Daily Market Report
10 Nov 2021
EUR/USD added to the ongoing recovery and posted modest gains in the 1.1590 region, re-shifting the focus to another attempt to retake the 1.1600 barrier and above on Tuesday.
The continuation of the upside in spot came in response to further deterioration in the greenback following three daily pullbacks in a row and another unsuccessful attempt to regain the 94.00 mark.
Positive results from the euro docket (from the German/EMU ZEW survey) lent extra strength to the pair amidst the offered note in the buck, always against the backdrop of the deeper leg lower in US yields.
On the ECB front, board member Knot suggested that the conditions for a rate hike would probably remain elusive in 2022, while he also joined the “higher-for-longer” narrative surrounding inflation and noted that the central bank should not be complacent about upside inflation risks. His colleague I.Schnabel said that low income households would be mainly affected by higher interest rates in response to transitory elevated inflation. She also stressed the high level of uncertainty that still lingers over the duration of the current elevated inflation.
In the euro docket, the German trade surplus narrowed to a seasonally adjusted €13.2B in September. In addition, the Economic Sentiment tracked by the ZE survey improved to 31.7 for the month of November. In the broader Euroland, the Economic Sentiment also improved to 25.9 for the current month.
Across the pond, the NFIB Business Optimism Index eased a tad to 98.2 (from 99.1) in October. In addition, headline Producer Prices rose 0.6% MoM in October and 8.6% over the last twelve months. Core Producer Prices rose 0.4% MoM and 6.4% YoY.
EUR/USD still faces the next resistance of note around recent tops in the 1.1610/15 band (November 3,4). Above this area, gains are expected to target the resistance zone in the vicinity of 1.1700, where the October highs, the 55-day SMA and the 5-month resistance line (off June 1 high) all coincide. Further up comes the interim hurdle at the 100-day SMA at 1.1738 ahead of the 1.1750 area. On the opposite side, the resumption of the selling bias is expected to re-visit the YTD low at 1.1513 (November 5) ahead of the 1.1500 area, where the March 2020 high at 1.1495 (March 10) is located. A deeper pullback could see the June 2020 high at 1.1422 (June 10) retested. The RSI stabilizes around 45, although the trend lacks vigour, as per the ADX near 18.
Resistance levels: 1.1608 1.1611 1.1616 (4H chart)
Support levels: 1.1569 1.1550 1.1513 (4H chart)
USD/JPY breached the key support at 113.00 the figure and clinched fresh 4-week lows in the 112.80 region on Tuesday.
The move lower in the pair was amidst the continuation of the selloff sparked following the rejection from the November peaks near 114.50 (November 1) and always sustained by the deeper retracement in US yields.
Indeed, yields in the front end of the curve approached the 0.40% area, while the belly receded to levels last seen back in late September near 1.42% and the long-dated bonds probed the 1.80% region, an area last visited back in mid-July.
In Japan, the Bank Lending expanded at an annualized 0.9% in October. Further data saw the Eco Watchers Survey Current improving to 55.5 in October and the Eco Watchers Survey Outlook also bettering to 57.5.
The deep decline in USD/JPY now faces a potential visit to the September highs in the 112.00 region ahead of the 55-day SMA at 111.71. Further south from here is seen the 100-day SMA at 111.00 seconded by the October’s low at 110.82 (October 4). On the flip side, the re-emergence of the buying interest faces minor hurdles at the 10-day and 20-day SMAs at 113.65 and 113.79, respectively prior to the so far monthly high at 114.44 (November 1), which is deemed as the latest defence of the 2021 top at 114.69 (October 20). A move beyond the latter should open the door to the November 2017 high at 114.73 ahead of the round level at 115.00 and the March 2017 high at 115.50 (March 10). The RSI loses ground and tests 46 and the trend looks solid with the ADX around 31.
Resistance levels: 113.66 114.02 114.27 (4H chart)
Support levels: 112.72 112.07 111.48 (4H chart)
GBP/USD managed to briefly surpass 1.3600 the figure, although the bullish move lacked follow through on turnaround Tuesday.
The rebound in the greenback pushed the US Dollar Index (DXY) back to the 94.00 region but failed to advance further north of that barrier on the back of diminishing US yields.
On the sterling-side, concerns around the Northern Ireland Protocol remain well and sound (and unresolved) and the effervescence around it seems poised to pick up further after the Irish deputy minister hinted at a “very robust response” from the EU if the UK sets aside parts of the Protocol.
Now on the Brexit issue, UK PM Spokesman Davies said the UK’s position on post-Brexit fishing license remains unchanged. On this, Brexit Minister Frost and France’s Beaune will resume talks later in the week.
In the UK, the BRC Retail Sales Monitor contracted 0.2% YoY in October. Around the BoE, MPC member Broadbent expects the participation in labour to increase and that current strains in the labour market will alleviate over time. He added that some sectors could experience higher wages, while this, coupled with higher prices, are seen limiting the output in some sectors eventually.
If sellers regain the upper hand, Cable could slip back to the so far monthly low at 1.3424 (November 5) before the 2021 low at 1.3411 (September 29). A deeper retracement notes that there are no levels of note until 1.3187 (December 21 2020) ahead of the monthly low at 1.3134 (December 11 2020). On the upside, the 10-day SMA at 1.3626 emerges as the interim hurdle seconded by the vicinity of the 1.3700 yardstick, where the high pre-BoE meeting and the 55- and 20-day SMAs all converge. Further gains from here target the 5-month resistance line near 1.3730 before the 100-day SMA at 1.3748. The surpass of the latter opens the door to a move to the mid-1.3800s, home of the October peaks and the key 200-day SMA. The RSI stays around 42, and the trend remains pale with the ADX close to 16.
Resistance levels: 1.3606 1.3652 1.3698 (4H chart)
Support levels: 1.3524 1.3450 1.3424 (4H chart)
AUD/USD charted a bearish “outside day” on Tuesday. Indeed, spot failed to extend the move further north of daily highs around 0.7430 and dropped to the negative territory to retest the 0.7360 region, where the 55-day SMA also converges.
The erratic performance of the greenback did not ignite a lasting move higher in the pair, which seems to have suffered the negative performance of the commodity complex, where prices of the tonne of iron ore grinded lower to levels last seen in May 2020 below the $90.00 mark.
The move lower in the pair came in tandem with the decline in yields of the key 10y AGB to the sub-1.76% area.
In Australia, HIA New Home Sales expanded 11.1% during October, while the Business Confidence tracked by NAB improved to 21 in the same month (from 10).
Decent contention for further decline in AUD/USD has so far emerged around 0.7360, where the monthly lows and the 55-day SMA coincide. The loss of this area could aim for a test of the 5-month support line around 0.7245 ahead of the weekly low at 0.7226 (October 6) and September’s low at 0.7169 (September 30). Bulls, on the other hand, need to clear the mid-0.7400s, where the 20- and 10-day SMAs are located, to allow for extra gains to, initially, the round level at. 0.7500 before October’s highs near 0.7550. This area is underpinned by the 200-day SMA (0.7547). The daily RSI eases to 45, and the trend gives away some muscle, as per the ADX near 22.
Resistance levels: 0.7431 0.7455 0.7470 (4H chart)
Support levels: 0.7360 0.7359 0.7323 (4H chart)
Another day, another higher for the yellow metal. Indeed, gold prices extended the rally further and flirted with the key resistance area around $%1,830 per ounce troy on turnaround Tuesday.
The persevering offered stance in the greenback and the deeper retracement in US yields pushed gold prices back to the $1,830 area for the first time since early September.
In addition, the pick-up in volatility also saw the VIX index (aka “the panic index”) climbing to levels past the 18 yardstick, an area last visited back in mid-October.
Extra upside in gold prices now face the key hurdle around $1,830, where the July, August and September highs are located. The surpass of this zone is expected to shift the investors’ attention to the 2021 peak at $1,913 (June 1). On the downside, the 200-day SMA at $1,789 emerges as the next support of note, which is in turn surrounded by minor obstacles at the 10-day SMA ($1,798), the 20-day SMA ($1,791), the 100-day SMA ($1,786) and the 55-day SMA ($1,782). A move below these levels should allow for a potential visit to the monthly low at $1,760 (November 3) before the weekly low at $1,750 (October 11).
Resistance levels: $1,831.30 $1,834.01 $1,863.17 (4H chart)
Support levels: $1,818.00 $1,811.50 $1,784.80 (4H chart)
Silver reversed three consecutive daily advances and faded the recent spike to weekly tops near $24.50 (November 8).
Prices of the ounce of the grey metal remained on the defensive on Tuesday in spite of further selling pressure hurting the US dollar. The daily pullback, however, seems to follow the negative price action in the commodity space.
Sustaining the correction in silver, the Gold/Silver Ratio climbed to fresh 4-day highs further north of the 75.00 yardstick in response to the solid rebound in prices of the yellow metal.
The immediate barrier for silver bulls now emerges at the monthly high at $24.50 (November 8) ahead of October’s high at $24.82 (October 22) and September’s top at $24.86 (September 3). Further up is located the round level at $25.00 followed by the 200-day SMA at $25.36. In the opposite direction, there are interim support levels at the 10-day SMA ($23.96), the 20-day SMA ($23.88) and the 55-day SMA ($23.42), all before the so far monthly low at $23.02 (November 3). A break below the latter exposes a visit to the 5-month support line around $22.30 ahead of $22.21 (October 6) and $22.00 (September 20).
Resistance levels: $24.50 $24.61 $24.82 (4H chart)
Support levels: $24.00 $23.57 $23.42 (4H chart)
Prices of the barrel of the American benchmark for the sweet light crude oil reached new 5-day highs just shy of the $84.00 mark on Tuesday.
Indeed, prices of the WTI regained further traction in the first half of the week, as traders continued to adjust to prospects of solid recovery in the demand for crude oil in the near term, which are in turn propped up by the firm economic recovery across the world.
In addition, the US recently lifted the ban for world travellers to visit the country, which is also expected to lend extra oxygen to the demand for jet fuel.
All the above coupled with the steady stance from the OPEC+ regarding its plan to increase the oil output by 400 kbpd has been collaborating with the rebound in prices of the WTI from monthly lows near the $78.00 mark (November 4), while relegating at the same time concerns stemming from the probability that the US could pump extra oil from its SPR in order to cool prices.
Later in the session, the API will publish its report on US crude oil supplies to the week ended on November 5 ahead of the EIA’S report due on Wednesday.
The rally in prices of the WTI is seen targeting the monthly peak at $84.85 (November 1) ahead of the YTD high at $85.39 (October 25) in the relatively short-term horizon. The resurgence of the selling interest could well see the monthly low at $78.28 (November 3) re-visited before the 55-day SMA at $76.18 and the weekly low around $75.00 (October 7). Further south from here resurfaces the 100-day SMA at $73.71 prior to the psychological $70.00 mark and before the weekly low at $69.42 (September 21).
Resistance levels: $84.05 $84.85 $85.39 (4H chart)
Support levels: $81.30 $80.21 $78.24 (4H chart)
The ongoing rally in US stocks seems to have taken a breather on Tuesday, forcing all three major benchmark indices to give away part of the recent advance.
That said, the Dow Jones retreated 0.60% at 36,213.80, the S&P500 lost 0.50% at 4,678.46 and the tech reference Nasdaq Composite shed 0.64% at 15,882.65; all indices now slipping into the negative ground for the first time after five consecutive weekly advances.
Other than some profit taking mood among market participants, the knee-jerk in stock prices appears to follow renewed inflation concerns following October’s uptick in Producer Prices.
Further upside in the index now needs to clear the all-time high at 36,565 (November 8) to attempt a move to the Fibo extension around 36,650. Sellers, in the meantime, face temporary support at the 10-day SMA at 36,024 before the 20-day SMA at 35,696. If the selling pressure gathers steam, then the weekly low at 35,490 (October 27) should come next seconded by the 55-day SMA at 35,091. Further down, the Dow could attempt to fill the gap at 34,923 (October 15) before the weekly low at 34,115 (October 13). The RSI recedes from the overbought territory near 64 and the trend gathers vigour denoted by the ADX near 26.
Top Performers: Cisco, Honeywell, Dow
Worst Performers: Visa A, Caterpillar, Goldman Sachs
Resistance levels: 36,565.73 36,650 (4H chart)
Support levels: 36,173.07 35,891.73 35,490.43 (4H chart)