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Daily Pivots: (S1) 1.2558; (P) 1.2590; (R1) 1.2640; More...

USD/CAD's rise from 1.2286 resumes by taking out 1.2603 temporary top and intraday bias is back on the upside. As noted before, fall from 1.2947 has possibly completed with three waves down to 1.2886. Further rise should be seen to retest 1.2894/2947 resistance zone. On the downside, however, break of 1.2491 support will revive near term bearishness and bring retest of 1.2886 low.

In the bigger picture, medium term outlook is neutral for now. The pair drew support from 1.2061 cluster and rebounded. Yet, upside was limited below 38.2% retracement of 1.4667 to 1.2005 at 1.3022. On the upside, firm break of 1.3022 should affirm the case of medium term bullish reversal. However, break of 1.2286 will turn focus back to 1.2005 low again.

Daily Pivots: (S1) 0.7248; (P) 0.7277; (R1) 0.7294; More...

Intraday bias in AUD/USD remains on the downside at this point. As noted before, rebound Rebound from 0.7105 could be complete with three waves up to 0.7555, and fall from 0.8006 is still in progress. Deeper fall should be seen to 0.7169 support, and then 0.7105. On the upside, however, break of 0.7369 minor resistance will turn bias back to the upside for retesting 0.7555 instead.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action from 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

Daily Pivots: (S1) 113.70; (P) 114.34; (R1) 114.73; More...

Intraday bias in USD/JPY is turned neutral as a temporary top is formed at 114.96. Further rise is expected as long as 113.74 minor support holds. Break of 114.96 will resume larger up trend to 100% projection of 102.58 to 111.65 from 109.11 at 118.18. However, break of 113.74 will dampen this bullish case and turn bias back to the downside for 112.71 near term structural support.

In the bigger picture, corrective decline from 118.65 (2016 high) should have completed at 101.18 already. Rise from the 102.58 is seen as the third leg of the up trend from 101.18. Next target is 118.65 high. This will now be the preferred case as long as 111.65 resistance turned support holds, even in case of deep pull back.

Daily Pivots: (S1) 0.9261; (P) 0.9296; (R1) 0.9315; More....

Intraday bias in USD/CHF is turned neutral first with current retreat. On the upside, above 0.9328 will resume the rally from 0.9084 for 0.9367 resistance. On the downside, below 0.9236 minor support will turn intraday bias back to the downside for 0.9084 instead.

In the bigger picture, the corrective structure of the rebound from 0.8925 argues that fall from 0.9471 is not complete yet. It could either be the second leg of pattern from 0.8756 (2021 low), or resuming larger down trend from 1.0237 (2018 high). We'd pay attention to the downside momentum and assess the odds later. But for now, medium term outlook will be neutral at best as long as 0.9471 resistance holds.

Daily Pivots: (S1) 1.3429; (P) 1.3462; (R1) 1.3528; More...

Outlook in GBP/USD remains unchanged as consolidation from 1.3351 is extending. Intraday bias remains neutral first. Upside of recovery should be limited below 1.3606 resistance to bring down trend resumption. On the downside, break of 1.3351 will extend the decline from 1.4248 to 1.3164 fibonacci level next.

In the bigger picture, the structure of the fall from 1.4248 suggests that it's a correction to the up trend from 1.1409 (2020 low) only. While deeper fall cannot be ruled out yet, downside should be contained by 38.2% retracement of 1.1409 to 1.4248 at 1.3164, at least on first attempt, to bring rebound. On the upside, firm break of 1.4376 key resistance (2018 high) will add to the case of long term bullish reversal. However, sustained trading below 1.3164 will revive some medium term bearishness and target 61.8% retracement at 1.2493.

Daily Pivots: (S1) 1.1281; (P) 1.1306; (R1) 1.1349; More...

Intraday bias in EUR/USD is turned neutral first as it recovered after hitting 1.1262. Focus remains on 1.1289 long term fibonacci level. Sustained break there will carry larger bearish implication, and extend the fall from 1.2348 to 161.8% projection of 1.1908 to 1.1523 from 1.1691 at 1.1068. On the upside, above 1.1384 indicate short term bottoming and turn bias back to the upside for stronger rebound.

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

New Zealand Dollar trades mildly higher today, after an RBNZ survey shows firm expectation of more rate hike ahead. On the other hand, Canadian Dollar weakens broadly as WTI crude oil's pull back extends below a near term support level. Overall, Sterling and Dollar remain the strongest ones for the week. Euro is recovering slightly but remains the worst weekly performer, followed by Aussie.

Technically, major focus remains on 1.1289 long term fibonacci support in EUR/USD. Sustained break of this will carry larger bearish implication and would bring even deeper down trend to 1.0635 (2020 low). At the same time, EUR/CHF is also pressing 1.0505 low. Sustained break there will resume the larger down trend from 1.2004 to 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223 next. We'll see if Euro's selloff would intensify ahead, or rebound from here.

In Asia, at the time of writing, Nikkei is down -0.80%. Hong Kong HSI is down -1.44%. China Shanghai SSE is down -0.33%. Singapore Strait Times is up 0.06%. Japan 10-year JGB yield is up 0.0006 at 0.075. Overnight, DOW dropped -0.58%. S&P 500 dropped -0.26%. NASDAQ dropped -0.33%. 10-year yield dropped -0.030 to 1.604.

RBNZ survey: Four rate hikes over next seven meetings

In the latest RBNZ survey for Q4, 2-year ahead inflation expectations rose from 2.27% to 2.96%, highest since June 2011. 5-year inflation inflation expectation rose from 2.03 to 2.17%, highest since September 2017.

Currently, the OCR is standing at 0.50%, after a rate hike of 25bps in October 6. Survey respondents expect Oct. to rise further to 0.75% by the end of the current quarter. Mean estimate for OCR one year ahead was 1.53%, translating to four 25bps hike over the next seven RBNZ meetings. Two year-head expectations stands at 1.83%, with more respondents expecting OCR to be either at 1.50% or 2.0)% by the end of September 2023.

NZD/USD recovers mildly, but outlook stays bearish

NZD/USD recovers mildly today but overall outlook is unchanged. Further decline will remain in favor as long as 0.7079 minor resistance holds. Current development suggests that rebound from 0.6804 is complete with three waves up to 0.7217. In other words, larger decline from 0.7463 is not over.

Fall from 0.7271 should target 0.6858 support next. Firm break there will solidify this bearish case, and extend the corrective pattern from 0.7463 through 0.6804 low, to 38.2% retracement of 0.5467 to 0.7463 at 0.6701.

Fed Evans: Going to take us until the middle of next year to complete tapering

Chicago Fed President Charles Evans said in a virtual conference, "we learned back in 2013 that tapering these asset purchases was preferable for financial market functioning; that if we did a sudden stop on our purchases that wasn't well received. It's going to take us until the middle of next year to complete that".

"It's going to take us until the middle of next year to complete that; we are going to be mindful of inflation; we're going to be looking to see how much additional accommodation is boosting inflation; if indeed that is the case, we'll be thinking about when the right time to start raising rates will be," he added.

CAD/JPY and AUD/JPY resume corrective decline

Following the pullback in US stocks overnight, Yen crosses are trading generally lower. In particular, CAD/JPY resumed the decline from 93.00 by breaking through 90.40 temporary low. Judging from the development in Yen pairs elsewhere, there is prospect of deeper decline even if such fall is still a corrective more.

For now, further decline is expected in CAD/JPY as long as 91.58 minor resistance holds. 38.2% retracement of 84.65 to 93.00 at 89.81 might provide some initial support. But firm break there will bring deeper fall to 61.8% retracement at 87.83.

Development in AUD/JPY is slightly more bearish, as 55 day EMA and 38.2% retracement of 77.88 to 86.24 at 83.04 are both taken out. Fall from 86.24 has just resumed. Deeper decline is expected as long as 84.14 resistance holds, for 61.8% retracement at 81.07 and possibly below.

Looking ahead

Swiss trade balance will be released in European session. Later in the day, Canada will release ADP employment and foreign securities purchases. US will release jobless claims and Philly Fed survey.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1281; (P) 1.1306; (R1) 1.1349; More...

Intraday bias in EUR/USD is turned neutral first as it recovered after hitting 1.1262. Focus remains on 1.1289 long term fibonacci level. Sustained break there will carry larger bearish implication, and extend the fall from 1.2348 to 161.8% projection of 1.1908 to 1.1523 from 1.1691 at 1.1068. On the upside, above 1.1384 indicate short term bottoming and turn bias back to the upside for stronger rebound.

In the bigger picture, there are various ways of interpreting the fall from 1.2348 (2021 high). It could be a correction to rise from 1.0635 (2020 low), the fourth leg of a sideway pattern from 1.0339 (2017 low), or resuming long term down trend. In any case, outlook will now stay bearish as long as 1.1703 support turned resistance holds. Sustained break of 61.8% retracement of 1.0635 to 1.2348 at 1.1289 would pave the way back to 1.0635.

Economic Indicators Update

STOCKS

Dow has declined while Dax still has room on the upside to test 16400 before reversing from there. Nikkei is bearish below 29500/750 while Shanghai seems to be stuck in the 3500-3550 region for now. Nifty can see a fall to 17600/400 on a break below the range of 18200-17800. Sensex too looks bearish on a break below 60000. Overall not much strength is visible in global equities just now.

Dow (35931.05, -211.17, -0.58%) has fallen below 36000. The index needs to fall below 35900 to be bearish towards 35750/500 or even lower.

DAX (16251.13, +3.27, +0.02%) has risen slightly today. The index can test 16400 before we see a reversal from there, as 16400 is a strong medium term resistance.

Nikkei (29451.41, -263.92, -0.8%) has broken the support at 29500. A fall towards 28000 can be seen while below 29500/29750. Below 29500, we may delay or negate the upside for now.

Shanghai (3524.91, -12.18, -0.35%) has come down today. The range of 3500-3550 continues. A strong break above 3550 can take the index towards 3600 while a break below 3500 can take it down towards 3400.Watch price action for a break on either side.

Nifty (17898.65, -100.55, -0.56%) tested 18022.65 before coming down to close at 17898.65.The range of 17800-18200 mentioned previously is holding well for now. A break below 17800 can trigger a fall towards 17600/400.

Sensex (60008.33, -314.04, -0.52%) has come down from the high of 60426.61 and closed just above 60000. If the support at 60000 breaks then a fall towards 59500/000 and even 58000 is possible in the coming sessions. It needs to sustain above 60000 to see a rise towards 62000.

COMMODITIES

Brent and WTI have fallen sharply as expected and indicates that a near term top could be in place. Support at 79/78 is seen in Brent and near 75/73 in WTI. Gold can trade within 1850-1880 while silver needs to rise from support at 24.50 to move up. Copper has broken below support at 4.25 and can fall to 4.20/10/05

Brent (79.87) has fallen as expected and could test 79/78 while below resistance at 83/84 holds. A near term top seems to have been made with a possible fall in crude prices going ahead. Any rise from current levels can be limited to 83/84/85 max while there is scope for a fall towards 75 in the longer run on a break below 78/79. Watch price action near 79/78 to see if the price bounces or manages to break on the downside. Refer to our Nov’21 Crude report released yesterday:
(Kshitij Crude Oil Forecast - Kshitij.com)

WTI (76.90) has come down well and could be headed towards 75-73 before pausing there for sometime. View is bearish while below 80.

Gold (1868.20) remains sideways within overall uptrend. It is likely gain against Crude. Trade within 1850-1880 may hold for now.

Silver (25.02) has immediate support at 24.50 which if holds can produce a bounce back to 25.50-26 in the medium term. Failure to hold above 24.50 can take the price down to 24 or lower before a bounce is seen from there. Watch price action at 24.50.

Copper (4.2320) has broken below support at 4.25 and if that holds, we may expect a fall towards 4.20/10/05 eventually before pausing to turn around from there.

FOREX

Currencies see some corrective movements today. Dollar Index has seen a pullback as expected and could fall to 95.48/40 taking Euro higher towards 1.1350/75. Pound has bounced well from channel support and looks strong while Aussie needs to bounce from 0.7250/60 to head higher to 0.73/7350. USDCNY has downward pressure intact which can eventually lead to a fall towards 6.36/35. USDINR has crucial support at 74 which may hold. Although there is scope for a test of 73.80/60, we watch price action near 74 just now.

Dollar Index (95.725) rose to 96.24 yesterday, but has dipped from there in line with our expectation of seeing a pull back. Need to see if there is more profit-taking now that US Yields have dipped a bit. A fall to 95.48-95.40 is possible in the next 1-2 sessions.

Euro (1.1333) has bounced a bit from yesterday’s low of 1.1264. The German-US10Yr yield spread (-1.87%) is at a crucial support which if holds and produces a bounce could take Euro higher from current levels in the near term. Watch the yield spread to see if it bounces or breaks below the current support. On the charts, 1.1250 could be a decent support.

EURJPY (129.20) has broken below immediate support at 129.50 and if the cross sustains below 129.50, it can fall further to test 129 or even lower to 128.35-128.00. But while above 129.00, there is scope for some more bounce towards 130.40/60. A broad range of 129-130.40/60 is possible in the near term.

Aussie (0.7260) has fallen below mentioned support at 0.7280 and is testing 0.7260 mentioned yesterday. If 0.7250/60 support holds, we may expect a bounce back to 0.73-0.7350 soon.

Pound (1.3496) has been rising well as channel support near 1.33 has held well. While the support holds, Pound is bullish for a rally towards 1.3550/3600.

Dollar-Yen (114.07) has dipped from yesterday’s high of 114.97 and failed to break above 115. Note that 115 seems to be forming a crucial resistance and if it holds, we may expect a sharp and sustained decline below 114-113.75, taking the pair down to 113 or lower. We need to see trade above 113.75-114 to keep upside possibilities intact. Watch price action near current levels.

USDCNY (6.3753) has fallen again to 6.3750 and while the downside pressure remains intact, the pair may fall towards 6.36/35 in the medium term. View is bearish while below 6.40.

USDINR (74.27) has come down to almost 74.25 as expected. Now we look for 74.00 while below 74.60/50/30. Can ideally target 73.80-60 as well, but we also note that 74.00 is a strong Support, especially as RBI might not want a month-close below 74.00. Still, overall trend is down.

INTEREST RATES

The US Treasury yields have come-off across tenors. The resistances have held well as expected and the yields are likely to move down within the broad range now. The German yields remain stable below their first level of resistance. It will have to be seen if they reverse lower from here itself or after an extended rise from here. The 10Yr and 5Yr GoI have come-off yesterday and are likely to move down within their current sideways range.

The US 2Yr (0.49%), 5Yr (1.22%), 10Yr (1.58%) and the 30Yr (1.97%) yields have come-off across tenors. The resistance at 1.65% on the 10Yr has held well as expected. Now a dip to 1.5% can be seen. Broadly our view of seeing a range of 1.35%-1.65% remains intact. The 30Yr has dipped below 2% and can dip to 1.9%-1.85% while it remains below 2%. The expected range on the 30Yr will be 1.75%-2.1%/2.2%.

The German 2Yr (-0.74%), 5Yr (-0.57%), 10Yr (-0.25%) and 30Yr (0.08%) yields continue to remain stable. Immediate resistances at -0.2% (10Yr) and 0.1% (30Yr) are likely to hold and trigger a fresh fall to keep the broader downtrend intact. In case if these resistances are broken, an extended rise to -0.1% (10Yr) and 0.2% (30Yr) is possible. Thereafter the expected reversal can happen.

The resistance at 6.38% has held well again yesterday and the Indian 10Yr GoI (6.3612%) has dipped after testing it. While below 6.38%, a fall to 6.3% is possible. A strong break above 6.38% is needed to see 6.4%-6.43% levels. Overall, we retain our view of seeing a broad range of 6.3%-6.45% for now with a bearish bias to see a downside break of this range and a fall to 6.2% eventually.

The 5Yr GoI (5.6778%) failed to sustain above 5.7% and has come down sharply. It can test 5.66% - the lower end of our preferred 5.66%-5.75%.5.78% range. It will have to be seen if the 5Yr breaks below 5.66% and falls to 5.63%-5.62% or continues to retain the range and moves back up again.

NZD/USD recovers mildly today but overall outlook is unchanged. Further decline will remain in favor as long as 0.7079 minor resistance holds. Current development suggests that rebound from 0.6804 is complete with three waves up to 0.7217. In other words, larger decline from 0.7463 is not over.

Fall from 0.7271 should target 0.6858 support next. Firm break there will solidify this bearish case, and extend the corrective pattern from 0.7463 through 0.6804 low, to 38.2% retracement of 0.5467 to 0.7463 at 0.6701.

Or is a bearish breakout coming?

It’s been a wild ride in GBPJPY over the last month or so and it may only be about to take off.

From long-term consolidation to finally breaking higher – and in impressive fashion – to a sharp reversal after the BoE bottled raising rates. It’s been quite the month and there’s still plenty of action to come.

The pair now finds itself between two very interesting levels that may hold the key to the next surge.

To the downside, it’s last weeks lows around 152.50, where the 61.8 fib – September lows to October highs – coincides with the 55/89-day SMA band, maybe even the upper end of the 200/233-day SMA band. As long as the pair remains above here, it’s in bullish territory.

To the upside, it’s yesterday’s highs around 154.75 where the 61.8 fib – 3 November highs to 11 November lows – coincides with the 200/233-period SMA band on the 4-hour chart.

A break in either direction could tell us a lot about the path of travel in the coming weeks.