Yesterday’s shopping package
The US dollar continued its mid-week decline as the FOMC minutes sounded a bit hawkish as the US manufacturing PMI fell last week. Although volatility eased over the weekend, US markets were closed for the Thanksgiving holiday. But volatility picked up yesterday and the US dollar continued to slide, falling nearly 2 cents against most currencies, while risk assets rose early in Europe.
But the accident happened in mid-afternoon in China after 10 people died in a fire, as protests erupted and Covid lockdowns were blamed. The idea that we’ll get some kind of velvet covid revolution in China is a bit far-fetched, though. While the USD turned bearish and almost erased all losses, risk assets declined. Oil made some good gains despite rumors that OPEC is seriously considering some production cuts.
This week’s market expectations
At the end of yesterday, we heard that the Chinese government, Hu Xijin, said that ‘China may emerge from the shadow of COVID-19 earlier than expected.’ According to today’s report, this will be big news for risk and risk assets as it opens up the economy and reduces supply lines and manufacturing backlogs. The Eurozone’s flash CPI inflation report will be released soon, which is expected to show some cooling this month. In the US session we have the US prelim GDP reading for Q3 and JOLTS jobs open.
Volatility picked up again yesterday as the USD turned bearish and lost nearly 2 cents across the board. However, it turned upside when protests erupted in China and lost most of the gains. We opened many signals in commodities and forex and even in such situations we left on vacation.
USD/JPY MAcus new low
The bull run has ended for this pair and USD/JPY sentiment has now turned bearish. Last week we saw a drop of 400 pp, but yesterday we saw a drop of 200 pp after the US manufacturing PMI report showed that this sector contracted this month. However, risk sentiment later turned negative which led to lower risk assets, hence the bullish turn in USD/JPY. Although the 50 SMA (yellow) is acting as resistance on the H1 chart, we are seeing a double rejection of the price, so we decided to open a sell forex signal below that moving average.
USD/JPY – H1 chart
Gold It was rejected by the 50 SMA
Gold has been on a roll since March when it failed to break above $2,000, but it turned bearish in early November as the U.S. dollar turned bearish. Although the price rejected the price yesterday, it is stuck between the 50 SMA (yellow) and below the 100 SMA (green).
XAU/USD – H4 chart
Crypto currency update
Cryptocurrencies continued to decline early last week, with Bitcoin hitting a new low for the year at around $15,500, while Ethereum fell back below $1,100. Although we have seen some improvements as the week progresses, the sentiment is positive in the financial markets.
[[Bitcoin] Strengthening with moving averages
Last week, Bitcoin turned higher after testing a low around $15,500 on Monday, pushing below the FTX exchange’s collapse. The price has moved above the 20 SMA (gray) and the 50 SMA (yellow) but the 100 SMA (green) still holds as resistance, so we will see that the momentum of the bull will continue this week.
BTC/USD – H4 chart
ETHEREUM Getting support in MAs
The situation in Ethereum is similar to that of Bitcoin as it deteriorated after the FTX loss and moving averages turned into resistance. Although it is not a new low this week and now the price has broken the MAs that were acting as resistance, so they have now turned into support.