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Daily Market Report
25 Nov 2019

EURUSD

A dull week finished with a bang for the greenback, which appreciated sharply against most major rivals on solid local data and renewed hopes about the US-China trade deal. Disappointing macroeconomic data elsewhere added to the dollar’s rally, as European figures out on Friday came in below the market’s expectations. The preliminary November estimates of Markit PMI for the EU showed that manufacturing output bounced modestly, with the index up to 46.6 from 45.9 previously, although services activity decelerated to 51.5 from 52.2. In the US, on the other hand, the numbers were upbeat, as the Manufacturing PMI printed at 52.2 while the Services PMI came in at 51.6, surpassing both the October final readings and the market’s expectations. Also, the final version of the US November Michigan Consumer Sentiment index came in at 95.6, better than the preliminary estimate of 95.7. Finally, US President Donald Trump said a trade deal with China was "potentially very close."

This Monday, Germany will release the November IFO survey on Business Climate, seen bouncing from 94.6 to 95. The US is set to publish minor data, including the October Chicago Fed National Activity Index and the Dallas Fed Manufacturing Business Index.

The  EUR/USD pair settled around 1.1020 after hitting a weekly high of 1.1096 on Thursday, not far from November’s low at 1.0988. This last, it’s also the 61.8% retracement of the October rally, a relevant and immediate support. In the daily chart, the picture is bearish, as the pair was rejected by sellers aligned around its 100 DMA, while technical indicators stand within negative levels with uneven downward strength. In the 4-hour chart, the downward potential is even stronger, with technical indicators offering bearish slopes near oversold levels, and the pair developing far below all of its moving averages.

Support levels: 1.0985 1.0950 1.0915

Resistance levels: 1.1065 1.1110 1.1145

USDJPY

The USD/JPY pair has settled at 108.63, barely changed weekly basis. The pair bottomed at 108.27 on Thursday, recovering just modestly on reassuring comments from US President Trump and the Chinese leader, Xi-Jinping, both suggesting a trade deal is around the corner. Xi Jinping repeated that Beijing wants to work out a deal with Washington, but added that he is not afraid to retaliate if necessary. Trump, on the other hand, said that  a trade deal with China was "potentially very close." Better than expected US data, helped the pair stay afloat.

Japan released on Friday its October National inflation, with the core ex-fresh food reading at 0.4%, as expected. The country also released the preliminary November estimate of the Jibun Bank Manufacturing PMI which missed the market’s expectations by printing at 48.6. This Monday, the country will release the final version of the September Leading Index, foreseen unchanged at 92.2, and the Coincident Index for the same month, expected at 101.

The USD/JPY pair is technically neutral according to the daily chart, trading below the 20 and 200 DMA, both lacking directional strength, while the 100 DMA also heads nowhere, but well below the current level. Technical indicators are around their midlines, the Momentum heading lower but the RSI stable at around its 50 level. In the shorter term, and according to the 4-hour chart, the pair is also neutral, trading below the 100 SMA but above the 20 SMA, as technical indicators hover around their midlines without directional strength.

Support levels: 108.50 108.20 107.75  

Resistance levels: 108.90 109.25 109.50

GBPUSD

The GBP/USD pair has closed the week in the red at 1.2830, undermined by UK data which overshadowed persistent Brexit hopes. Markit released for the first time preliminary estimated of its manufacturing and services indexes in November, and the numbers resulted below the market’s expectations. The Manufacturing PMI contracted to 48.2, while the Services PMI printed at 48.6, the lowest outcome in over three years.

In the Brexit front, attention continues to be centered on the upcoming December 12 general election. The latest polls show that Conservatives lead by PM Johnson retain the lead with an advantage of over 10% over their Labour rivals. On Sunday, Johnson unveiled the Conservative Party’s manifesto, focused on moving on from Brexit and austerity, and pledging not to raise income taxes. The headlines are Pound-positive, although probably not enough to push the pair back to the 1.2900 region. The UK macroeconomic calendar will remain empty this Monday.

From a technical point of view, the pair is neutral-to-bearish with chances of additional declines increasing if it breaks below 1.2768, November low. The daily chart shows that the pair is just above the 23.6% retracement of its October rally, an area that provided support in the last few weeks. The same chart shows that the pair has settled below a flat 20 DMA, while the 100 DMA converges with the next Fibonacci support at around 1.2700. The Momentum heads modestly lower at around 100, while the RSI it’s also around its mid-line, although with a firmer bearish stance. In the 4-hour chart, the pair is below its 20 and 100 SMA, while the 200 SMA heads north around 1.2810. Technical indicators settled at weekly lows, skewing the risk to the downside.

Support levels: 1.2810 1.2770 1.2720  

Resistance levels: 1.2880 1.2920 1.2950  

AUDUSD

The AUD/USD pair has fallen for a third consecutive week, ending this last one at 0.6785. Pressure on the Aussie surged mid-week, following headlines indicating that chances that the US and China could sign phase one of a trade deal this year were unlikely. On Friday, hopes resurged following optimistic comments from the leaders of both economies, but Australian data weighed more, keeping the upside limited. The preliminary estimate of the November Commonwealth Bank Services PMI came in at 49.5, well below the 53.4 expected, while the Commonwealth Bank Manufacturing PMI printed at 49.9, better than the 49.8 expected but below the previous 50. Both indexes are now in contraction territory, adding pressure on the RBA to cut rates further, hence, pressuring the Aussie.

The Australian macroeconomic calendar has nothing to offer at the start of the new week, as the first event scheduled in the country is a speech from RBA’s Governor Lowe early Tuesday.

The AUD/USD pair is bearish according to the daily chart, as selling interest surged on an approach to a bearish 100 DMA, which capped the upside throughout the week. Technical indicators in the mentioned chart have pared their declines, but remain well into negative territory, in line with further slides ahead. Shorter-term, and according to the 4-hour chart, the risk is also skewed to the downside as a bearish 20 SMA contained advances, while technical indicators hold directionless within negative levels.

Support levels: 0.6770 0.6730 0.6700

Resistance levels: 0.6835 0.6860 0.6900

GOLD

Last week the market players prefered not the focus on the negative developments on the trade deal front and therefore Gold failed to extend its recovery. With a teasing move against China, The US Senate on Tuesday passed legislation to safeguard human rights in Hong Kong. Furthermore, President Trump on Tuesday said China will have to agree to a deal that he wants else the US will raise tariffs on Chinese imports with an immediate effect. On the first part of the previous week, Gold was supported with the negative development but later Wall Street Journal on Thursday reported that Chinese Vice Premier Liu He, during a phone call, made late last week, had invited US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing for trade negotiations and the US negotiators had accepted the invitation and the South China Morning Post said both countries are on the “doorstep” of reaching a deal. As the markets are getting close to year-end, the traders are willing to capitalise any kind of positive news way more than the negative ones and with the improved risk appetite, Gold retraced back giving away most of its weekly gains. The market will have another dull week ahead in terms of the economic calendar. The only risk event will be Powell’s speech on Tuesday as the investors will look for further clues regarding the central bank’s future monetary policy.

On the technical front, 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). On the other hand, the resistances can be followed at 1.482$ (1.557$-1.459$ %23.6), 1.496$ (1.557$-1.459$ %38.2) and 1.500$ levels.   

Support Levels: 1.459$ 1.446$ 1.411$

Resistance Levels: 1.482$ 1.496$ 1.500$ 

SILVER

Silver shared the same fate as Gold and give away its gains made in the first part of the week. However, the precious metal managed to stop its decline just shy of 17.00$ level on Friday. The Gold vs Silver ratio which indicates the amount of silver needed to buy one ounce of Gold is also close to its peak level, which is 90. The ratio hovers around 86 after falling all the way to 79 earlier this year. Usually, in a Gold rally, Silver seems to outperform the yellow metal. However, in a retracement or flat market conditions, Silver usually underperforms. Like all the risk assets, Silver trade will be driven with the trade deal development until a solid agreement or a step is made.

Above the 17.00$ level, which is both psychological and %50.0 of 14.29$-19.64$, 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$

CRUDE WTI

The trade deal anxiety is also hitting the Oil trade due to fears of volatility in the demand side. On the other side, WTI rallied on Thursday following the Reuters report that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by another three months to mid-2020 when they meet in Vienna on Dec. 5. However, on the last day of the trading week, WTI retraced back and gave away almost half of its gains made on Thursday trading. As a micro development, the Canadian rail strike is affecting the oil shipments which might pressure the oil inventories for this week.

WTI tested the 58.63$ (63.33$-51.03$ %61.80) resistance twice both on Thursday and Friday but failed to stay over this level. The resistances are lined at 58.63$ (63.33$-51.03$ %61.80), 59.64$ (76.88$-42.40$ %50.00) and 60.00$ levels while the supports are followed at 57.13$ (63.33$-51.03$ %50.00), 55.73$ (63.33$-51.03$ %38.20) and 50.00$ levels.

Support Levels: 57.13$ 55.73$ 50.00$

Resistance Levels: 58.63$ 59.64$ 60.00$ 


DOW JONES

Despite the mixed news flow regarding the trade deal, after a three-day retracement, Dow Jones managed to end Friday trading positive on a daily basis. On Friday, the US President Trump said that the US-China trade deal is “potentially very close” while on the Hong Kong issue, he said his administration will take 'good look' at Hong Kong rights bill supporting the risk-on mood. However, speaking at the G20 foreign minister's meeting in Japan late Saturday, top Chinese Diplomat and the country’s Foreign Minister Wang Yi made sold bold remarks on the US-Chinese relationship. He said that the US is destabilizing the world and smearing China and this comment might add extra pressure to risk appetite for the upcoming week.

The index is still using the 27.770 level as a base for a possible move up. Over this level, 28.400 can be followed as new record highs while below 27.770 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

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* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

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