms, weak demand from China and parts of Europe hampered export growth.

"As such, expectations for future growth were reduced, with business confidence towards the year-ahead sliding for a sixth straight month to the lowest in two years."

Full release here.

Also from Japan, capital spending rose 4.5% in Q3, much lower than expectation of 8.6%.

China Caixin PMI rose 0.1 to 50.2 in November, slightly above expectation of 50.1. Markit noted in the release that production is unchanged for the second month running. There is further in crease in total new work, but export trends remains subdued. Meanwhile, input cost inflation softens to seven-month low.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

"The Caixin China General Manufacturing PMI inched up to 50.2 in November from the previous month. The subindex for new orders continued to rise, pointing to improved demand, which may be due to a recent raft of government policies aiming to support the private sector. The gauge for new export orders dropped further into contractionary territory in November, indicating the impact of the Sino-U.S. trade friction on exports.

"The employment subindex likewise dipped further into negative territory. The output subindex dropped to the dividing line of 50 that separates expansion from contraction, marking its lowest level since June 2016, which implied production was facing a slowing trend. One key reason for the slowdown may be the obvious increase in stocks of finished goods.

"The subindex for stocks of purchased items remained unchanged and stayed in positive territory. The measure for future output, which reflects manufacturers' production outlook over the next year, stayed in positive territory and rose modestly, suggesting business confidence was relatively stable. The subindex for suppliers' delivery times picked up marginally despite remaining in negative territory, implying capital turnover among goods producers slightly improved slightly.

"The gauges for output charges and input costs both dropped significantly, in line with the weakening domestic commodities market, which was impacted by plummeting oil prices across the globe, expectations about the loosening of restrictions on factory production that governments impose on the grounds of environmental protection, and weakening demand. Upward pressure on prices of industrial products was eased somewhat.

"Overall, domestic demand across the manufacturing sector improved in November, while overseas demand was still subdued. Production slowed, confidence was relatively stable, capital turnover was improved, and upward pressure on industrial product prices eased. China's economy was weak, but did not show significant signs of deterioration."

Full release here.

While it's merely a cease-fire for 90 days agreement between the US and China, Asian markets' responses are overwhelmingly positive. At this point, China SSE is up 2.91%. Hong Kong HSI is up 2.68%. Nikkei is up 1.46% and Singapore Strait Times is up 2.12.%.

The HK HSI gaps up sharply and is now rising 2.68% at 27217.25. The development is rather positive as rebound from 24540.63 medium term bottom should extend to 27957 fibonacci level next, which is close to 28000 handle.

USD/CNH also dips to 6.892 as the off shore Yuan rebounds. Though, it's quickly back above 6.91 as there is no follow through buying. And. Technically, sustained break of 55 day EMA is needed to indicate that Yuan has bottomed in medium term (or USD/CNH topped in medium term).