EUR/USD consolidates the recovery near 1.0640, ISM eyed
The EUR/USD pair is seen reversing a spike to daily tops, although remains well supported above 1.06 handle as we progress towards the US ISM non-manufacturing PMI release.Currently, EUR/USD now drops -0.27% to 1.0636, having posted session highs at 1.0662 in the last hour. The main currency pair failed to sustain the renewed upticks and drifted slightly lower, as the US treasury yields picked-up significant strength over the last hour, and thus, provided fresh impetus to the USD bulls.Further, a solid rebound seen in the European stocks also curbs the demand for the euro as a funding currency, therefore, keeping a lid on the prices.The shared currency also stalls upside following the release of mixed economic data from the Eurozone, with the Sentix investor confidence missing estimates, while the retail sales data arrived above expectations. Moving on, focus remains on the upcoming US ISM services PMI and LMCI data due later in the American session.In terms of technicals, the pair finds the immediate resistance 1.0650 (psychological levels). A break beyond the last, doors will open for a test of 1.0685/90 (Nov 28 high/ 11-day high) and from there to 1.0720 (daily R2). On the flip side, the immediate support is placed at 1.0507 (multi-month low) below which 1.0456 (March 2015 low) and 1.0400 (zero figure) could be tested.
GBP/USD hits fresh two-month highs after UK services PMI
The GBP/USD pair extended its recovery move further beyond 1.2700 handle and touched a fresh two-month peak after upbeat UK services CPI.Currently trading around 1.2735-40 band, the pair caught fresh bids after surprisingly stronger-than-expected gauge measuring activity in the UK services sector. In fact, the Markit services PMI unexpectedly rose to 55.2 for November from October’s 54.5 and the reading was better-than 54.2 expected.Today’s better-than-expected services PMI print added on to Friday’s upbeat construction PMI and helped the pair to erase early losses led by a ‘NO’ vote to Italian Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday and build on to its recent recovery trend to the highest level since Oct. 6.Later during NA session, the US ISM non-manufacturing PMI will be in spotlight and provide further opportunities for short-term traders.A follow through buying interest above 1.2700 handle is likely to lift the pair immediately towards a two-month high resistance near 1.2735-40 touched on Friday before the pair makes an attempt towards testing 100-day SMA resistance near 1.2800 handle. On the downside, 1.2665 level now becomes immediate support to defend, which if broken seems to drag the pair back towards session low support near 1.2625 en-route 1.2600 round figure mark support.
USD/JPY advances further to 114.40, risk-on back in vogue
The Japanese yen is seen extending losses versus its American counterpart in the European session, now pushing USD/JPY back towards multi-month tops reached well beyond 114 handle.The dollar-yen pair caught fresh bid-wave over last hours, after the JPY was solid-into a renewed risk-on wave, as the European traders moved past the Italian referendum-related news and sought higher-returns on their funds, lifting the demand for risk assets at the expense of the yen.The major is last seen changing hands at daily highs of 114.40, making headways towards multi-month tops of 114.83, recording a gain of +0.70% on the day.Attention now turns towards the US economic releases, including the ISM non-manufacturing PMI report, due later in the NA session. In the meantime, persisting risk trends will play a major influencing role on the spot.The major finds immediate resistance at 114.50 (psychological levels). A break above the last, the major could test 114.83 (10-month high) and 115 (zero figure) beyond the last. While to the downside, the immediate support is seen at 113.33/29 (daily pivot/ 10-DMA) next at 112.88 (daily low) and below that at 112.64 (daily S2).
EUR/GBP keeps mild red after UK services PMI
The EUR/GBP cross failed to gain fresh traction and halted its recovery move from the lowest level since July 22 following the release of UK services PMI.Currently trading with mild bearish bias, around 0.8360 region, the cross struggled to extend its recovery after UK services PMI print for the month of November surpassed expectations and came-in at 55.2 as compared to 54.2 expected and 54.5 recorded in the previous month.The cross, however, remained over 60-pips off multi-month lows touched during early Asian session as market seems to have digested early jitters in wake of a 'NO' vote victory in Sunday's Italian referendum on constitutional reforms. Investors will remain focused on any fresh news / developments surrounding the Italian referendum ahead of this week's key ECB meeting on Thursday. Renewed weakness below 0.8335 region (Sept. 6 low) is likely to drag the cross back towards 0.8300 handle, which if broken has the potential to continue dragging the cross further towards 0.8250 support area (July 14 low). On the upside, recovery momentum above session peak resistance near 0.8385 is likely to boost the pair beyond 0.8400 handle towards its next major hurdle near 0.8460 region.
CAD: Break of 1.3200-1.3230 could spur a move toward 1.30 - BBH
Research Team at BBH, notes that the Canadian dollar was the best performing major currency last week (+1.7%) after the Norwegian krone (1.8%). “Two fundamental considerations were at work. First is the 11.6% rally in oil price following OPEC's announcement. Second is the seven basis point narrowing of the Canadian discount to the US on the two-year money. The US dollar fell to CAD1.3255 before the weekend, a two-month low.” “The five and 20-day moving averages crossed for the first time since late October. Technical factors warn of the risk of additional near-term US dollar losses, though it closed near its lower Bollinger Band (CAD1.3290). A break of CAD1.3200-CAD1.3230 could spur a move toward CAD1.30. The Bank of Canada meets next week, but policy is on steadfastly on hold.”
WTI jumps to the highest level since July 2015
After an initial slide to $51.00 neighborhood, WTI crude oil staged a goodish recovery and jumped beyond $52.00/barrel mark to a fresh yearly high. Currently trading around $52.10-15 band, with gains of nearly 1% for the day, the black gold's recovery gained traction during European session amid renewed risk-on wave as markets reversed initial bearish reaction over Italy's 'NO' vote to Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday. Adding to the prevalent risk-on mood, a broad based greenback retracement is further supporting the bid tone surrounding dollar-denominated commodities - like oil. Meanwhile, the commodity continues to benefit from a new supply agreement by OPEC and was seen building on to last week’s sharp rally, hitting the level since July 14. Later during NA session, the US ISM non-manufacturing PMI might provide some impetus to the overall US Dollar Index, eventually driving dollar-denominated commodities and provide some short-term trading opportunities.A follow through buying interest above $52.20-25 area now seems to pave way for continuation of the commodity's near-term trajectory towards $53.00 handle ahead of its next major resistance near $53.40-50 region. On the downside, weakness back below $52.00 round figure mark, leading to a subsequent drop below $51.80 support, is likely to trigger a corrective slide even below $51.00 mark towards $50.60-55 support area.
Gold in danger zone but reasons to feel optimistic - TDS
Bart Melek, Head of Global Commodity Strategy at TDS, suggests that the period since the US election has been bad for gold, with prices testing lows near 1,160/oz on Thursday as the yellow metal has plummeted by as much as $177/oz since the highs during the night of the US elections, when gold hit a high of $1,337.51/ oz.“This most recent slide lower is no doubt driven by market prepositioning for still higher interest rates amid an anticipation of a fairly healthy November payrolls and sharp rise in oil prices, after OPEC delivered deeper-than-expected production cuts on Wednesday. At the same time the common belief that President -elect Trump will be able to deliver aggressive fiscal stimulus in the form of massive tax cuts and infrastructure spending have also prompted investors to sell treasuries, which has strengthened the USD, increasing both the cost of carry and opportunity cost to hold zero-yielding assets such as gold. The market seems to be thinking that with the US economy approaching full employment on its own (unemployment at 4.9%), higher oil, and the pending Trump stimulus, it will create inflation that will prompt the Fed to be somewhat more aggressive. And, higher real interest rates are bad for gold, as is an ever stronger USD. China's announcement that it will tighten gold import quotas to curb dollar outflows also played a role in depressing the yellow metal on Friday.”“While the steepening of the yield curve, higher real yields, a supercharged US dollar, and the accompanying lack of investor interest could see prices fall below the current $1,165/oz again, a sustained rout toward the January 2016 lows is unlikely unless the Federal Reserve becomes significantly more hawkish than we expect. But we do acknowledge that given the current technicals, there is a risk of a sharp decline of a transitory nature should the market overshoot interest rates higher.”“The presence of considerable global economic, political, market risks and considering that the longer end of the yield curve and the sky-high USD have already tightened conditions, the Fed is likely to deliver a dovish hike later in December (relative to positioning). This could mean that rates (and real rates) along the curve may slide lower, which along with the resulting loss of USD upward momentum could prompt technical traders to send gold back into $1,200-plus territory. It should also be noted that long liquidation momentum has run out of steam and could be reversed by such a move, solidifying support.”“Stronger Indian imports on the back of a healthy monsoon season and the possible rise in hoarding, following the government's "demonetization" policies, could also help prices as China's import quota reductions are at least partially offset.”“Markets should keep an eye out for the Payrolls data, as any disappointment could be a trigger for at least a partial reversal of the recent gold price drop.”
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. We assume no liability for any loss arising from any investment made based on the information provided in this communication.