Optimism is still rife in the markets as China shifts its attention to shoring up its economy and supporting its property sector.

What You Need to Know

Asian markets continued with bullish momentum, stimulated by the U.S. equities market’s biggest weekly gain last week and also a shift in policy by the China authorities from zero-Covid to supporting the property market. The Chinese government has issued a 16-point plan to boost its property sector, which includes addressing the property liquidity crisis and loosening down-payment for homebuyers. The dollar slumped more than 4% last week with the cooling U.S. inflation rate and the prospect of a more dovish rate hike from the Fed. The sentiment in the cryptocurrency market is still gloomy, with FTX filing for bankruptcy and markets under pressure. 

Look Out For

Current rate hike bets on 14th December Fed interest rate decision: 

75 bps (19.4%) VS 50 bps (80.6%)

Market Movements

DXY

The Dollar Index  continues to receive significant selloffs, with investors bracing for downbeat inflation data and dovish statements from the Fed. Federal Reserve Governor Christopher Waller claimed on Sunday that the Fed might consider slowing down the rate increases during its next meeting but reiterated that they would continue to monitor further economic data for fresh clues about the future monetary decision in the long-term.  

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 28, indicating the index is going into oversold territory. 

Resistance level: 107.80, 109.65

Support level: 106.45, 105.00

XAU/USD

Gold markets are seeing their biggest weekly gains in 30 months following the significant selloff for the US Dollar and cryptocurrencies sparking market demand for gold. Cooling inflation data has hinted that the Federal Reserve might moderate its hiking pace, which underpinned the dollar-denominated gold. Earlier, October’s Consumer Price Index (CPI) recorded its slowest annual growth in nine months, expanding by 7.7% over a year-on-year basis versus the market forecast of 8.0%.

The gold market is trading higher while currently testing the resistance level. Nevertheless, MACD has illustrated diminishing bullish momentum, while RSI is at 71, indicating the commodity was going into overbought territory.

Resistance level: 1764.40, 1801.30        

Support level: 1727.20, 1681.85

EUR/USD

Market sentiment was good in the past week with the U.S. equities market recording its biggest weekly gain since June and the equities market in other regions following the momentum. The bullish momentum is driven by the favourable U.S. CPI data released last Thursday, which led to a higher market risk appetite and weakened the dollar. 

The pair traded on its bullish trend since last month and the momentum is continuing given that the USD is weak especially after the release of the CPI data. The MACD is still flowing high and the RSI has touched the overbought zone; if the pair can keep its momentum to trade above the level of 1.0164 then the bullish momentum is still on the go. 

Resistance level: 1.0412,1.0574

Support level: 1.01605, 1.0001

BTC/USD

The crypto markets continue to remain volatile following FTX, one of the biggest crypto exchanges, filing for US bankruptcy on Friday and Sam Bankman-Fried stepping down as CEO, triggering a potentially massive meltdown in the crypto industry due to spillover effects. Earlier, FTX had struggled to raise billions of dollars to solve the issues regarding the liquidity crunch in the platform, as traders rushed to withdraw billions from the platform in just 72 hours while rival exchange Binance abandoned a proposed acquisition deal.

BTC is trading lower while currently testing the support level at 15065. MACD has illustrated diminishing bullish momentum, while RSI is at 30, suggesting downside is more favoured as the RSI stays below the midline. 

Resistance level: 18265, 21255

Support level: 15065, 12010

DJ30

The Dow Jones index has been bullish since last month and recorded its biggest weekly gain last week since June. Lighter CPI data has pushed demand for risky assets higher in the market, leading to a “buy-everything” rally that occurred last week. 

The index can hold on to the critical psychological support level at 32000 early this month, which shows that the bullish momentum is still strong. However, the MACD histogram has narrowed down and the RSI has just fallen below the overbought zone which depicts that the momentum might slow down for a while. If the index is able to stay above 33000 level suggesting that the index is still strong 

Resistance level: 34100, 34840

Support level: 33030, 32065

GBP/USD

The pound has reached its two-month high and is trading at 1.1785 at the time of writing. As investors continued to digest the CPI data last week, it led to the dollar index drop, and the pound went up. The market could focus on the UK government’s budget plan, which will be announced on Thursday for future trading signals. 

The pair is testing its resistance level at 1.1785 as of writing, while MACD remains upwards, indicating a bullish momentum ahead. Besides, RSI is trading near the overbought zone at 65, which suggests it remains bullish in the short term. 

Resistance：1.1985, 1.2304

Support： 1.1779, 1.1464

USD/JPY

The pair dropped significantly after the release of the inflation data last week. The dollar index fell as the Fed might slow down its hiking pace and directly strengthen the yen. The pair has dropped below its support level of 140 and is now trading at 139.01 as of writing. The slip of the pair is likely too fast, with a Fed pushback against over-dovish rate expectations likely to put some pressure back on.  

Both indicators, MACD and RSI, show that it might reach the oversold level, suggesting the fall in the pair looked overdone when it dropped to around 138.50 on Friday. That indicates a technical rebound to 140 wouldn’t surprise technical traders.

Resistance level: 139.62, 142.11

Support level: 137.80  135.52

CL OIL

Crude oil prices surged following China’s easing of some of its strict Covid-19 rules, spurring hopes for improved economic activity and demand in the world’s giant oil importer, China. Under the new rules, the Chinese authorities have shortened quarantine times for close contact cases and inbound travellers by two days from the early 7 days to 5 days. Meanwhile, a weakening US Dollar will also make US-denominated oil less expensive for other currency holders. The Organization of the Petroleum Exporting Countries and allies led by Russia, collectively known as OPEC+, will meet again on 4th December to set its supply policy.

Crude oil prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59, suggesting a neutral-to-bullish stance as RSI stood above the midline

Resistance level: 89.75, 92.60

Support level: 85.75, 83.05