U.S. Equities are trading flat in the lead up to the nonfarm payrolls report, which will give investors a gauge of further monetary policy

What You Need To Know

The U.S. equities markets need more direction while investors are awaiting the jobs report later this Friday to gauge the Fed’s next policy move. Increasing worker demand and wages will give the Fed a more challenging job in curbing high inflation. Meanwhile, oil prices continue to rise with China signalling further easing of Covid restrictions, increasing expectations that economic activity in the country will begin ramping up again. On the crypto front, U.S. authorities have stepped in and asked stakeholders of FTX for information on the company to investigate FTX’s collapse.

Look Out For

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

75 bps (20.6%) VS 50 bps (79.4%)

Market Overview

Economic Calendar

Market Movements

DXY

The US Dollar slumped to a 4-month low yesterday over the backdrop of a string of downbeat economic data. US Core PCE Price Index, a gauge that excludes food and energy and is focused on by the Federal Reserve, increased by only 0.20% last month, lower than the market expectations at 0.30%. In another crucial data, US ISM Manufacturing Purchasing Managers Index (PMI) declined from the previous reading of 50.2 to 49.0, which also fared worse than expectations of 49.8.

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 33, indicating the index is going into oversold territory.    

Resistance level: 107.95, 110.25

Support level: 104.75, 102.20

XAU/USD

Gold prices surged to a three-month high as the cooling inflation data, and the recent dovish statement from Federal Reserve Chair Jerome Powell sparked a significant selloff for the US Dollar, supporting the dollar-denominated gold. Market participants will now focus on Friday’s US Nonfarm Payroll for November – which will give hints about the monetary decision from the Federal Reserve.

The gold market is trading higher while currently near the resistance level. However, MACD has diminishing bullish momentum, while RSI is at 69, suggesting the commodity is going into overbought territory.  

Resistance level: 1810.00, 1875.00

Support level: 1730.00, 1680.00

EUR/USD

The weakening US Dollar, weighed by the Fed’s dovish statement and easing inflation data from the US region, has spurred bullish momentum on EUR/USD on a relative basis. However, the gains experienced by the Euro are still capped by pessimistic manufacturing data. According to Markit Economics, Germany’s Manufacturing Purchasing Managers Index (PMI) came in at 46.2, missing the market forecast of 46.7. As for now, investors are advised to keep an eye out for the monetary policy decision from the European Central Bank to gauge the likelihood trend for the pair.

EUR/USD is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 67, suggesting the pair is going into overbought territory.  

Resistance level: 1.0515, 1.0735

Support level: 1.0285, 1.0010

BTC/USD

After barely breaking above its resistance level, BTC has fallen back to the consolidation price range between 17040 to 15836. Given that the dollar has been weak lately, the DXY was trading below 105 for the 1st time since August this year; BTC is not able to take advantage of a weaker dollar to rise further. On the other hand, the U.S. SEC has stepped in and investigated the collapse of the FTX and hopefully will restore the stability of the crypto market. 

The indicators suggest that the bullish momentum has slightly diminished. MACD has been flowing near the zero line and the histogram has been flat, depicting that the bullish momentum for BTC is lacking. The RSI has also failed to gain into the overbought zone and fall to 59-level as of writing. 

Resistance level: 17040, 18060

Support level: 15673, 14799

DJ30

The U.S. nonfarm payrolls (NFP) report will be released later today and the U.S. equities markets lack direction while investors await the report. The NFP and the CPI reports will be the gauge for the Fed’s decision on its next policy move. A greater-than-expected cost of borrowing will harm the equities markets and vice versa. 

On the technical side, although the index has broken through the downtrend channel at 33050, the MACD has been moving in a downtrend, suggesting that the bullish momentum for the index is getting weaker. On the other hand, the RSI has constantly been staying above the 50-level but is not able to break into the overbought zone. 

Resistance level: 35437, 36531

Support level:  33015, 31545

GBP/USD

The pound rose to a 16-week high as the dollar broadly softened on Thursday. The pound was last up 0.9% against the dollar at $1.2237 as of writing, its highest level since the beginning of Aug, breaching the previous high of $1.2153 touched on 24th Nov. It is due to the dollar extending its losses after Powell signals that the Federal Reserve will slow the pace of interest rate hikes for next month. At the same time, British manufacturing data released on Thursday showed that a fall for the fourth month in November as businesses faced the lowest overseas demand in recent years led to job cuts and reduced investors’ confidence about the year ahead. 

The pound successfully broke its previous resistance level, $1.2153 and is now trading at $1.2237. The MACD line started to bend up, showing a bullish momentum ahead for the pair. RSI spikes from 59 to 70, indicating a bullish momentum is blowing. However, RSI has already touched its overbought zone, suggesting that it might have a slight retracement in the near term for the pair to continue its upward trends. 

Resistance level：1.2302， 1.2676 

Support level： 1.1950，1.1627

NAS100

The Nasdaq gained 0.13% to 11,482.45 points, lifted by gains of over 1% each in Nvidia (NVDA.O)and Facebook (META.O). The economic data from the U.S. Labour Department showed initial claims for unemployment benefits dropped 16,000 to a seasonally adjusted 225,000 for the week ended on 26th Nov. Meanwhile, markets are awaiting nonfarm payroll data later on Friday for clues regarding how interest rate hikes affected the labour market. 

Investors could keep an eye on the upcoming economic data or wait for a catalyst as the index trades near the resistance level of 12094. The MACD line is still trading above the zero line, suggesting the index remains in bullish momentum in the near term. At the same time, the RSI is trading at 64, indicating an ongoing bullish momentum.

Resistance level: 12094，12476

Support level: 11228，10448

CL OIL

Oil prices surged after top oil importer China began to ease the Covid-19 restrictions in two major cities, while the weak US Dollar, buoyed by the cooling inflation data, has spurred bullish momentum on this black commodity on a relative basis. According to Reuters, the two major Chinese cities of Guangzhou and Chongqing announced an easing of Covid-19 restrictions by lifting their ban on indoor dining and scrapping PCR test requirements to enter many buildings.

Crude oil prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 59, indicating downside is more favored as the RSI retreated sharply from the overbought territory.   

Resistance level: 83.10, 91.90

Support level: 76.00, 69.90