NCM Investment - The Festival of GOLD
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EURUSD
Trading was choppy across the FX board this Tuesday, with EUR/USD seesawing within familiar levels. The pair fell to 1.2120 as the dollar benefited from a sour market’s moo, but finished the day little changed around 1.2150. A scarce macroeconomic calendar and fundamental jitters were behind the absence of definitions. Brexit talks continue, which seems good, although no progress on negotiations has been reported. On a positive note, Republican Senator Mitch McConnell acknowledged Joe Biden as the elected President after the Electoral College confirmed his victory.
In the US, Industrial Production increased 0.4% in November, while Capacity Utilization was up to 73.3%, both beating the market’s expectations. Manufacturing output was up for the seventh consecutive month. Also, House Speaker Nancy Pelosi invited fellow leaders to a meeting to discuss government funding and coronavirus relief. Without fresh funding, the US government will be shutting down this weekend.
On Wednesday, Markit will publish the preliminary estimates of its December PMIs for the EU and the US. Manufacturing activity in the EU is expected to have contracted but also to have held within expansion territory. Services output, however, is expected to fell further into contraction levels. The US will publish November Retail Sales, foreseen at -0.3% MoM, while in the American afternoon, the Federal Reserve will release its latest monetary policy decision and publish fresh economic projections.
The EUR/USD pair seems poised to extend its advance in the near-term. The 4-hour chart shows that the price has briefly pierced a mildly bullish 20 SMA but quickly recovered above it. The longer moving averages continue to advance below the shorter one, reflecting continued buying interest. Technical indicators hold within positive levels, although lacking directional strength. The pair could accelerate its advance once beyond 1.2177, so far the year’s high.
Support levels: 1.2120 1.2075 1.2030
Resistance levels: 1.2180 1.2230 1.2280
USDJPY
The USD/JPY pair advanced to a daily high of 104.14 at the beginning of the day, as the greenback found temporal support on risk-off sentiment. However, the pair changed course during US trading hours, falling towards the current 103.70 price zone. Wall Street posted some modest gains, while Treasury yields rose, backed by hopes that US lawmakers are moving forward on fiscal stimulus.
Japan will publish on Wednesday the November Merchandise Trade Balance, expected to post a surplus of ¥529.8 billion after printing at ¥872.9 billion in the previous month. Imports are foreseen falling by 10.5% while exports are expected to increase by 0.5%. The country will also publish the December Jibun Bank Manufacturing PMI’s preliminary estimate, previously at 49.
The USD/JPY pair is trading near its daily low, and technically bearish. The 4-hour chart shows that a bearish 20 SMA rejected bullish attempts, with the moving average accelerating its decline below the larger ones. Technical indicators have eased from around their midlines to stabilize within negative levels, leaving doors open for additional declines.
Support levels: 103.50 103.10 102.70
Resistance levels: 103.90 104.30 104.75
GBPUSD
The GBP/USD pair is up on Tuesday, trading near a daily high of 1.3452. The sterling is all about Brexit as leaders battle to clinch a trade deal before December 31. The pair traded as low as 1.3279, weighed by mixed UK employment figures and comments from UK PM Boris Johnson’s spokesman. This last said that the UK wants a post-Brexit deal but not “at any cost.” PM Johnson told his senior minister that the most likely outcome was a no-deal Brexit. The news feeds were flooded by rumors and speculation, but no official announcement has been made at the end of the day.
Employment data showed that the number of people claiming jobless benefits rose by 64.3K in November, beating expectations of 50K, while the ILO unemployment rate for the three months to October came in at 4.9% better than the 5.1% expected. Wages in the same period surged by more than anticipated. This Wednesday, the UK will publish November inflation figures. The annual CPI is foreseen at 0.6%, while the monthly one is expected at 0.1%. Core inflation is seen advancing 1.4% YoY.
The GBP/USD pair is bullish in the short-term, trading above a daily descendant trend line coming from this year’s high at 1.3539. The 4-hour chart shows that the pair has advanced above all of its moving averages, which offer modest bullish slopes. The Momentum indicator heads firmly higher within overbought levels, while the RSI is stable around 60. As it has been happening lately, directional movements will depend on Brexit headlines.
Support levels: 1.3290 1.3240 1.3185
Resistance levels: 1.3350 1.3390 1.3440
AUDUSD
The AUD/USD pair suffered a setback at the beginning of the day, falling to 0.7506, as the Reserve Bank of Australian Minutes brought a surprise. Policymakers noted that “substantial policy support” would be required for a considerable period, somehow hinting at more QE coming in early 2021. Meanwhile, the American dollar got attention due to its safe-haven condition, advancing on mounting concerns regarding fresh lockdowns in the US and Europe.
Early Wednesday, Australia will publish the November Westpac Leading Index, previously at 0.12%. The country will also see the release of the December Commonwealth Bank PMIs. The services index was previously at 55.4, while the manufacturing index was at 54.9 in November. Later in the day, the country will release October HIA New Home Sales.
The AUD/USD pair bounced from the mentioned low to settle in the 0.7560 price zone, helped during US trading hours by Wall Street’s positive tone. The pair is technically bullish, as the 4-hour chart shows that a bullish 20 SMA leads the way higher, attracting buying interest. Technical indicators stand within positive levels, although lacking directional strength. The pair has room to extend its advance towards 0.7660 on a break above 0.7580, the immediate resistance level.
Support levels: 0.7510 0.7470 0.7425
Resistance levels: 0.7580 0.7620 0.7660
SILVER
Silver also benefited from the decline seen in the USD index DXY on Tuesday in the eve of FOMC. The white metal lifted to mid-$24.00 but failed to extend its lead to test last week’s highs at $25.00 levels. Risk aversion caused by the announcement of further lockdowns combined with the stimulus expectations with falling real rates in the US is the main driver behind the precious metal rally. Further dovish statements from the Fed will most likely push precious metals further. Therefore, the event tomorrow will be crucial for precious metal traders.
Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the targets up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.
Support Levels: $22.90 $20.75 $18.42
Resistance Levels: $25.21 $26.00 $27.00
DOW JONES
Dow Jones tried to erase its gains made on Monday while the USD index DXY continued its decline towards mid-90.00 levels testing its lowest level in two and a half years. While the vaccine optimism, in reality, could be short-lived, stimulus expectations are keeping the markets alive at the moment. As the vaccine roll-out started in the US, real-life effects are expected to be seen at least around 2021 summer. The number of coronavirus deaths in the United States exceeded 300,000 on Monday as the hardest-hit nation started its first vaccine inoculations, while tighter COVID-19 restrictions were imposed on London. Other countries across Europe were also set to impose new restrictions during the holiday season to limit the spread of the virus. Germany adopted a stricter lockdown on Sunday. On the other hand, expectations of a $1.4 trillion spending package to help the pandemic-battered U.S. the economy could be imminent grew after House of Representatives Speaker Nancy Pelosi invited other top congressional leaders to meet later on Tuesday to seal a deal. All eyes will be on the FOMC decision today while there is no change expected in the interest rates. However, a dovish stance from the Fed and a possible further easing will most likely trigger the risk appetite while suppressing the USD.
From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.
Support Levels: 28,400 28,000 27,770
Resistance Levels: 29,500 30,000 30,500
GOLD
Gold topped its one-week high on Tuesday as the increasing number of cases weighted on the risk sentiment. Also, the USD index DXY accelerated its decline towards mid-90.00 levels. Despite the roll-out of the vaccine, there is still a long way until the social life goes back to normal. Therefore, a new set of restrictions might be on the table as Germany, The Netherlands and UK already announced further restrictions to limit the gatherings for The Christmas holiday. On the other hand, stimulus expectations continue to weigh on the USD. Also, it is highly expected that the Fed might follow the ECB and announce further easing to support the markets as all the traders will follow the FOMC press conference today. The yield on the US 10-year TIPS has slumped back to -1.0% and currently sits close to lows since mid-September. For context, falling US real yields (since the start of the year the US 10-year TIPS yields has dropped from roughly 0.0% to current levels at around -1.0%) have been identified as a key driver of precious metals; the lower the real rate of return on investments in bonds, the more comparatively attractive it is to invest in non-yielding precious metals.
From the technical point of view, below the $1,860 level, the supports can be followed at $1,800, $1,763 ($1,451-$2,075 61.80%) and $1,700 levels. Over the $1,860 level, the resistances can be followed at $1,900 with $1,956 ($1,451-$2,075 38.20%) and $2,000 levels.
Support Levels: $1,800 $1,763 $1,700
Resistance Levels: $1,900 $1,956 $2,000
WTITITITI
WTI extended its move up on Tuesday despite the gloomy EIA report that lowered the 2020 global oil demand forecast by 50K BPD. The International Energy Agency (IEA) stated that Global oil stocks will move into deficits compared with the end of 2019 levels. While the 2021 forecast revised down to 170,000 BPD, product stock draws reached the 2020 peak in October, and will slow until more demand recovery in Q2 2021. However, the negative EIA report and further lockdowns did not stop the oil bulls as the black gold tested March highs right before the massive decline seen at the beginning of the pandemic. With Covid-19 cases on the rise in Europe and the US still, the near-term risks to crude oil demand are growing. Indeed, on Tuesday, the Italian PM said that it would be necessary to adopt additional Covid-19 restrictions over the coming weeks to avoid a third wave, putting Italy on course to join the likes of Germany and the Netherlands in imposing harsher lockdown restrictions that will reduce European fuel demand over the coming weeks. At this point, WTI is driven by vaccine optimism which will take a long time until the results are seen in real life.
Next supports can be seen at $45.00, $43.88 and $43.00 respectively while the resistances can be followed at $47.00, $48.50 and $49.00 levels.
Support Levels: $45.00 $43.88 $43.00
Resistance Levels: $47.00 $48.50 $49.00
MACROECONOMIC EVENTS
* 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.
Please remember that trading financial markets carry a high degree of risk to your capital. It is possible to lose more than your initial stake. Leveraged products may not be suitable for all
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