Daily Market Report
05 Dec 2019

EURUSD

The EUR/USD pair has extended its advance beyond the 1.1100 figure, as uncertainty surrounding the US-China trade relationship and dismal American data weighed on the greenback. The pair hit 1.1115 as the US ADP employment survey showed that the private sector added just 67K new jobs in November against the 140K expected. Furthermore, the ISM Non-Manufacturing PMI for the same month missed the market’s expectations, falling to 53.9. The employment sub-component, however, was upbeat, partially offsetting the negative headlines.

Earlier in the day, Markit released the final versions of the Services PMI and Composite PMI for the Union, with services output revised marginally higher in Germany and the EU. The market’s sentiment improved just modestly on reports indicating that the US and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal, although the enthusiasm was limited amid the lack of detail.

 Thursday will bring a packed macroeconomic calendar, as Germany will release October Factory Orders, while the EU will publish Retail Sales for the same month and a revision of the Q3 Gross Domestic Product estimate, this last seen at 0.2%. The US will release weekly unemployment claims and November Challenger Job Cuts, relevant ahead of the Nonfarm Payroll Report to be out next Friday.

The EUR/USD pair has retreated from the mentioned high to currently hover around the 1.1070 level, barely up for a second consecutive day. The pair retains a bullish potential in the short-term, as it held above 1.1065, the 38.2% retracement of its October rally, after bottoming around the 61.8% retracement of the same advance last week. In the 4-hour chart, the pair is still holding above all of its moving averages, with the 20 SMA advancing steadily above the 100 SMA, as technical indicators ease from overbought readings but remain far from suggesting an upcoming decline. The pair was unable to sustain gains beyond the 23.6% retracement of the mentioned rally at 1.1110, which means that it would need to move past 1.1120 to confirm additional gains ahead.

Support levels: 1.1065 1.1030 1.0985

Resistance levels: 1.1120 1.1150 1.1185

USDJPY

A modest improvement in the market’s mood helped the USD/JPY pair recover from 108.42, although the pair’s rally stalled ahead of the 109.00 figure, amid dismal US data. The ADP survey disappointed, as the private sector added just 67,000 new jobs in November, while services activity grew by less than anticipated in the same month. Nevertheless, European indexes managed to close in the green, amid headlines suggesting the US and China are discussing the amount of tariffs that would be reduced in the initial phase of a trade deal. Wall Street also ended with gains, although far from trimming its previous two-day losses. US Treasury yields bounced, with the yield on the benchmark 10-year Treasury note up to 1.79% from a daily low of 1.70%.

Japan released at the beginning of the day the Jibun Bank Services PMI for November, which improved by less than anticipated up to 50.3 from 49.7, anyway back in expansion territory. This Thursday, the Japanese macroeconomic calendar will be quite scarce, as it will only include a speech from BOJ’s Harada.

The USD/JPY pair is trading near its daily high ahead of Wall Street’s close around 108.90, with the advance still seen as corrective according to the 4 hours chart, as the pair is currently battling with a directionless 100 SMA, but below a firmly bearish 20 SMA. Technical indicators, in the meantime, recovered from oversold readings, with the RSI having lost upward strength currently at 47. The positive momentum needs to drive the pair beyond 109.30 for bears to give up.

Support levels: 108.45 108.10 107.75

Resistance levels: 109.00 109.30 109.60

GBPUSD

The GBP/USD pair soared to 1.3120, a level that was last seen in May this year, with the pound founding support in upbeat UK data and a more election polls, which continue indicating an advantage for UK PM Johnson’s Conservatives. One week ahead of the election, it seems that the UK would avoid a hung Parliament. Meanwhile, the Markit Services PMI was upwardly revised to 49.3 in November, better than the 48.6 forecasted.

The dollar managed to recover some ground during the US session, despite dismal local data, amid hopes the US and China are moving closer to a trade agreement. Nevertheless, the pair held around the 1.3100 figure ahead of the Asian opening. The UK calendar will remain empty this Thursday.

The GBP/USD pair has room to extend its advance during the upcoming session, particularly if UK election polls support the Sterling. The pair is overbought in the short-term, as, in the 4 hours chart, technical indicators are losing strength upward but holding within extreme overbought levels, not enough to suggest upward exhaustion. The pair, in the meantime, is currently developing some 150 pips above a bullish 20 SMA, which accelerated above the larger ones.  The pair would need to break below 1.3012, October monthly high, for the current bullish stance to hesitate. May high, at 1.3176, is the next bullish target and relevant resistance.  

Support levels: 1.3055 1.3015 1.2970

Resistance levels: 1.3120 1.3175 1.3220

AUDUSD

The Australian dollar has fallen during Asian trading hours against all of its major rivals, following the release of the Gross Domestic Product estimate for the three months to September, which rose by 0.4%, missing the market’s expectations of a 0.5% advance. The yearly estimate came as expected at 1.7%. Also, the AIG Performance of Services Index shrank to 53.7 in November from 54.2 in October. The Commonwealth Bank Services PMI for the same month improved to 49.7.  The AUD/USD pair fell to 0.6812, but bounced to settle around 0.6850, helped by a better market mood, as equities recovered on the back of headlines suggesting the US and China are still working on a trade deal.

Australia will release its October Trade Balance during the upcoming Asian session, with the market expecting a surplus of 6100M.

The AUD/USD pair is holding at the upper end of its latest range, although chances that it could extend its rally have somehow decreased. In the 4 hours chart, the pair continues developing above all of its moving averages. Technical indicators eased, still near overbought readings although posting lower highs daily basis, a sign that bulls are losing interest. The pair, however, would only turn bearish on a break below the 0.6800 figure.

Support levels: 0.6800 0.6770  0.6730  

Resistance levels: 0.6865 0.6890 0.6920

GOLD

The stream of contrary headlines about the trade deal is making the Gold trade harder each day. On the negative side, Donald Trump attacks China with the Hong Kong human rights and democracy act while the US senates propose sanctions to Chinese officials about the ethical issues related to Uyghurs minority. Also, the US president stated that he might be willing to wait until November 2020 and sign a deal after the election. On the other hand, on Wednesday due to a Bloomberg report, a trade deal between the US and China was in the making. Although the negative comments seem more, the traders are willing to capitalise the positive comments more than the negative ones. In the USD front, worse than expected PMI data in the US pressured the greenback and supported the incline in Gold yesterday. Apart from the trade deal developments, the markets will focus on the NFP data on Friday.

On Wednesday, the up move ended again around the resistance level which is at 1.482$ (1.557$-1.459$ %23.6). 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 in case of a close over 1.459$ (October low) while below the 1.459$ (October dip), 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$

 

SILVER

Silver tried to extend its move up on Wednesday but failed to keep up the momentum and retraced back to negative zone below 17.00$. For traders, it’s almost impossible to have a conclusion as Trump said a deal might not be possible until November 2020 while some positive comments are being published at the same time.

On the top side, the resistances are lined at 17.60$ (%38.20 14.29$-19.65$), 18.38$ (%23.6 14.29$-19.65$) and over that 18.70$ while 16.97$ (%50.0 14.29$-19.65$) stands as critical support which is broken now. Below this level, a test of 16.80$ (late November support), 16.33$ (%61.8 14.29$-19.65$) and 15.55$ (%76.40 14.29$-19.65$) can be targeted.

Support Levels: 16.80$ 16.33$ 15.55$

Resistance Levels: 17.60$ 18.38$ 18.70$


CRUDE WTI

In the light of the OPEC+ meeting in Vienna, WTI managed to re-gain its heavy losses made last week caused by the rumours of production cut dispute between the members of the organisation. Oil has two major drivers as trade talks and a deal on tariff might boost the industrial production and demand for oil. Also, OPEC’s plans for further production cuts will shorten the supply and support the prices higher. Another support to WTI came from the weekly API crude stock data. The API data showed that the US crude inventories fell by 3.7 million barrels, more than double expectations of a decline of 1.7 million barrels. The OPEC+ meeting will be held tomorrow and it is expected to be a big driver for the trade in the upcoming period.

WTI rallied around %4.0 on a daily basis during Wednesday trading. Although the strong move up, 58.63$ (63.33$-51.03$ %61.80) is now a proven hard nut to crack for WTI price to advance further. 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$ 60.0

 

DOW JONES

Due to mixed developments regarding the trade deal and US macro data, Dow Jones is trading in an erratic way with opening gaps in both ways as the deadline for an agreement, which is on December 15th is coming closer. US President Trump signed Hong Kong human rights and democracy act and stated that a deal might not be done until November 2020 after the US elections. However, at the same time stated in a press conference that the talks between the US and China are going very well. Also, due to a Bloomberg report, both sides are very close to phase one deal which will reduce the number of tariffs. On Wednesday, both ADP unemployment and ISM non-manufacturing PMI data missed their expectations after the worse than expected manufacturing PMI data in the US. As a result, the US index DXY kept its down move below the 98 marks. Also, Wall Street seems not affected by the impeachment hearings. The Democrat’s 300-page House Intelligence Committee summary of witness testimony, timelines and phone records accused Trump of perpetrating one of the most serious political crimes in the history of the United States.

On the top side, 27.770 and 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: 27.770 28.000 28.400

 

MACROECONOMIC EVENTS