Wall Street has rallied on expectations of a more dovish Fed in the upcoming months

What You Need To Know

Jerome Powell’s speech has spurred Wall Street to rally. The Fed’s chair signalled for a slower pace of interest rate hikes, but added that borrowing costs will need to keep increasing to calm inflation. A soft landing promised by the Fed inspired the equities market to edge higher but harmed the dollar with the DXY index trading below 105. The sentiment has spread to the Asian markets to open higher in the morning, especially the China market. In addition, Chinese officials said that its combat against Covid is entering a new phase with loosening restrictions. 

Look Out For

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

75 bps (23%) VS 50 bps (77%)

Market Overview

Economic Calendar

Market Movements

DXY

The US Dollar dipped after Federal Reserve Chairman Jerome Powell’s claim that the Federal Reserve could scale back the pace of its aggressive rate hikes as soon as December. The central bank will meet again on 13-14th December and approve an expected 50 basis point rate hike. In addition, the Greenback extended its losses over the backdrop of downbeat economic data. According to Automatic Data Processing (ADP), US ADP Nonfarm Employment Change came in at 127K, missing the market forecast of 200K. Such data indicated that job growth is gradually slowing as the restrictive monetary policy from the Fed slows demand in the economy.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 42, suggesting the downside is more favoured as the RSI stays below the midline.   

Resistance level: 107.95, 109.60

Support level: 105.75, 104.75

XAU/USD

The weak US Dollar, buoyed by the dovish tone from the following Federal Reserve Chairman Jerome Powell, has underpinned the dollar-denominated gold. In addition, the gold market extended its gains following the release of downbeat economic data from the United States. According to Automatic Data Processing (ADP), US ADP Nonfarm Employment Change came in at 127K, missing the market forecast of 200K. With several crucial data released yesterday, market participants will now focus on Friday’s US Nonfarm Payroll for November – which will give hints for the monetary decision from the Federal Reserve.

The gold market is trading higher while currently near the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 66, suggesting the commodity will extend its gains after successfully breaking out above the resistance level as the RSI stays above the midline.     

Resistance level: 1785.00, 1815.00

Support level: 1730.00, 1680.00

EUR/USD

The US Dollar slumped, with investors bracing for a dovish tone from the Federal Reserve, has spurred bullish momentum on other regional currencies on a relative basis; EUR/USD continues to stand on its ground while testing the resistance level. Nonetheless, the gains experienced by the Euro were limited by easing inflation data. Recently, Euro area annual inflation came in at 10% for November, down significantly from the previous reading of 10.60% while posting its first decline since July 2021. The data, coupled with softer readings, will provide hints for the European Central Bank to moderate the restrictive monetary policy, weighing on the Euro. 

EURUSD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59,  suggesting the upside is more favoured as the RSI stays above the midline.   

Resistance level: 1.0435, 1.0595

Support level: 1.0225, 1.0080

BTC/USD

Jerome Powell’s speech, which signalled a slower pace of rate hike, has inspired the markets to go for more risky assets. A soft landing for rate hikes is promised from the Fed, favouring the other asset classes but harming the Dollar. By tapping on the weaker Dollar, BTC edged higher and broke its consolidation resistance level at 17040 after 20 trading days.  

BTC broke its strong resistance at 17040 but the bullish momentum has eased drastically and held near the level. It will be a bullish signal if BTC is able to stay above the level and turn 17040 from resistance to support. There is some bullish signal from indicators with the MACD starting to pick up from the zero line and the MACD histogram is also gaining. RSI has broken above the 70-level for the 1st time in nearly a month, suggesting that BTC’s buying power is strong. 

Resistance level: 18040, 19345

Support level: 17040, 15673

DJ30

Dow Jones is spurred by Jerome Powell’s speech and gained 2% yesterday. The Fed chairperson has signalled that the Fed is opting for a soft landing for its rate hikes which inspires the market to go for a riskier asset class. The bullish momentum of the index has also led it to gain more than 20% from its lowest in October. 

On the technical side, Dow Jones has broken its bearish channel and continues to gain after that. The RSI has constantly been staying above the 50-level for the past month suggesting that the buying power is strong. However, the MACD depicts that the index’s bullish momentum is diminishing and flowing toward the zero line. 

Resistance level: 35437, 36531

Support level:  33015, 31545

GBP/USD

The pound rose against the weakened dollar as Powell signals that the Federal Reserve will slow the pace of interest rate hikes next month. The pair is trading at $1.20 at the time of writing, hovering near last week’s three-month high of $1.21. Market players are keeping an eye on BoE’s next move as they expect there will slow down its pace of interest rate hikes by 50 basis points. It is due to the release of the eurozone inflation data cooled off by more than expected in November, enhancing the chances for a slowdown in European Central Bank rate hikes next month.

The pound hovers near the three-month high, around $1.20 at the time of writing. However, the momentum seems to hover within the range until it breaks through its previous high, $1.2153. The MACD line drops to zero with a little bend up, showing a bullish momentum that might continue. RSI spikes up to 59, which also indicates a bullish momentum is blowing. 

Resistance level：1.2302， 1.2676 

Support level： 1.1950，1.1627

NAS100

The NASDAQ soared 4.41% to 11,468.00 points on Wednesday after Federal Reserve Chair Jerome Powell said the central bank might slow down the pace of its interest rate hikes as soon as December. As the most significant gain was Nvidia (NVDA.O) rose more than 8%, Microsoft (MSFT.O) jumped 6.2%, and Apple(AAPLE.O) rose 4.9%. At the same time, markets are awaiting nonfarm payroll data, which will be released on Friday. 

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 spikes from 46 to 64, indicating a bullish momentum ahead.

Resistance level: 12094，12476

Support level: 11228，10448

CL OIL

Crude oil prices extended their gains by 3% yesterday, continuing their recovery since early this week after the US Energy Information Administration (EIA) reported a massive drawdown of oil inventory for the week ended 25th November. According to the EIA group, US Crude Oil Inventories notched down significantly from the previous reading of -3.691M to -12.580M, much lower than the market forecast at -2.758 M. As for now, investors will continue to scrutinise the latest updates regarding the OPEC+ meeting on Sunday for further trading signals.

Crude oil prices are trading higher following the prior rebounded from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 60, suggesting the commodity will extend its gains as the RSI stays above the midline.  

Resistance level: 83.10, 91.90

Support level: 76.00, 69.90