Daily Market Report
18 Nov 2019
The EUR/USD pair has recovered some ground Friday, ending the week with modest gains at around 1.1050. The American dollar extended its slide as speculative interest couldn’t find a reason to keep on buying it. Trade woes between the US and China and mixed US data exacerbated profit-taking ahead of the close. Wall Street settled at record highs, while government bond yields bounced just modestly, indicating decreasing demand for safety.
The EU October inflation came in as expected, up by 0.7% YoY, and with the core CPI up by 1.1%. In the US, on the other hand, Retail Sales were slightly better than expected, up by 0.3% in October, although Industrial Production fell by 0.8% in the same month, while Capacity Utilization shrank to 76.7%, both below forecasts. The macroeconomic calendar has little to offer this Monday, which means sentiment will continue leading the way.
The daily chart for the EUR/USD pair shows that it has managed to extend its recovery from the 61.8% retracement of the October rally, to settle just below the 38.2% retracement of the same rally at 1.1065. The risk remains skewed to the downside, as the 20 and the 100 DMA continue heading firmly lower above the current level, while technical indicators have recovered within negative levels, although without bullish strength. In the 4-hour chart, the pair has room to extend its advance, although the bullish potential is limited, with the 100 DMA maintaining its downward slope well above the current level and technical indicators well above their midlines, the Momentum decelerating and the RSI already turning lower.
Support levels: 1.1015 1.0985 1.0950
Resistance levels: 1.1065 1.1110 1.1140
The USD/JPY pair trimmed part of its weekly losses last Friday, closing the week in the red at around 108.80. Demand for safe-haven assets eased despite persistent tensions between the US and China, as optimism prevailed, following comments from different US representatives, with US President’s advisor Kudlow indicating that a trade deal is in its “final stages.” Wall Street settled at fresh all-time highs, while the yield on the benchmark 10-year Treasury note settled at 1.83%.
Japanese data released by the end of the week, was encouraging as Industrial Production was up by 1.7% in September. Capacity Utilization in the same month rose by 1.0%, well above the -0.6% expected. The country won’t release relevant macroeconomic figures at the beginning of the week.
From a technical point of view, the pair is neutral, although with the downside potential well limited. In the daily chart, the pair is struggling around a flat 20 DMA, while the larger moving averages also lack directional strength. Technical indicators hover directionless around their midlines. In the 4-hour chart, the pair is around the 20 and 100 SMA, while technical indicators have recovered from oversold levels but lost momentum near their midlines. The pair could have more chances of extending its advance on an upward acceleration through 108.90, the immediate resistance.
Support levels: 108.55 108.20 107.75
Resistance levels: 108.90 109.25 109.50
The GBP/USD pair hit a daily high of 1.2918 on Friday, boosted by news indicating that the Brexit Party has decided to step down from 43 additional constituencies where Labour won, facilitating the way for a Conservative majority. In this scenario, chances that UK PM Boris Johnson’s Withdrawal Agreement will pass the Parliament increased. Meanwhile, UK PM Johnson said over the weekend that all Conservative Party candidates have pledged to back his Brexit deal. The headline should keep GBP/USD on the winning side.
The UK didn’t release relevant data by the end of the week, and the macroeconomic calendar will remain scarce these upcoming days, with nothing scheduled for Monday an only the CBI Industrial Trends Survey on Orders expected for Tuesday.
The GBP/USD pair is still unable to rally beyond the 1.2900 threshold, but remains biased higher, as, it continues developing above the 23.6% retracement of its October rally. In the daily chart, the pair offers a neutral-to-bullish stance, as its holding above a flat 20 DMA, while technical indicators lack directional strength, but remain above their midlines. In the shorter term, and according to the 4-hour chart, the technical picture is also neutral-to-positive, as the pair is just above its 20 and 100 SMA, both converging directionless around 1.2860, as technical indicators head nowhere, but hold on to positive ground.
Support levels: 1.2860 1.2820 1.2785
Resistance levels: 1.2920 1.2950 1.2985
The AUD/USD pair recovered from a fresh 4-week low at 0.6769 to trim part of its weekly losses and settle a handful of pips above the 0.6800 threshold. The market’s sentiment seesawed alongside US-China trade-related headlines, with investors’ concerns easing ahead of London close, following comments from US officials. Trump’s advisor Kudlow said that the arrangement is in its “final stages,” while US Commerce Secretary Wilbur Ross, later added that a trade deal would be done “in all likelihood.”
However, Australian disappointing employment data kept the upside at check. The current recovery, supported by a rally in Wall Street, seems poised to be short-lived, mostly if Australian data continues to miss the market’s expectations. There are no releases scheduled in Australia until Tuesday when the RBA will publish the Minutes of its latest meeting.
The AUD/USD pair remains at risk of falling, as, in the daily chart, it continues developing below all of its moving averages, while technical indicators remain within negative levels, lacking directional strength. In the 4-hour chart, the recovery stalled around the 20 and 200 SMA, while technical indicators lost upward momentum just below their midlines, after correcting oversold conditions. Selling interest will likely surge on an approach to the 0.6900 level while sellers will be more aggressive on a break below 0.6770.
Support levels: 0.6770 0.6730 0.6700
Resistance levels: 0.6835 0.6860 0.6900
As a new set of upbeat news started to circulate around the markets, with the renewed risk-on mood safe havens struggled on the last day of the trading week. On the other hand, the retracement seen in the USD index DXY contrary to better than expected macro data from the US holds Gold for further declines. The United States' Commerce Secretary, Wilbur Ross, on Friday said that there was a very high probability that the US would reach a trade deal with China. "We're much farther along with details of the trade deal with China, there are many active calls," Ross told Fox Business Network. "There will be another trade call with China on Friday". This week will be relatively light from the macro data point of view in the US. The most important event will be the release of FOMC minutes on Wednesday
While the USD index DXYstayed under pressure, the 10-year US Treasury bond yield posts modest gains on Friday. Gold managed to save itself from multi-month lows at 1.446$ and also managed to stay over 1.459$ (October low). As long as Gold stays over 1.470$, the resistances can be followed 1.482$ (1.557$-1.459$ %23.6), 1.496$ (1.557$-1.459$ %38.2) and 1.500$ levels. Below the 1.459$ (October low) level, the supports are lined at 1.446$ (1.266$-1.557$ %38.20), 1.411$ (1.266$-1.557$ %50.0) and 1.377$ (1.266$-1.557$ %61.80).
Support Levels: 1.459$ 1.446$ 1.411$
Resistance Levels: 1.482$ 1.496$ 1.500$
As the news regarding the trade deal continues to dominate the markets. Silver failed to stay over an important level of 17.00$ on Friday trading. Depending on the latest update from the trade deal side, another meeting call will be done next Friday between the US and China. Therefore, data weak Monday trade can relatively happen in a narrow range if there will be no more updates from the trade deal front.
Silver still did not succeed to break over 17.00$ which is both psychological level and %50.0 of 14.29$-19.64$. Above this level, 17.60$ (%38.20 14.29$-19.65$) and 18.38$ (%23.6 14.29$-19.65$) can be targeted. On the downside, the supports can be seen at 16.70$ (double dip), 16.33$ (%61.8 14.29$-19.65$), 15.55$ (%76.40 14.29$-19.65$) and 15.00$ levels.
Support Levels: 16.70$ 16.33$ 15.55$
Resistance Levels: 17.00$ 17.60$ 18.38$
Along with the improved market bias supported by the optimism caused by the trade deal between the US and China, also the expectations from the OPEC+ to extend fresh production cuts supported WTI on the last day of the trading week. On the other hand, rising Oil inventories in the US pressured WTI last week before the Friday’s up move supported by the risk-on mood.
WTI finally managed to break the 57.13$ (63.33$-51.03$ %50.00) resistance on Friday trading but stayed short from the 58.00$ level. However, after a series of narrow range trading days, the daily RSI(14) is around 60 zone getting closer to overbought levels. As long as the WTI stays over 57.13$ level, 58.63$ (63.33$-51.03$ %61.80), 59.64$ (76.88$-42.40$ %50.00) and 60.00$ levels can be followed as targets up. As long as the prices stay below this level, 55.73$ (63.33$-51.03$ %38.20), 53.93$ (63.33$-51.03$ %23.60) and 51.03$ (October dip) levels can be targeted.
Support Levels: 55.73$ 53.93$ 50.00$
Resistance Levels: 57.13$ 58.63$ 59.64$
Better than expected the US retail sales data and positive news flow regarding the trade deal triggered the risk-on trade on last Friday and Dow Jones started the day with a positive gap and extended its move up to a new record high. Earlier in the day, United States Commerce Secretary Wilbur Ross told Fox Business Network that they were "much farther along with details of the trade deal with China," and noted that there was a very high probability that they will reach a deal. The week ahead will be relatively slow on the macro data release side. The most important event will the release of the FOMC minutes on Wednesday where the traders can dig into details of the FED’s latest interest rate decision.
Dow Jones started the day with a gap net over previous all-time high level of 27.770. However, the index failed to break the physiological level of 28.000 level. Over the 28.000 level, 28.400 can be followed as new record highs while below 27.400 level the supports can be seen at 27.000, 26.757 (24.680-27.400 %23.60), 26.360 (24.680-27.398 %38.20) and 26.000 (24.680-27.398 %50.00).
Support Levels: 27.400 27.000 26.757
Resistance Levels: 28.000 28.400 29.000