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WTI oil price regained traction after a gap-lower opening and subsequent dip on Monday, pressuring last Friday’s three-week high, posted after Friday’s 5.3% rally.

Signals that the Fed may ease its firm hawkish stance in tightening monetary policy in coming meetings, deflated dollar and lifted oil prices, with news that China will stick to its zero-Covid policy (after Friday’s rumors of possible easing) had a limited and short-lived negative impact on oil prices.

Friday’s strong bullish acceleration generated strong bullish signal on close above pivots at $90.69 (Fibo 76.4%) and $91.62 (falling 100DMA).

Bulls eye key near-term barrier at $93.60 (Oct 10 top), break of which would add to reversal signal on completion of failure swing pattern on daily chart and expose next key resistance at $94.36 (Fibo 38.2% of $123.56/$76.25).

Bullish daily studies are supportive, but overbought conditions suggest a pause for consolidation, with dips to be ideally contained by broken $90 level, which guards pivotal support at $89.06 (daily cloud top).

Res: 92.82; 93.60; 94.36; 95.02.
Sup: 91.62; 90.69; 90.00; 89.06.

The US 500 stock index is moving slightly higher, approaching the 50-day simple moving average (SMA), holding well above the crucial 200-weekly SMA, which is acting as strong support level near 3,635. The RSI indicator is pointing slightly up near the neutral threshold of 50, while the MACD is moving sideways near its trigger and zero lines.

If price action jumps above the 50-day SMA (immediate resistance), there is scope to test the 100-day SMA around the 3,920 barrier. Clearing this key level would see additional gains towards the 200-day SMA at 4,080.

If the 3,635 support fails, then the focus would shift to the downside towards 3,500, which if breached would increase downside pressure and bring about a reversal of the trend. From here, the index would be on the path towards the 3,233 barrier, registered in October 2020.

Overall, the US 500 index has been negative in the long-term timeframe and only a climb above the 200-day SMA may change the outlook to bullish.

The Canadian dollar is almost unchanged today, trading at 1.3483.

Canadian dollar flies on job gains

It was a day to remember for the Canadian dollar, which rocketed almost 2% higher on Friday. The driver behind the spike was a massive gain in jobs at 108, 300 in October, up from 20,000 in September. The reading crushed the forecast of 10,000. Wage growth rose to 5.5%, up from 5.2%, while the unemployment rate was unchanged at 5.2%.

The employment gain was especially impressive as it was spread across the economy and was made up entirely of full-time jobs. The Bank of Canada, which hiked rates to 3.75% after a 50 basis point increase in late October is likely to respond with additional oversize hikes. The markets have priced in a 70% chance of a 50 basis point increase in December, and the terminal rate is projected at 4.5%.  At the October meeting, BoC Governor Macklem said that the BoC was closer to ending the tightening cycle, while acknowledging that the BoC was far from achieving its goal of lowering inflation to its 2% target. Headline inflation has slowed to 6.9%, but core inflation has persisted.

In the US, the nonfarm payrolls sent mixed and somewhat confusing signals to the market. The October reading of 261,000 was stronger than the consensus of 200,000, but it marked the smallest gain since December 2020. The unemployment rate rose to 3.7%, up from 3.5%, while wage growth rose to 5.5% YoY, up from 5.2%. The latter release is likely to keep the Fed concerned about inflationary pressures.

Bottom line? The jobs report indicates that the labour market remains robust and although a 50-bp hike is likely, a 75-bp move remains a possibility. There is one more employment report and two more inflation releases ahead of the December 14^th FOMC decision, each of which should be treated as a market-mover.

USD/CAD Technical

• USD/CAD faces resistance at 1.3420 and 1.3586
• There is support at 1.3364 and 1.3248

Spot gold holds firm bullish stance and consolidating under three-week high, posted after 3.2% rally on Friday (the biggest one-day rally since 24 June 2016), sparked by US labor data which raised hopes that the Fed may ease its aggressive stance in raising interest rates in the near future.

Fresh rally retraced over 50% of the $1729/$1617 bear-leg, leaving a double bottom ($1616/17), with penetration and close within thick daily cloud, adding to bullish signals.

Improved daily studies (strong bullish momentum / 10/20/30 DMA’s in positive setup) underpin recovery, which needs extension through $1680/$1686 pivots (55DMA / Fibo 61.8%) to confirm bullish stance and open way for attack at psychological $1700 barrier and daily cloud top ($1711).

Broken daily Kijun-sen / 50% retracement marks initial support at $1673, guarding more significant daily cloud base ($1669), loss of which would weaken near-term structure and risk deeper pullback.

Res: 1680; 1686; 1700; 1718.
Sup: 1673; 1669; 1660; 1649.

Cable surges above 1.14 handle in European trading on Monday, in extension of Friday’s bounce from strong support at 1.1150 (Fibo 38.2% of 1.0348/1.1645) where a double bottom was left.

Fresh advance was sparked by renewed risk mode and so far retraced slightly over 61.8% of 1.1645/1.1146 bear-leg, generating a reversal signal.

Daily studies are turning to bullish configuration as positive momentum is strengthening and RSI / Stochastic are heading north.

Close above daily Tenkan-sen (1.1395) is needed to keep bulls intact for push through pivots at 1.1500/1.1527 (psychological / Fibo 76.4%) that would confirm reversal and open way towards Oct monthly peak at 1.1645.

Broken top of thick daily cloud (1.1321) marks pivotal support, loss of which would weaken near-0term structure.

Res: 1.1470; 1.1500; 1.1527; 1.1566.
Sup: 1.1395; 1.1337; 1.1290; 1.1264.

The dollar turns to red in early Europe after initial gains in Asia on Monday and probes again through cracked Fibo support at 146.85 (23.6% of 130.39/151.94 ascend).

Renewed risk sentiment keeps the dollar under pressure, as traders focus on the US mid-term elections and prepare for the likely scenario in which Republicans would take control of Congress and possibly the Senate that would result in a split government.

The risk appetite is likely to remain, according the scenario of potential political gridlock, as markets performed positively after the previous mid-term elections.

Fresh weakness broke again below the trendline support of a larger bull-channel that raises fears of reversal.

Repeated close below Fibo support at 146.85 to generate initial bullish signal, with extension and break below 145.10 pivot (Oct 27 trough) to boost negative signal on completion of failure swing pattern on daily chart. Daily Tenkan-sen and Kijun-sen turned to bearish setup and structure is weakening on rising negative momentum, adding to signals that near-term focus is shifting lower.

Repeated close below broken daily Kijun-sen (147.73) to keep bearish stance intact.

Res: 147.10; 147.73; 148.52; 148.84.
Sup: 146.55; 145.67; 145.10; 143.71.

The Euro keeps firm tone at the beginning of the week and consolidating after 2.1% rally on Friday (the biggest daily advance in six years), sparked by renewed risk appetite on speculations that China could soon end its Covid restrictions, but the story was short-lived after China said on Monday that easing of zero-Covid policy is unlikely in the near future.

Friday’s strong rally generated bullish signal on marginal close above thick daily cloud (cloud top at 0.9954 is reinforced by Fibo 61.8% of 1.0093/0.9730 bear-leg) but the signal requires confirmation on sustained break above cloud top that would open way for test of parity level and falling 100DMA (1.0046) in extension.

Bullish configuration of daily studies supports the action, which needs to remain above broken 10DMA/50% retracement of 1.0093/0.9730, to keep bullish bias.

Res: 0.9976; 1.0000; 1.0046; 1.0093.
Sup: 0.9954; 0.9911; 0.9886; 0.9855.

Eurozone Sentix Investor Confidence rose from -38.3 to -30.9 in November, above expectation of -35. Current situation index rose from -35.5 to -29.5. Expectations index rose from -41.0 to -32.3, highest since June this year.

Sentix said: "At the beginning of November, the sentix economic indices in Euroland surprise on the positive side. The overall index rises by 7.4 points to -30.9, which is still not a trend reversal signal. But the rise in situation and expectation values shows how sensitively investors react in their economic expectations to signals from the energy market.

"For this is the cause of the hopeful changes. October showed higher temperatures than usual and this means that gas storage facilities in Germany, for example, are full to the brim, more than expected for November. Spot market gas prices collapsed in response. Concerns about a catastrophic gas shortage are fading."

Full released here.

Gold has been losing ground since early March, generating a profound structure of lower highs and lower lows within a descending channel. However, in the previous daily session, bullion managed to profoundly cross above its restrictive trendline before the 50-day simple moving average (SMA) capped its upside.

The momentum indicators currently suggest that bullish forces are strengthening. Specifically, the RSI has jumped above its 50-neutral mark, while the stochastic oscillator is ascending after bouncing at its 20-oversold level.

To the upside, bullish actions could propel the price towards 1,688, which has acted as both support and resistance in the past two months. Conquering this barricade, the bulls could aim for the October high of 1,730. Piercing through this region, gold may ascend towards 1,765 or higher to test the August high of 1,807.

Alternatively, if the positive momentum wanes, initial support could be met at the 1,653 level. A violation of this zone could open the door for the 30-month low of 1,614. Failing to halt there, the price could descend to form fresh multi-month lows, where the April 2020 support of 1,566 might provide downside protection.

In brief, gold appears to be in recovery mode after managing to break above its long-term descending channel. Nevertheless, if the price falls again below the latter, the precious metal will most likely extend its downtrend.

EURUSD experienced its fastest daily rally in two years on Friday, advancing by 2.0% to an intra-day high of 0.9965.

The swift bounce back took place at the bottom of a short-term ascending channel, adding credence to the series of higher highs and higher lows that emerged following the plunge to a 20-year low of 0.9535. The momentum signals are also sending some encouraging signals as the RSI has forcefully returned above its 50 neutral mark and the stochastics have resumed their positive trajectory. However, some caution is warranted as the MACD has yet to climb above its red signal line despite its latest upturn.

Besides, with the price being trapped below parity and the nearby 0.9965 resistance, downside corrections cannot be ruled out. Note that the 50% Fibonacci retracement of the 1.0367–0.9535 downleg is also within this neighborhood. Hence, a decisive close above this region is probably needed for the price to accelerate towards the upper surface of the channel seen around 1.0150, unless the previous high of 1.0092 halts the rally first. If the bulls manage to overcome September’s bar of 1.0917 too, the recovery could strengthen towards the 200-day exponential moving average (EMA) currently near the August top of 1.0367.

In the event sellers dominate, immediate support could again develop within the 0.9853–0.9785 region formed by the 38.2% Fibonacci and the channel’s lower band. If downside pressures press the price below the 23.6% Fibonacci of 0.9730 too, all eyes will turn to the crucial 0.9600–0.9535 floor. A violation of this base could bring the 0.9400 level next into focus.

In brief, EURUSD seems to have the bulls’ back, though some extra effort is needed above 0.9965–1.0000 to generate fresh buying interest.