Crude oil prices soared to new monthly highs, U.S. crude rose 0.73% to $76.57 per barrel

30 December 2021, 03:00

Market Focus

The world’s major stock indexes closed mixed on Wednesday as the surge in Omicron infections weakened the optimism surrounding strict new restrictions on business and travel. Due to strong retail sales in the United States, the Dow Jones Industrial Average and S&P 500 closed at historical highs, with the Dow Jones rising for six consecutive trading days. However, the Nasdaq Composite Index fell slightly. At the end of the market, the Dow Jones Industrial Average gained 0.25% to 36,488.63 points, the S&P 500 index rose 0.14% to 4,793.05, while the Nasdaq Composite Index was flat and only added 0.01%.

The real estate and the healthcare indexes were the top two performers in the S&P500, up 0.64% and 0.60%, respectively. Alexandria Real Estate Equities Inc. rose 0.71% and outperformed competitors. In healthcare, Biogen rose nearly 10% after the Korea Economic Daily reported that the company was discussing the possibility of selling to electronics giant Samsung. Although crude oil inventories data fell more than expected and oil prices rebounded from intraday lows after increased production, the energy sector still weighed on the broader market. Schlumberger, ONEOK, and Baker Hughes were among the biggest declines.

Main Pairs Movement

The US dollar edged lower in light holiday trading on Wednesday, while the safe-haven yen hit a one-month low as investors looked beyond the surge in Omicron cases and favoured riskier currencies. The dollar fluctuated, rising during European hours and then falling during the US trading hours. In the end, the dollar index fell 0.206% to 95.93, and the USD/JPY was close to 115, the lowest since late November.

EUR/USD fell to 1.12737, then rebounded to 1.1390, remaining between the monthly extremes. GBP/USD continued to rise and officially broke through the heavy pressure at 1.34301 to close at 1.34875. The Aussie was up 0.35% at 0.72515, the Kiwi was up 0.28% at 0.6823, and the Loonie rose 0.16% to 1.2794.

After encouraging news was related to inventories, crude oil prices soared to new monthly highs. The API report announced a reduction of 3.09 million barrels, while the EIA report stated that as of the week of December 24, US crude oil inventories were reduced by approximately 3.6 million barrels. Brent oil was last up 0.25% at $79.24 a barrel. U.S. crude rose 0.73% to $76.57 per barrel.

Among cryptocurrencies, Bitcoin recently fell by 0.67% to $47,223, while Ethereum, fell by 1.57% to $3,733.

Technical Analysis

GBPUSD (4- Hour Chart)

GBPUSD edged higher, flirting with the 1.3500 level amid the US dollar’s weakness. The British pound is relatively the strongest among the US dollar’s rivals as the markets are optimistic on Brexit news and the UK’s decision to not tighten pandemic measures. For the technical aspect, the outlook of GBPUSD has turned to the upside as it broke above the descending channel coming from mid-December. In the meantime, the pair is steadily trading above the 20 and 50 SMAs, suggesting a stable bullish momentum. However, the RSI on the 4-hour chart is looking to reach nearly 70, indicating that the upside momentum might need a break to adjust. The consolidated price action is expected to take place in between the 1.3427 to 1.3496 range.

Resistance: 1.3496, 1.3575

Support: 1.3417, 1.3320, 1.3163

Nasdaq 100 ( Daily Chart)

Nasdaq 100 edged lower for two successive days, dropping 0.41% at the time of writing. Technology stocks dropped as the benchmark US 10-year Treasury Yield jumped above 1.5%. From a technical perspective, the outlook of Nasdaq 100 remains bullish as it continues to trade above its 5, 10, 20, and 60 simple moving averages. However, it looks like the upside momentum is currently not strong enough to climb further north after the W pattern was formed. The immediate support at 16457 acts as a defending line for Nasdaq to stay bullish in the near- term. If the support level fails to hold, then it will possibly head further south toward 15689. On the flip side, if the support can hold, then the Nasdaq is expected to contest its all-time high at 16764. At the time of writing, the RSI and the MACD continue to favour the bulls as the RSI has not yet reached the overbought territory while the MACD is still positive.

Resistance: 16764

Support: 16457, 15689, 15024

XAUUSD (4- Hour Chart)

Gold declined to 1800, pressured by the rising US Treasury yields. For technical analysis: the outlook on gold turned to the downside on the 4- hour chart as today’s decline brings gold below the ascending trendline and the 20 simple moving average. In order to reclaim a bullish stance, gold needs to recover above 1810 to regain strength. The RSI is currently recovering from the oversold condition, reflecting that the ongoing advance is coming. On the flip side, if the immediate support at 1798 cannot hold, then gold can head toward 1781, followed by 1753.

Resistance: 1812, 1826, 1843

Support: 1798, 1781, 1753