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After the release of the CPI, US Federal Reserve officials broadly agreed…

After the release of the CPI, US Federal Reserve officials broadly agreed on the plan to begin the tapering process by mid-November

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Market Focus

US markets traded higher following the release of the Consumer Prices Index. Consumer prices increased slightly more than expected in September. According to the Labor Department, the rise in food and energy prices offset the decline of used vehicles prices.

The US social security cost-of-living adjustment will be adjusted 5.9% higher in 2022, according to an announcement by the Social Security Administration. Notably, the adjustment will be the biggest boost in about 40 years. For 2021, the Social Security cost-of-living increase was only 1.3%.

After the release of the CPI, US Federal Reserve officials broadly agreed on the plan to begin the tapering process by mid-November. The tapering process could see a monthly reduction of $10 billion in Treasury and $5 billion in mortgage-backed securities.

Main Pairs Movement

Gold rose to the highest in almost a month as US Treasury yields and the US dollar declined after the release of CPI, which was slightly higher than expected. Gold was trading at $1,793, up nearly 2% on Wednesday. The upsurge of gold prices could be potentially seen as an initial reaction to inflation numbers.

GBPUSD traded further north, trading 0.52% higher. Lower US Treasury yields undermined the demand for the greenback; however, the upside momentum of the British pound was still limited as Brexit-led woes, a weaker GDP, and the worker shortage continues to be issues weighing on the Pound.

EURUSD traded similarly to GBPUSD amid concerns of US inflation and lower US Treasury yields. At the end of the day, the currency pair closed at 1.15907, 0.53% higher.

Technical Analysis

EURUSD (4-hour Chart)

The EUR/USD pair is trading at the intraday high of 1.1596 as of writing. However, the current recovery could well be seen as corrective, as the pair remains below a firmly bearish 20-DMA. The MACD histogram remains flat within the negative territory, while the RSI indicator has bounced from oversold readings, holding below 50.

As expected, the Fed reaffirmed their previous statements in the latest FOMC Minutes: to start tapering in either November or December, and to end it in mid-2022. The dull announcement has had little effect on the market.

As for the resistance and support levels, our opinion remains unchanged. The first support appears at the 1.15 psychological level, then 1.14225, which was May 2020’s peak. The resistance levels are at 1.161, 1.166 and 1.171, where the historical tops and bottoms lie. The 20-DMA is also a strong resistance to the pair, as a breach of it marks a flip of market sentiment.

Resistance: 1.1610, 1.1660, 1.1675,1.1710

Support: 1.153, 1.15, 1.14225

XAUUSD (4-hour Chart)

The price of gold on Wednesday has rallied as key data was announced today. U.S. inflation data showed that prices rose solidly in Sep, stoking expectations that the Federal Reserve will announce a tapering of stimulus next month, with the potential of rate hikes by mid-2022. The Consumer Price index rose 0.4% last month, versus a 0.3% rise expected by economists. At the time of writing, gold is trading at 1791.99. The price has travelled from a low of 1757 to a high of 1796, which tests the 200-day EMA.

On the technical front, the 4-hour RSI index has breached overbought territory at 72.83 figures, suggesting overly bullish sentiment in the short term. On the moving average side, the 15- and 60-long indicators are both heading towards upside traction.

As gold penetrates the 1780 psychological resistance level during the New York Session, we believe that the market has found accommodative bullish territory ahead, as shown by the Fed boosting the tapering expectation, as well as trends indicated by the price action. On the upside, we foresee 1800 pose as a barricade to upside traction, followed by 1830.

Resistance: 1800, 1830

Support: 1783, 1758, 1750

USDCAD (4 Hour Chart)

The Loonie has stayed under modest bearish pressure during the European session on Wednesday with the greenback struggling to find demand ahead of key events. As of writing, the pair was down 0.16% during the day market at 1.2445. This was due to higher-than-expected U.S. consumer prices, with Sept’s CPI accelerating to a 0.4% monthly rate and 5.4% year-on-year in September. At the same time, oil prices have been unfazed in the day market, courtesy of OPEC+, which lowered its estimates for the rest of 2021.

From a technical perspective, the RSI indicator is still clinging to over sought territory at 38 in nearly three days as the market has been faltering, suggesting bearish momentum in short term. On the moving average indicator, the 15- and 60-long indicators still are retaining downside movement.

Since the Loonie rapidly broke through a critical support level at 1.25, we expect that the next downward support will be last July’s low of 1.2425. On the upside, the psychological level at 1.25 will turn into a pivotal resistance for the short-term, with 1.256 behind.

Resistance: 1.25, 1.256

Support: 1.2425, 1.23

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Bitcoin plummeted over 4% after renewing multi-month highs on Monday, and is…

Bitcoin plummeted over 4% after renewing multi-month highs on Monday, and is now trading at $55,250

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Market Focus

All major U.S. stock indices closed lower for the second straight day. The Dow lost 0.34% to close at 34378.34, the S&P 500 lost 0.24% to close at 4350.65, and Nasdaq lost 0.14% to close at 14465.93. Poor performance in the communications sector dragged most indices lower, while strong gains in the real estate and consumer discretionary industries helped limit losses. Macroeconomic factors including soaring commodity prices and strong global energy demand put further weight on the threat of inflation.

Oil prices remained at historical heights. The WTI gained 12 cents to settle at $80.64 per barrel, while the Brent Crude lost 23 cents to settle at $83.42 per barrel. The worldwide shortage of natural gas has helped buoy oil prices. On the other hand, the 10-year treasury yield has stayed above 1.5%, but the yield experienced its largest one day drop to settle at 1.579%.

This week also signals the beginning of the third-quarter earnings season. JPMorgan Chase and Blackrock will be announcing their earnings on the 13th. Speculators are eyeing the performance of the industrial and the materials industry as global demand has ticked up, and these firms retain better pricing power in the face of rising costs.

Main Pairs Movement

Another day without high-impact US data has lead risk perception to become the primary driver of market movement. With major US indices consolidating in the familiar levels, the US Dollar Index continued its upward traction and rose 0.15% on Tuesday.

Robust USD strength during the second day of the week forced most of its rival pairs to close in the negative territory. The EUR/USD pair remains within a touching distance of the 15-month low setting at 1.1529 while consolidating its losses. GBP/USD settled around the same range at 1.3600. USD/JPY advanced to its highest level since late-2018 and seems to have gone into a consolidation phase around 113.50. Commodity-linked currencies posted mild gains against the Greenback. USD/CAD dropped nearly 0.1%, and AUD/USD climbed about 0.15%.

After surging more than 10% in the previous week, the benchmark 10-year US Treasury bond yield dropped a significant 3.6% intraday, fueling gold’s rally. The yellow metal is trading at $1760 per ounce at the moment, 0.36% higher than yesterday; Crude oil prices remain unchanged, with WTI’s at $80.50, and Brent at $83.30.

Bitcoin plummeted over 4% after renewing multi-month highs on Monday, and is now trading at $55,250. Ethereum traded near $3,500 on Tuesday, although it seems to lack the momentum to keep its uptrend, as the overall risk-off mood has made cryptocurrencies unattractive.

Technical Analysis

USD/JPY (4-hour Chart)

The USD/JPY pair refreshed daily lows during the early European session and managed to defend the 113.00 mark, quickly rebounding thereafter. The pair was last seen hovering around the 113.50-80 region, a fresh high since December 2018.

On the technical front, both the 4-hour MACD histogram and RSI indicator suggest that the USD/JPY pair is strongly bullish. Even then, the RSI has breached the overbought territory, implying the pair might experience a correction in the short term. In our opinion, we think the pair may encounter its first resistance at the upper bound of the Bollinger Band, consolidate for a while, then keep on its uptrend. If not, then the first support for the pair lies on the 4-hour 20 SMA, then 112.00. A breakthrough of the last support 109.15 could open a Pandora’s Box of downward trajectory.

Resistance: 114.02, 114.55

Support: 112.57, 112.00, 109.15

EURUSD (4-hour Chart)

The EUR/USD pair lingered in the narrow price interval for yet another session on Tuesday. The pair dove to the 2021 low of below 1.1530, remaining well on the table amid the ongoing bearish trend, at least in the short term. A further retreat from this spot should trigger a relatively quick test of the 1.1500 psychological support, where the March 2020 high sits. A breakthrough of that will lead the pair to the last barricade ahead of a massive downfall, the June 2020 high at 1.1422.

On the technical front, the 4-hour MACD histogram has just formed a death cross, and the RSI indicator is at 35, and is strongly bearish but above the oversold territory, suggesting the downward traction should proceed. Moreover, the pair is now deeply below the key 200-DMA line, where the pair should cross to prove a meaningful rebound.

Resistance: 1.161, 1.164, 1.1675, 1.172

Support: 1.153, 1.150, 1.1422

USDCAD (4 Hour Chart)

The USD/CAD pair slid during the New York session, trading at 1.4635, down 0.17% near to the market close. The market sentiment is downbeat, portrayed by U.S. stock indices posting losses between 0.25% and 0.34% due to reasons like the energy crunch in Europe and Asia. On the oil side, rising oil prices are boosting the Loonie, while WTI crude oil remains barely unchanged at $79.9, outside of the $80 per barrel threshold for the first time in two days.

From a technical perspective, the RSI indicator still clinging to over-sought territory at 38 in nearly two days as the market falters, suggesting bearish momentum in short term. On the moving average indicator, the 15- and 60-long indicators still retain downside movement.

Since the Loonie rapidly has broken through a critical support at 1.25, we expect the next downward support will be last July’s low at 1.2425. On upside, the psychological level at 1.25 will turn into a pivotal resistance for the short-term, with 1.256 following behind.

Resistance: 1.25, 1.256

Support: 1.2425, 1.23

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Gold was limited as markets were awaiting the report of the FOMC’s…

Gold was limited as markets were awaiting the report of the FOMC’s consumer spending and inflation for the days ahead

20211012
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Market Focus

US markets started the week in a gloomy mood as the Dow Jones shed 0.7%, and the S&P 500 dropped 0.7%, while the Nasdaq Composite dipped 0.6%. Stocks were mostly positive for most of the day, but selling pressure increased in the final hour, with the major indices closing the session at their lows.

US 10- year Treasury yield has risen above 1.6% as markets tried to digest disappointing job data from last Friday. The majority of the markets believed that the latest job report did not change the Federal Reserve’s outlook for tapering its bond purchases later this year.

Singapore has announced to open its border to more countries for quarantine-free travel. The move has shown that the country is preparing to reach a new normal of living with the coronavirus. It is significant as Singapore is one of the world’s biggest travel and financial hubs.

Main Pairs Movement

USDJPY has printed a fresh high since 2018, trading at 113.482, up 0.97% on Monday. With Japanese bond rates well-anchored as the Bank of Japan continues to keep policy rates on ice, the potential tapering by the US Fed should bring the US dollar stronger, favouring a higher Dollar-Yen rate.

EURUSD seesawed between gains and losses on Monday, trading at 1.15494. The currency pair would be mostly driven by the dollar this week as the European calendar has been scarce with only a couple of ECB’s speakers.

AUDUSD traded 0.52 higher, closing at 0.73427. The Australian dollar was stronger against the Dollar on Monday on the back of iron ore prices.

Gold price was consolidating on Monday, trading at $1,754. Bullion was limited as markets were awaiting the report of the FOMC’s consumer spending and inflation for the days ahead.

Technical Analysis

USDJPY (4 Hour Chart)

The Japan Yen soared during the New York session, trading at 113.38 as of writing, up over 1% in the day market. The risk-on environment, as witnessed by U.S. stock indices trading in the green, post gains between 0.43% and 0.86%. Also, the U.S. T-bond yields, with the 10-year benchmark note rate rising above the 1.6% threshold, exerted upward pressure on the yen.

On the technical side, the RSI is at 79, indicating overbuying in the short term. On the moving average side, 15-and 60-long moving averages are remaining the ascending traction.

All in all, the Yen had broken through a critical resistance at 112 recently, so we believe that the market will probably tick up to a higher level while maintaining smooth momentum. One concern is that the market might experience an exaggerated bounce up in the short term, and we should not rule out the fact that the market will have a correction.

Resistance: 114.55 (Oct. 2018 high), 118.60 (Jan. 2017 high)

Support: 112.00, 110.65, 109.15

EURUSD (4 Hour Chart)

The Euro-Dollar pair is trading below 1.16, yet has gotten off the lows as U.S. share indices advance, with the closed bond markets providing some calm, Concerns about energy costs, disappointing U.S. jobs figures, and uncertainty about fiscal policy weighed on sentiment earlier. ECB executive board member Philip Lane seemed reluctant to act to battle inflation.

From a technical perspective, the RSI continues to trim weakness, closing at around 39, suggesting bearish movement ahead. For averages, the 15-long indicator has been flattening while 60-long remains on the descent.

On the slip side, we expect that the last time low of 1.153 will give the pair short-term support guidance. If breaks below the threshold, we foresee the downside support will eye the psychological level at 1.15.

Resistance: 1.161, 1.1675

Support: 1.153, 1.15

USDCAD (4 Hour Chart)

The U.S. dollar attempted to pick up on Monday after a sharp decline observed in the previous three days. The pair has pulled back from a two-month low at 1.2445, although, so far, it has remained unable to pose a relevant recovery due to high oil prices. Meantime, U.S. WTI has appreciated for the eighth consecutive day, hitting 7-years highs.

From a technical perspective, the RSI indicator rebounded from oversold territory at 38 as of writing, suggesting bearish momentum in the short term. For the moving average indicator, the 15- and 60-long indicators still retain downside movement.

Since the Loonie rapidly broke through a critical support at 1.25, we expect that the next downward support will be last July’s low at 1.2425. On upside, a psychological level at 1.25 will turn into a pivotal resistance for the short-term, 1.256 behind.

Resistance: 1.25, 1.256

Support: 1.2425, 1.23

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