The Department of Labor reported that the number of initial jobless claims fell by 8,000 to 198,000, better than the expected

31 December 2021, 03:07

Market Focus

The S&P 500 Index and the Dow Jones Index hit intraday highs on Thursday but closed lower. After the stock market opened on Thursday, the Dow Jones, S&P 500 and Nasdaq all rose 0.38%, 0.12% and 0.02%, respectively. After positive economic data was released earlier, there was a bullish trend. The Department of Labor reported that the number of initial jobless claims fell by 8,000 to 198,000, better than the expected 205,000. The 4-week moving average of 199,250 points is the lowest point since October 1969. As the labour market continues to tighten, the current unemployment rate is expected to drop slightly to 4.1% in December. At the end of the market, the Dow Jones Industrial Average fell 0.3% to 36,398.09 points, the S&P 500 index down 0.3% to 4,778.74 and the Nasdaq Composite Index closed down 0.2%.

The winners in the S&P 500 index are still real estate, utilities, and healthcare, which rose 0.36%, 0.34%, and 0.16% respectively. On the other hand, the communications sector reversed the situation on Thursday, rising 0.11%. This sector is pushed up by ViacomCBS, Discovery and other video streaming stocks as it was previously expected that U.S. video content spending will increase in 2022. In contrast, technology stocks were dragged down by the decline in chip stocks, and Micron’s stock price fell. Micron Technology fell more than 2% after warning that the new Covid closure in Xi’an, China would affect output. Moreover, Biogen gave up the previous day’s gains. After Samsung denied reports that it was negotiating to acquire the healthcare company for US$42 billion, the company’s share price fell by more than 7%.

Main Pairs Movement

On Thursday, light holiday trading continued and the U.S. dollar rose slightly against most rival currencies as the decline in the number of initial jobless claims helped alleviate concerns that the surge in COVID-19 infections will curb economic recovery. Therefore, the major currency pairs remained at familiar levels. The macroeconomic calendar will remain blank throughout Friday, with the exception of China releasing its manufacturing purchasing managers index for December. In the end, the dollar index fell 0.12% to 95.99, EUR/USD is trading a few pips above the 1.1300 level and closed at 1.13231. In contrast, GBP/USD continued to move northward, hitting a new monthly high of 1.3521 but then closing down at 1.35004.

The Canadian dollar performed the strongest, with the USD/CAD falling to the 1.2740 price area. On the other hand, the AUD/USD currency pair continued to rise gradually but faced certain pressure near 0.7275 for the second day in a row. USD/JPY maintained a positive tone, trading around 115.10.

Crude oil consolidated gains, while gold prices rose slightly, both staying within familiar levels.

Among the cryptocurrencies, Bitcoin and Ethereum finally got some support and Bitcoin recently rose by 1.44% to $47,150, while Ethereum went up by 2.32% to $3,711.

Technical Analysis

GBPUSD (4- Hour Chart)

GBPUSD made a U-turn during the American trading hours as it has reclaimed 1.3500 at the time of writing, with the US dollar facing renewed selling pressure amid falling US Treasury Bond yields. From the technical perspective, GBPUSD regains strength, turning bullish tone on the 4- hour chart since it sustainably trades above the 20 and 50 simple moving averages and it has broken two psychological resistances, 1.3300 and 1.3400, within 10 trading days. On the upside, GBPUSD is currently contesting its psychological resistance at 1.3500; if the pair can witness the break of the 1.3500 level, then it will possibly accelerate heading toward the next critical resistance at 1.3815. From the ADAM Reflection indicator, the projection of the price is also located around 1.3815 if GBPUSD can break its current barrier at 1.3500. However, the RSI reading has slightly declined to 63 and the MACD is in the neutral position, suggesting that the bullish momentum is fading away. As a result, it would be a critical turnaround for GBPUSD at the moment.

Resistance: 1.3575, 1.3661, 1.3815

Support: 1.3489, 1.3417, 1.3320, 1.3163

EURUSD (4- Hour Chart)

The price action of EURUSD continues to seesaw in the 1.1233 to 1.1357 range but holds steadily above the 1.1300 level after the US initial Jobless Claim. From the technical aspect, the outlook of EURUSD remains neutral tone on the 4- hour chart while the currency pair moves back and forth around its 20 and 50 simple moving averages, suggesting that the pair is currently directionless. Moreover, the RSI is holding within neutral levels, hovering around its midline; the MACD also move in between positive and negative tones. As a result, it is quite unlikely that EURUSD can find its way during the upcoming hours ahead of the New Year Holiday. The relevant resistance awaits at 1.1357, followed by 1.1462, whilst the support awaits at 1.1233 and 1.1186.

Resistance: 1.1357, 1.1462, 1.1548

Support: 1.1233, 1.1186

Nasdaq 100 (Daily Chart)

After two consecutive days of edging lower, the Nasdaq 100 resumes the Santa Claus rally, turning positive as the time of writing on Thursday. From the technical analysis, the outlook of the Nasdaq 100 remains bullish as it continues to trade above the ascending trendline and the moving averages while the W pattern has been formed. At the moment, the Nasdaq is hovering slightly above its support at 16457. To the upside, the bullish momentum will gain extra strength if it can break its all-time high at 16764, the resistance. From the technical indicators, the upside momentum is likely to keep up as the RSI and the MACD both continue to favour the bulls. On the flip side, the Nasdaq 100 will turn bearish in the near term if it declines below the moving averages and further below the ascending trendline.

Resistance: 16765

Support: 16457, 15689, 15024