Oil prices continue to be buoyed by China’s easing of curbs, as well as the recent sanctions on Russian oil.

What You Need to Know

Better-than-expected earnings reports from some major U.S. companies spurred a rally in its equities market and the sentiment extended to the Asian market. Oil extended its bullish trend as the U.S. crude inventories fell by 5.89 million barrels and are far from the estimated drop of 1.66 million barrels. China’s relaxation of curbs also boosted oil prices on Covid-19 curbs as the aftermath of the Russian oil sanction started to kick in. Elsewhere, gold prices increased and a minor fall in the dollar as the consumer confidence level lifted while awaiting further U.S. data that will be released this week. 

Look Out For

Current rate hike bets on 1st February Fed interest rate decision: 

25 bps (72%) VS 50 bps (18%)

Market Movements

DXY

The Dollar Index, which trades against a basket of six major currencies, continues to trade within a certain range after the United States released its mixed economic data. On the positive front, consumer sentiment in the United States continued to remain resilient, with the Conference Board’s Consumer Confidence Index surging to 108.3 from the previous reading of 101.4, exceeding the market expectations of 101.0. However, the gains experienced by the US Dollar were capped by downbeat housing data. According to the National Association of Realtors, US Existing Home Sales declined from the previous reading of 4.43M to 4.09M, missing the market expectations of 4.20M, indicating the rising borrowing cost environment continues to weigh on the housing demand

The Dollar Index is trading lower following the prior breakout below the previous support level. MACD has illustrated diminishing bullish momentum, while RSI is at 38, suggesting the index might extend its losses as the RSI stays below the midline.  

Resistance level: 105.05, 108.35

Support level: 101.30, 99.05

XAU/USD

Gold prices are trading sideways as traders await crucial economic data from the United States. Given the recent weakening US Dollar, the overall trend for gold prices remains bullish. Investors are advised to continuously monitor the development of US Gross Domestic Product (GDP) and Core Personal Consumption Expenditure (PCE) details for the third quarter for further trading signals.

The gold market is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 65, suggesting the commodity is entering the overbought territory.

Resistance level: 1820.00, 1870.00

Support level: 1770.00, 1725.00

EUR/USD

In the past trading week, the pair has been consolidating in a price range between 1.0580 to 1.0740. The dollar index fell slightly last night as investors are confident about the upcoming U.S. economic data. U.S. GDP, initial jobless claims and also PCE data are set to be released by these 2 days and the market is confident that inflation has peaked in the nation. Perhaps the Fed will pivot from its Hawkish stance in monetary policy. The slow down in rate hike pace from the Fed will be an advantage for the pair to edge higher. 

The pair has been sideways on the technical front after it touched its highest level at 1.0736 since June this year. The RSI has been moving in a smaller range near to the 50-level which gives a neutral sign for the pair. The MACD has remained flat and flows closely to the zero line which also signals no bias in either way of the future trend. 

Resistance level: 1.0743, 1.0988

Support level: 1.0495, 1.0277

BTC/USD

BTC has tumbled nearly 10% over the weekend and fell below its psychological support level at 17000. But the bearish momentum eased and climbed back to near 17000 level last night. The Dollar index fell slightly and the gold price edged slightly higher along with a rally in U.S. equities markets, indicating that consumer confidence is higher before the U.S. economic data is out. This is also a key catalyst for BTC if the upcoming U.S. consumer confidence data is favourable. The Fear and Greed index for crypto has shifted from the extreme fear zone to the fear zone and this also suggests that investor confidence is slowly building up. If the upcoming U.S. economic data is favourable for the Fed to slow down rate hikes, this will bolster the sentiment for riskier assets including cryptocurrency.

On the technical front, BTC crashed by nearly 10% after it touched its highest point in a month at 18366. The RSI has rebounded slightly from near the oversold zone, suggesting that the selling power is eased. There is also a sign of slow down in bearish momentum as the MACD line is climbing toward the zero line from below. 

Resistance level: 16870, 17640

Support level: 16166, 15448

DJ30

The Dow surged yesterday, buoyed by strong quarterly earnings from major corporations and optimistic consumer data. The Conference Board’s Consumer Confidence Index, a key indicator of consumer spending, surged to 108.3 from the previous reading of 101.4, exceeding the market expectations of 101.0. Such upbeat data indicated a resilient consumer sentiment, easing fears about recession while spurring risk-on sentiment in the global financial market. Meanwhile, optimistic financial results from major corporations such as Nike and FedEx Corporation had also sparked further confidence toward the US equity market, underpinning the Dow.

The Dow is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 51, indicating the index might extend its gains as the RSI rebounded sharply from the oversold territory. 

Resistance level: 34110.00, 35320.70

Support level: 32620.00, 31165.00

GBP/USD

The pound dropped against the dollar at $1.2119 on Wednesday as British public borrowing hit a November record, increasing the challenges for the UK economy. The public borrowing data showed a higher cost for energy subsidies since November. Therefore, the pair has lost some ground due to the overall outlook for the UK not looking great now. Analysts predict that the pound will likely face headwinds in 2023 as the cost of energy subsidies and public borrowing keep increasing. 

As we can see, the pound has a very low volume trading on Wednesday. The MACD line hovers below the zero line, indicating bearish momentum ahead. At the same time, RSI is trading at 44, which indicates a bearish movement ahead. We expect the pair’s movement to stay on the sidelines until further economic data is released. 

Resistance level：1.2343，1.2664

Support level： 1.2119， 1.1950

NAS100

The Nasdaq rose by 1.54% or 162.26 points to 10,709.37 on Wednesday. Moreover, the upbeat U.S. consumer confidence hit an eight-month high in December as inflation retreated and the labour market remained strong, while 12-month inflation expectations fell to 6.7%, the lowest since September 2021. Yet, the U.S. existing home sales data dropped 7.7% as higher mortgage rates impacted the housing market. This might trigger investor hope that the Fed could ease its tightening policy. 

Although the index rose 1.5% yesterday, the overall trend remains neutral-bearish. The MACD is moving downward with a broader range, suggesting the index is still trading in bearish momentum. At the same time, RSI is trading at 41, indicating a bearish momentum.

Resistance level: 11500, 12170　

Support level: 10965, 10458

CL OIL

Oil prices extended their gains for a third straight day as top importer China continued to ease the Covid-19 restrictions. Meanwhile, yesterday’s inventory data from the United States also sparked positive prospects for the oil demand. Millions of people have been advised to continue to work, despite being infected by Covid-19, indicating the government has tried to shift from its previous strict Covid-19 policy. According to the latest data, China’s oil imports from Russia in November surged by 17% yearly as the solid economic recovery continued to boost demand for this black commodity. On the other hand, the oil market received further bullish momentum against the backdrop of positive inventory data. According to the Energy Information Administration (EIA), US Crude Oil Inventories came in at -5.894M, well below the market expectations of -1.657M.

Crude oil prices are trading higher following the prior breakout above the previous resistance level at 77.45. However, MACD has illustrated diminishing bullish momentum, while RSI is at 70, suggesting the commodity is entering into overbought territory.

Resistance level: 77.45, 81.55

Support level: 73.70, 70.20