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WTI oil crude oil extends recent decline and hit the lowest level for the year. Today's move is part of the selloff in reaction to OPEC+ decision to stick with their existing pace of production cut, rather then raising it. Overall risk sentiment is not helping while China's easing of pandemic restrictions is largely ignore.

With 74.10 support broke, WTI is resuming whole down trend from 131.82. Further decline is now expected as long as 78.21 minor support holds. Next target is 61.8% projection of 124.12 to 76.61. from 94.25 at 64.88. Break of 78.21 will delay the bearish case, but risk will stays on the downside with 83.82 resistance intact.

• GBPCHF reversed from resistance level 1.1530
• Likely to fall to support level 1.1330

GBPCHF recently reversed down from the powerful resistance level 1.1530 (former double bottom from July), strengthened by the upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward impulse from June.

The downward reversal from the resistance level 1.1530 stopped the earlier short-term impulse waves (iii) and C.

GBPCHF can be expected to fall further toward the next support level 1.1330 (low of the previous minor correction (ii)).

• EURGBP reversed from support level 0.8580
• Likely to rise to resistance level 0.8670

EURGBP recently reversed up from the key support level 0.8580 (which has been reversing the price from the start of September), standing near the lower daily Bollinger Band.

The upward reversal from the support level 0.8580 started the active short-term correction (ii) – which belongs to wave (c) from the start of November.

EURGBP can be expected to rise further toward the next resistance level 0.8670 (top of the previous minor correction iv).

The Canadian dollar has edged lower on Wednesday. In the European session, USD/CAD is trading at 1.3686, up 0.25%. December has started on the wrong foot, as the Canadian dollar is yet to post a winning session.

Will BoC push the 25 or 50 button?

The Bank of Canada hasn’t hesitated to put the rate pedal to the floor, as it continues to battle high inflation. In July, the BoC raised rates by a full point but has been gradually easing since then, delivering a 75 bp hike followed by a 50 bp increase. Will the easing trend continue at today’s policy meeting? The markets have priced in a 72% likelihood of a 25 bp move, which would bring the cash rate to an even 4.0%. A 50-bp hike would be considered a surprise hawkish move and would likely give the Canadian dollar a boost.

The previous meeting in October was also live, with a 50/50 split over whether the BoC would raise rates by 50 or 75 bp. In the end, the BoC opted for the smaller hike, with Governor Macklem warning that he expected a ‘significant slowing of the economy to occur’. Investors will be keeping an eye on the rate statement and Macklem’s follow-up presser to see if his view has changed or not. Inflation was unchanged in October at 6.9% but is well below the 8.1% clip in June. Macklem’s comments about the health of the economy and the direction of inflation could affect the movement of the Canadian dollar.

With the New Year just around the corner, what can we expect from the BoC in 2023? The terminal rate is projected at around 4.5%, which would mean several more rate hikes early next year. Of course, rate policy will be heavily dictated by key data such as employment, consumer spending and inflation. In addition, the BoC will want to keep pace (or close to it) with the Federal Reserve, which is widely expected to raise rates by 50 bp next week, to prevent the Canadian dollar from falling further.

USD/CAD Technical

• There is resistance at 1.3762 and 1.3879
• USD/CAD has support at 1.3619 and 1.3502

Last month, China’s harsh lockdown measures negatively impacted foreign trade. Exports fell by 8.7% YoY; imports lost 10.6% YoY. Economists, on average, were expecting half the rate of decline. Trade surplus shrank to $69.84B in November from $85.15B a month earlier and is much weaker than the forecasted $79B.

Overall, the figures are far from disastrous. Cumulatively, over 11 months, exports are up 9.1%, and imports are up 2%, marking a slowdown but not yet a decline. This is the high price of tight travel restrictions, easing gently in recent weeks. The loosening of these restrictions looks more like a concern for the economy but not a concession to protesters.

China’s foreign trade decrease in November should also be seen as a sign of how monetary tightening and the severity of energy prices in Europe are hurting the economy. For markets, such data is a new reason to reduce risk appetite, which we see early on Wednesday. Also, since the beginning of the week, the offshore renminbi has stabilised just below 7.0 to the dollar after an impressive 5.5% increase during November.

The released batch of data may be followed by further easing the zero- covid policy to avoid unnecessarily restraining of the economy. Still, it is also possible that we will see further monetary policy easing (good for the stocks and bad for the renminbi).

NZDUSD came under pressure marginally below the August high of 0.6467 at the start of the week, having gained almost 15% since the bottom at a 31-month high of 0.5510 in mid-October.

Market sentiment may remain tepid, according to the momentum indicators. With the RSI losing steam near its 70 overbought mark, the stochastics struggling to post new highs above 80, and the MACD set to cross below its red signal line, a downside correction cannot be ruled out.

The bearish scenario, however, may not come into play unless the price retreats below the 0.6300 round-level and the 200-day simple moving average (SMA), which currently overlaps with the 50% Fibonacci retracement of the 0.7032-0.5510 downleg. The 20-day SMA could next support the market around 0.6212. If selling forces dominate, the decline could stretch towards the 38.2% Fibonacci of 0.6093.

Alternatively, a close above the 0.6350 barrier could get an extension towards the August resistance area of 0.6467. Slightly higher, the 61.8% Fibonacci of 0.6550 could be another spot to keep a close eye. A successful move above that bar may stage a quick rally towards the crucial long-term descending trendline that joins all the highs from February 2021 at 0.6770.

In brief, NZDUSD is in a neutral mode in the short-term picture, waiting for a new direction either above 0.6350 or below 0.6300-0.6273.

USDJPY recently bounced off the 200-day simple moving average (SMA) after the fall towards the three-and-half-month low of 133.55. The price is trying to create a bullish correction as in the short-term timeframe the bias is bearish.

Technically, the MACD is gaining some momentum above its trigger line in the negative region, while the RSI is sloping slightly upwards to confirm the recent upside movement. However, the 20- and 40-day SMAs are still moving down, approaching the current market price.

Should the price move up, the 20-day SMA at 138.75, which the bears were unable to break the last month, could provide immediate resistance. Moving higher, the focus will shift to the 143.45-145.00 area, which encapsulates the 50-day SMA.

In the alternative scenario, traders would eagerly be looking for a break lower, meeting the 200-day SMA at 135.00. If that’s the case, the rally could last until the 133.55 barrier, ahead of the 130.37-131.35 support zone, confirming the near-term bearish outlook.

Summarizing, USDJPY has been negative over the last one-and-a-half-months despite the latest upside movement. Any moves beneath the 200-day SMA may change the broader outlook to bearish as well. 

The USDJPY advances for the third consecutive day and cracks initial barrier at 137.94 (Fibo 23.6% of 151.94/133.62 descend).

The dollar received fresh boost from renewed warnings from economists that the US economy is heading into recession, despite recent encouraging signals from solid US economic data which revived hopes that the largest world economy may skip recession.

Recovery emerged after a bear-trap under ascending 200DMA, with initial signals of reversal pattern forming on daily chart, though bulls would require more evidence, as overall structure is still bearish.

Break of 137.94 would generate initial bullish signal which would require lift above pivotal barriers at 140.00/60 (psychological / Fibo 38.2% of 151.94/133.62) to sideline short-term bears.

Broken 5DMA (136.17) marks initial support which should keep the downside protected and maintain bear-term bullish bias.

Caution on drop below 200DMA (134.83) loss of which would signal bearish continuation.

Res: 137.94; 138.81; 140.00; 140.62
Sup: 136.78; 136.17; 134.83; 133.62

The British Pound started a downside correction from the 1.2350 zone against the US Dollar. The GBP/USD pair declined below 1.2300 to move into a short-term bearish zone.

The pair even settled below the 1.2220 level and the 50 hourly simple moving average. It is now consolidating near the 1.2130 level, with an immediate resistance at 1.2150 on FXOpen.

The main hurdle is near the 1.2180 level and a connecting bearish trend line on the hourly chart. If there is a clear upside break above the 1.2180 resistance, the pair could rise steadily towards the 1.2220 level in the near term. The next major resistance sits near the 1.2300 level.

On the downside, the first major support is near the 1.2120 level. The main support is forming near the 1.2100 level. A break below the 1.2100 support could push the pair towards the 1.2000 support.

Market picture

The crypto market remains detached from movements in traditional financial markets. Bitcoin continues to hover around $17K, despite the S&P 500 is down 1.5% and the Nasdaq down 2%. The capitalisation of the entire crypto market is unchanged overnight, remaining at $853bn.

Cryptocurrency enthusiasts are waiting for ideas and news that could move the market forward. And the very fact that stocks are falling without dragging crypto down points to the technical nature of the latest correction after an impressive rally.

Glassnode recorded a weakening pace of bitcoin investor capitulation. The trend in realised losses after the FTX collapse has subsided, while there has been a positive shift in on-chain activity.

On weekly timeframes, the current lull forms a bullish divergence between the price and RSI chart, with lower local lows corresponding to higher index levels. This is a signal of bottom formation, often followed by a reversal to the upside. It is usually relatively slow and fragile at the first stage. At the end of 2018, we saw almost four months of near-zero momentum before a rally began that tripled the price.

News background

Bitcoin’s mining difficulty fell 7.2% to 34.24 terahash amid a shutdown of outdated, unprofitable ASIC miners. This is the most significant drop since July 2021, when China banned mining.

Goldman Sachs plans to spend “tens of millions of dollars” to buy or invest in cryptocurrencies whose valuations have fallen due to the FTX collapse.

Texas Senator Ted Cruz said cryptocurrency mining is essential to the US energy system. He said he invests in bitcoin because the government does not control it and only buys BTC every week.

Mad Money show host Jim Cramer believes the cryptocurrency market will collapse in 2023, so he urged investors to sell all their crypto assets.

Renowned cryptocurrency sceptic Peter Schiff has again predicted a massive collapse of the entire cryptocurrency market. He believes the BTC exchange rate could fall as low as $5000.

Former trader Jordan Belfort, known as “The Wolf of Wall Street” and who previously predicted the collapse of the FTX exchange, urged investors to stay away from all cryptocurrencies except Bitcoin and Ethereum.