- Equities were mostly higher last week, thanks to positive results for COVID-19 vaccines and the general consensus that Joe Biden will indeed be confirmed as the new president.
- Gold dropped below 1800 for the first time since June in its most bearish week in 9-weeks. In stark contrast, oil broke to new highs to see WTI and Brent trade at their highest levels since March.
- The US dollar index closed to its lowest level since April 2018. However, it has found support just above the August low of 97.74 so we remain suspicious of the breakout. Given the extended nature of some of the bullish moves against the US dollar we are on guard for a potential correction higher for the dollar.
- AUD and NZD were the strongest majors in line with the risk-on sentiment last week.
Due to Thanksgiving in the US last week there has been a delay in the release of the weekly Commitment of Traders Report.
Calendar Events This Week (Times are in GMT +11 Sydney)
- NFP: Nonfarm payroll on Friday is the biggest data set this week for the US. 520k jobs are expected to have been created which is a fairly punchy number. Given Canada also release employment data at the same time then USD/CAD is the go-to currency pair for the event.
- ISM manufacturing is expected to expand at a faster rate. Whilst this is a welcome development (if it occurs) the risks are that the US could face further lockdowns in the new year, given the surge in COVID-19 cases and a new president at the helm.
- GDP on Wednesday will reveal if growth has surpassed Q2’s record-breaking contraction.
- Employment report on Friday is released alongside Nonfarm payroll.
- RBA cash rate decision: Given they reduced the intertest rate by 15 basis points at their last meeting and introduced a more QE (quantitative easing), we do not expect any changes at tomorrow’s meeting.
- GDP: Growth for the third quarter will be released and expected to expand by around 1.8%.
- Retail sales on Friday
WTI (WTI): Increasingly bullish structure
- Prices broke to their highest level since March last week and now consolidating near their highs.
- The bias remains bullish above the 43.85 level (prior resistance) where a 38.2% Fibonacci level also resides.
- A break above last week’s high assumes bullish continuation, although we could also consider bullish setups if prices retrace towards 43.85 support.
USD/SEK: Consolidating Near Its Lows
- The trend structure on the daily chart continues to suggest new lows are more likely.
- Prices are consolidating near recent lows between 8.4789 support and 8.5560 resistance.
- A break beneath 8.4789 support suggest trend continuation, although a break above 8.5560 suggest a counter-trend rally is on the cards.
USD/CNH: Trend Remains Firmly Bearish
- The daily chart on USD/CNH remains in a strong downtrend.
- Prices are consolidating near the lows and respecting a correction line.
- Bears could consider entering short a break of the correction line or wait for a break of last week’s low for extra confirmation the bearish trend has resumed.
- The next major level of support is around 6.4500 which makes an ideal target for bears.
AUD/CAD: Bullish Breakout Clears Resistance Cluster
- Prices have gapped higher today and broken to their highest level since September.
- The breakout has cleared 0.9583 resistance (based on closing prices) after several failed attempts to close above it over the past two weeks.
- The bias remains bullish above 0.9583. although traders could also use a break beneath today’s low as a sign the gap wants to close.
NZD/CAD: Prices Break to A 20-Month High
- NZD/CAD has broken to a 20-month high. The trend was also accelerating ahead of the breakout to show an increase of bullish momentum.
- The bias remains bullish above the trendline and bulls can target the 0.9200 handle and 0.9250 highs.
- If the H4 candle is to close back beneath the 0.9140 breakout level it warns of a bull-trap and we would prefer to step aside.
GBP/AUD: Bears Eye a Break Below 1.8000
- GBP/AUD has been carving out a top since breaking beneath its bullish trendline.
- A bearish 2-bar reversal and a lower high (LH) suggest the correction has complete.
- A break below 1.7919 / 1.8000 support zone suggests bearish continuation.
EUR/GBP: 0.9000 is a Pivotal Level This Week
- Bullish momentum has surged into 0.9000 resistance to suggest a bullish breakout may be on the cards.
- A break above 0.9000 resistance also invalidates the bearish trendline and brings the 0.9070 high into focus.
- If bearish momentum returns below 0.9000 without breaking higher, the 0.8865 low comes into focus.
GBP/CHF: The bias remains bearish below 1.2200 resistance.
NZD/USD Prices broke higher and the bias now remains bullish above 0.7000 – 0.7015 support. That said, prices may need to correct lower towards support before we regain interest in potential long positions.
USD/CHF: Prices nearly reached the 0.9031 target. Removed from watchlist until further notice.
USD/NOK: The bias remains bearish beneath the 0.8965 breakout level.