Sample Category Title

• NZDCAD reversed from resistance level 0.8750
• Likely to fall to support level 0.6850

NZDCAD currency pair recently reversed down with the daily Shooting Star from the resistance level 0.8750 (which has been reversing the price form the start of December, as can be seen below).

The resistance zone near the resistance level 0.8750 was strengthened by the upper daily Bollinger Band and by the 50% Fibonacci correction of the downward impulse (i) from the start of November.

NZDCAD can be expected to fall further toward the next support level 0.6850 (low of the previous minor correction (b)).

Asia Market Update: Equity indices trade mixed amid holiday impact and recent gains on Wall St.; Evergrande's bond payment deadlines in focus.

General trend

• PBOC increased OMO cash injection amid focus on year-end and Evergrande.
• USD/JPY remained below ¥115.
• 2-year UST yield rises above 0.75% [highest since Mar 2020].
• US Natural Gas FUTs extend gain.
• US equity FUTs trade slightly lower in Asia.
• Nikkei 225 has pared gain after rising over 1.4%; Exporters trade generally higher after the overnight rise in USD/JPY.
• Hang Seng has traded slightly lower after the higher open; Casino and Tech names trade generally weaker [Macau casino names weaker on the report of the first omicron case in the gambling hub]; Property index rises.
• Shanghai Composite ended morning trading slightly lower (-0.2%).
• AU and NZ markets return from extended holiday on Wed.
• South Korea ex-dividend date is on Wed (Dec 29th).

Headlines/Economic data

Australia/New Zealand

• ASX 200 closed for holiday.

Japan

• Nikkei 225 opened +1.0%.
• (JP) JAPAN NOV JOBLESS RATE: 2.8% V 2.7%E, Job-To-Applicant Ratio: 1.15 v 1.16e, seasonally adj jobless rate M/M for the first time in 6-months.
• (JP) JAPAN NOV PRELIMINARY INDUSTRIAL PRODUCTION M/M: 7.2% V 4.8%E (record high increase); Y/Y: 5.4% V 2.9%E; Dec production m/m: 1.6% (prior +2.1%); Japan Govt raises industrial production assessment.

• 7974.JP President Furukawa: Supply of Nintendo Switch may decline in 2022 due to global chip shortage and continued logistics issues - Japan press.
• (JP) Japan Fin Min Suzuki: Prices still need to be watched closely, must watch inflation expectations on market, no plans at all now for an extra budget next year.

Korea

• Kospi opened +0.2%.
• (KR) South Korea Dec Consumer Confidence: 103.9 v 107.6 prior; Households' inflation expectation for next 12 months: 2.6% v 2.7% prior.
• 005380.KR Suspends hydrogen car project for Genesis model (had the goal of launching in 2025) - Korean press.
• 015760.KR To raise household gas prices in May, July and Oct.
• 036460.KR Planning to raise prices in Q1 of 2022 – press.
• (KR) South Korea Govt purchases 200Kt of rice to help stabilize prices – Yonhap.
• (KR) South Korea Finance Ministry: To cut tariffs on ~90 products during 2022, to strengthen competitiveness of small businesses and stabilize prices of key materials - Press.

China/Hong Kong

• Hang Seng opened +0.3%; Shanghai Composite opened +0.1%.
• Evergrande [3333.HK] Said to have ~$255M in bond coupon payments due on Dec 28th (Tues) [~$50.4M relates to Jun 2023 USD bond, ~$204.8M relates to Jun 2025 USD bond].
• (CN) China PBOC Open Market Operation (OMO): Sells CNY200B (largest in 2 months) in 7-day reverse repos v CNY50B prior; Net inject: CNY190B v CNY40B prior.
• (HK) Macau reports its 1st imported omicron case.
• (CN) China PBOC sets Yuan reference rate: 6.3728 v 6.3686 prior.
• 700.HK To only allow minors 1 hour of game playing each night over new year holiday - Sina.
• (CN) China State Planner releases new negative list for foreign investment; Restrictions on foreign ownership in passenger car manufacturing are removed, effective 2022 – press.
• (CN) According to Shanghai Securities News: China monetary policy in 2022 will focus on releasing liquidity from marginal easing into areas like small business.
• (CN) China CICC: CSRC's draft regulations stating that companies can list overseas as VIE if they register with regulators and meet compliance rules will help eliminate regulatory uncertainties facing both overseas-listed Chinese companies and investors.
• (CN) China Govt to increase forex (FX) market monitoring in 2022 - financial press.

North America

• (US) CDC shortens recommended time for isolation of people who test positive for COVID from 10 days to 5 days, if asymptomatic.

Europe

• (US) White House issues proclamation on aluminum and steel imports from EU.

Levels as of 00:15ET

• Hang Seng -0.1%; Shanghai Composite -0.2%; Kospi +0.1%; Nikkei225 +1.0%; ASX 200 closed for holiday.
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.2%; FTSE100 +0.1%.
• EUR 1.1331-1.1318; JPY 114.94-114.76; AUD 0.7241-0.7229; NZD 0.6823-0.6805.
• Commodity Futures: Gold +0.1% at $1,811/oz; Crude Oil +0.3% at $75.78/brl; Copper -0.4% at $4.45/lb.

Key Highlights

• GBP/USD started a fresh increase above the 1.3350 resistance.
• It broke a major bearish trend line at 1.3220 on the 4-hours chart.
• EUR/USD could gain pace if it breaks the 1.1350 resistance zone.
• Crude oil price rallied further above the $73.00 hurdle.

GBP/USD Technical Analysis

The British Pound started a fresh increase from 1.3200 against the US Dollar. GBP/USD broke the 1.3280 and 1.3300 resistance levels to move into a positive zone.

Looking at the 4-hours chart, the settled above the 1.3320 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair even climbed above the 61.8% Fib retracement level of the key decline from the 1.3513 swing high to 1.3160 low. It is now consolidating near the 1.3400 zone. An immediate resistance on the upside is near the 1.3450 level.

The next major resistance is near the 1.3500 level. A clear move above 1.3480 and 1.3500 could lead the pair further higher. The next major resistance is near 1.3620.

On the downside, an immediate support is near the 1.3380 level. The next major support is also near the 1.3350. Any more losses might send the pair towards the 1.3280 level.

Looking at EUR/USD, the pair could gain pace if there is a clear break above the 1.1350 resistance zone in the coming sessions.

Economic Releases

• US Housing Price Index for Oct 2021 (MoM) - Forecast +1.2%, versus +0.9% previous.
• S&P/Case-Shiller Home Price Indices for Oct 2021 (YoY) - Forecast +18.5%, versus +19.1% previous.

Daily Pivots: (S1) 153.57; (P) 154.02; (R1) 154.90; More...

GBP/JPY's rise from 148.94 continues today and hit as high as 154.43 so far. Current development suggest that correction from 158.19 is complete after defending 148.93 support. Intraday bias stays on the upside for 154.70 resistance. Firm break there should confirm this bullish case and target a test on 158.19 high. Nevertheless, break of 153.02 minor support will mix up the near term outlook and turn intraday bias neutral again first.

In the bigger picture, strong rebound from 148.93 key structural support will retain medium term bullishness. Firm break of 158.19 high will resume whole up trend from 123.94 (2020 low), to 61.8% retracement of 195.86 to 122.75 at 167.93. Nevertheless, firm break of 148.93 will bring deeper correction to 38.2% retracement of 123.94 to 158.19 at 145.10, and possibly further lower, as a correction to up trend from 123.94 at least

Yen is trading broadly lower this week, and remain soft in Asian session, following the rally in US stocks overnight. Dollar is also weak in risk-on markets, while Euro is not far away. On the other hand, Sterling is so far the strongest one, followed by Aussie. The economic calendar is very light in the holiday-shortened week. The movements in currencies will more likely follow overall risk sentiment than not.

Technically, we'll keep an eye on the development in CAD/JPY in the next few days. Correction from 93.00 appears to be complete at 87.42 after drawing support from medium term trend line. Break of 90.34 resistance will affirm this case and bring stronger rally back to retest 93.00 high. Such development, if happens, will help affirm the return of medium term weakness in Yen.

In Asia, at the time of writing, Nikkei is up 1.10%. Hong Kong HSI is down -0.09%. China Shanghai SSE is down -0.16%. Singapore Strait Times is up 0.50%. Japan 10-year JGB yield is down -0.0006 at 0.064. Overnight, DOW rose 0.98%. S&P 500 rose 1.38%. NASDAQ rose 1.39%. 10-year yield dropped -0.012 to 1.481.

S&P 500 surged to new record, heading to 5000 and above

S&P 500 rose 1.38% to new record at 4791.19 overnight. The development confirmed resumption of whole up trend from 202 low at 2191.86. For now, outlook will stay bullish as long as 4531.10 support holds. Next medium term target is 138.2% projection of 2191.86 to 3588.11 from 3233.94 at 5163.55, which is slightly above 5000 handle. That would be a key level for S&P 500 to overcome in the early part of next year.

Meanwhile, to solidify the case of full return of risk-on sentiment, we'd like to see NASDAQ breaking through 16212.22 high and DOW through 36565.73.

Gold pressing 1814 resistance, but losing momentum

Immediate focus is now on 1814.06 resistance in Gold. Firm break there will resume the rebound from 1752.32, and solidify the case that fall from 1877.05 has completed. In this case, stronger rally should be seen towards 1877.05 key structural resistance next.

However, note that Gold is already losing some upside momentum as seen in 4 hour 55 EMA. Rejection by 1814.06 will bring another falling leg to extend the pattern from 1814.06. But still, further rally will remain mildly in favor as long as 1784.78 support holds.

Japan industrial production surged record 7.2% mom in Nov

Japan industrial production rose 7.2% mom in November, well above expectation of 4.8% mom. That's the biggest gain on record, going to back to as early as 1978. Comparing to the same month of 2020, industrial production was up 5.4% yoy.

Based on a poll of manufacturers, the Ministry of Economy, Trade and Industry expects output to advance 1.6% in December and climb 5.0% in January.

Also released, unemployment rate edged up to 2.8% in November, from October's 2.7%.

Looking ahead

US will release S&P/Case Shiller house price, and house price index today.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 153.57; (P) 154.02; (R1) 154.90; More...

GBP/JPY's rise from 148.94 continues today and hit as high as 154.43 so far. Current development suggest that correction from 158.19 is complete after defending 148.93 support. Intraday bias stays on the upside for 154.70 resistance. Firm break there should confirm this bullish case and target a test on 158.19 high. Nevertheless, break of 153.02 minor support will mix up the near term outlook and turn intraday bias neutral again first.

In the bigger picture, strong rebound from 148.93 key structural support will retain medium term bullishness. Firm break of 158.19 high will resume whole up trend from 123.94 (2020 low), to 61.8% retracement of 195.86 to 122.75 at 167.93. Nevertheless, firm break of 148.93 will bring deeper correction to 38.2% retracement of 123.94 to 158.19 at 145.10, and possibly further lower, as a correction to up trend from 123.94 at least

Economic Indicators Update

Immediate focus is now on 1814.06 resistance in Gold. Firm break there will resume the rebound from 1752.32, and solidify the case that fall from 1877.05 has completed. In this case, stronger rally should be seen towards 1877.05 key structural resistance next.

However, note that Gold is already losing some upside momentum as seen in 4 hour 55 EMA. Rejection by 1814.06 will bring another falling leg to extend the pattern from 1814.06. But still, further rally will remain mildly in favor as long as 1784.78 support holds.

S&P 500 rose 1.38% to new record at 4791.19 overnight. The development confirmed resumption of whole up trend from 202 low at 2191.86. For now, outlook will stay bullish as long as 4531.10 support holds. Next medium term target is 138.2% projection of 2191.86 to 3588.11 from 3233.94 at 5163.55, which is slightly above 5000 handle. That would be a key level for S&P 500 to overcome in the early part of next year.

Meanwhile, to solidify the case of full return of risk-on sentiment, we'd like to see NASDAQ breaking through 16212.22 high and DOW through 36565.73.

Japan industrial production rose 7.2% mom in November, well above expectation of 4.8% mom. That's the biggest gain on record, going to back to as early as 1978. Comparing to the same month of 2020, industrial production was up 5.4% yoy.

Based on a poll of manufacturers, the Ministry of Economy, Trade and Industry expects output to advance 1.6% in December and climb 5.0% in January.

Also released, unemployment rate edged up to 2.8% in November, from October's 2.7%.

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Tis the week of Christmas, which means eggnog, crackling fireplaces and thin liquidity in the markets. With Australian markets closed on Monday, the Aussie has shown little movement today and this should continue in the North American session.

There are no Australian events on this week’s calendar, so any movement of AUD/USD will come from events abroad. The US has mostly tier-2 releases this week, so events in China may have a magnified impact on the Aussie. There were some positive developments on the weekend in China. The PBOC said it would provide more support for the economy. As well, there were media reports that Evergrande has resumed most its home construction projects. The mammoth company owes more than USD 300 billion in liabilities, and any news concerning Evergrande could have an impact on the Australian dollar, as China is Australia’s largest trading partner.

With a very light calendar, market participants will have some time to focus on the RBA, which has been in the headlines frequently in recent weeks and published the minutes of the December meeting just last week. The minutes were cautiously optimistic. with the bank saying that it did not expect the Omicron variant to derail the economic recovery. Still, the bank noted that Omicron “posed additional uncertainty for the near-term outlook.” Given the disparity between RBA guidance and the markets’ expectations for a rate hike, this language is a signal that the bank has no intention of raising interest rates anytime soon.

The month of December is all about volatility, and the Australian dollar has already delivered on that front, with significant movement. Liquidity will be thin as we head towards the New Year, which could mean further volatility, especially if there are further developments surrounding Omicron, good or bad.

AUD/USD Technical

• 0.7288 has held in resistance since mid-November. The next resistance line is at 0.7354
• There is support at 0.7119 and 0.7016