What You Need To Know

China surging Covid-19 cases with Beijing doubling the cases over the weekend, has panicked the market. Hang Seng plunged nearly 4% as of writing and the sentiment spread to other Asian Equities markets as well. Safe haven Dollar rises amid the China pandemic crisis and oil prices fall to a yearly low with the gloomy demand outlook. The U.S. job report that is going to be released this week will be the gauge for the investor to predict the move from the Fed regarding the monetary policy. 

Look Out For

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

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

Market Overview

Economic Calendar

Market Movements

DXY

The US Dollar was traded flat across the board on Friday after the US Thanksgiving holiday. Still, it hovered near multi-month lows as the prospect of the Federal Reserve may soon slow down the pace of its aggressive rate hikes weighed on the currency. In addition, Friday’s Nonfarm Payroll for November will continue to test the US economy’s progression. Economists forecast that the US economy will increase by 200,000 new jobs, the smallest increase since December 2020, while the unemployment rate is expected to remain at 3.70%. 

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 46, suggesting the index to extend its gains as the RSI rebounded sharply from the oversold territory.

Resistance level: 107.95, 109.60

Support level: 105,75, 104.75

XAU/USD

Gold prices ended the week with a bullish bias as market participants continued to bet for a smaller rate hike from the Federal Reserve. According to meeting minutes on Wednesday, most Fed policymakers agreed to moderate the pace of interest rate hikes, dragging down the appeal for the US Dollar while underpinning the dollar-denominated gold.

The gold market is trading higher following prior rebound from the support level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 53, indicating the product would hover in a range from 1785 and 1730 as RSI stayed near midline.  

Resistance level: 1785.00, 1815.00

Support level: 1730.00, 1680.00

EUR/USD

Heightened volatility across the board with spiking Covid-19 cases in China and failure to achieve any agreement regarding the price cap on Russian oil continue to cause emerging market currencies such as Euro to be less attractive as investors look at a stronger currency. On the macro front, denoting that the supply chain bottlenecks from the European region are showing an easing sign coupled with loosening global supply chain pressure and weaker demand prospect, European Central Bank Vice President Luis de Guindos claimed that the inflation in the Euro area was likely at its peak or anyway close to it.  

EUR/USD is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 48, suggesting a neutral-to-bearish stance as the RSI stood below the midline. 

Resistance level: 1.0425, 1.0595

Support level: 1.0225, 1.0080

BTC/USD

The market is uneasy with the surging of Covid-19 cases in China and there is a slightly higher demand for the safe haven, Dollar. With that being said, BTC is trading low against the USD notwithstanding that  the uncertainty and the instability of the crypto market is still intact. BTC will likely consolidate between a price range with the investor holding a “wait-and-see” mode. 

On the technical side, there is strong resistance for BTC to trade below a price range with no catalyst for the coin at the moment. The MACD shows that the bullish momentum has eased as it has flowed below the zero line. The RSI on the other hand, depicts a lack of buying power for BTC as it falls to the 38-level as of writing. 

Resistance level: 17397, 18362

Support level: 15850, 15180

DJ30

The Dow Jones has enjoyed the after-effect of the release of the Fed’s minutes on Wednesday. Investor gauge that the Fed will have a more dovish approach to the upcoming monetary policy which will favour the equities market. However, the global market outlook is gloomy especially the surging Covid-cases in China and the geopolitical issue in Euro will put pressure on the index. 

On the technical side, the Dow Jones is trading on its bullish uptrend support line and the next resistance will be at a psychological level at 35000. The RSI suggests that the buying power is still strong, where it has been hovering near the overbought zone for the past week. However, the MACD shows that the bullish momentum is slowing down although the MACD line is still hovering on above. 

Resistance level: 35000, 35930

Support level:  32993, 31434

GBP/USD

The pound slightly retraced to 1.20 against the dollar as of writing. Moreover, the UK’s government planned to launch a billion-pound for home insulation programme. The program will help reduce energy consumption by 15% by 2030 and provide a 12.6 billion pound energy efficiency budget to cover the years up to 2028, which Jeremy Hunt expanded in a fiscal statement on 17 Nov. The implementation would probably ease inflation risk and enhance demand for Pound Sterling. However, it might be difficult for the pound to continue its upswing as severe China COVID-19 cases increase risk-off sentiment in the global financial market, dragging down its appeal.

The pound hovers around 1.1967 to 1.2100 at the time of writing. However, the momentum seems to ease after the resistance is broken, and there is another psychological resistance level of 1.23. The MACD line shows a diminishing bullish momentum ahead. RSI is dropping to 54, which indicates a diminishing bullish momentum ahead in the short term. 

Resistance：1.2297， 1.2676 

Support： 1.1967，1.1738

NAS100

The NASDAQ dropped 58.96 points or (-0.52%) on Friday with the pressure from Apple Inc (AAPL.O) in a half trading session for Wall Street. Apple fell 2.0% on news of reduced iPhone shipments from a Foxconn plant in China in November as production was hit by COVID-related worker unrest and the lockdown restrictions. Besides, investors focused on retailers as Black Friday sales kicked off against the high inflation and cooling economic growth. Suggest that investors could keep an eye on retail sales, China’s newest COVID outbreak and the Federal Reserve’s next steps for further trading signals. 

MACD is trading on the sidelines above the zero line, which suggests the index remains in a sideway movement in the short term. At the same time, RSI is trading around 58, indicating a neutral-bullish momentum ahead.

Resistance level: 12096，12750

Support level: 11230，10459

CL OIL

Crude oil prices dipped for a third straight week as a record number of new Covid-19 cases in China has made local authorities tighten the touch Zero-Covid restriction, weighing on crude oil demand. Chinese authorities reported a record 31,656 infections last Thursday. Besides, oil prices received further bearish momentum as European officials still could not achieve any consensus on a price cap sanction for Russian oil. Earlier, Diplomats from the Group of Seven (G7) have been discussing implying a Russian oil price cap between $65 and $70 a barrel with their European Union diplomats over the past few days. However, they have yet to reach an agreement.

Crude oil prices are trading lower following prior breakout below the previous support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 32, indicating the product was going into oversold territory.

Resistance level: 83.10, 91.90

Support level: 76.00, 69.90