US inflation shows no signs of easing. The headline number returned to 5.4% y/y, the highest since 2008, vs the expected 5.3%. Core CPI stabilised at 4%. That is not to say that the data deviated much from expectations and marked a turning point in the economic cycle. But the first reaction of the markets to this data was as sharp as the NFP release last Friday.
This was particularly so for gold. Buying gold gathered momentum today, taking the price to $1777, from where the seemingly strong CPI figures caused it to plummet to $1757. However, this dip attracted even more furious demand, taking the price to $1785 at the time of writing.
There were big bulls in gold. This was evident from the initial reaction to the NFP, although it proved volatile. However, this week, demand from gold has moved into gold miners' shares - a leading indicator for an asset.
A meaningful sign of a bearish trend reversal in gold would be a consolidation above $1800 and confirmation to overcome previous local highs at $1836.
This was particularly so for gold. Buying gold gathered momentum today, taking the price to $1777, from where the seemingly strong CPI figures caused it to plummet to $1757. However, this dip attracted even more furious demand, taking the price to $1785 at the time of writing.
There were big bulls in gold. This was evident from the initial reaction to the NFP, although it proved volatile. However, this week, demand from gold has moved into gold miners' shares - a leading indicator for an asset.
A meaningful sign of a bearish trend reversal in gold would be a consolidation above $1800 and confirmation to overcome previous local highs at $1836.
#Wheat falling inside wave (2)
• Likely to reach support level 700.00
Wheat continues to fall inside the intermediate correction (2), which started earlier from the resistance zone lying between the key resistance level 760.00 (which has been reversing the price from April) and the upper daily Bollinger Band.
The downward reversal from this resistance zone started the active corrective wave (2).
Wheat can be expected to fall further toward the next support level 700.00 (low of the previous correction 4 and the target for the completion of the active corrective wave (2))
• Likely to reach support level 700.00
Wheat continues to fall inside the intermediate correction (2), which started earlier from the resistance zone lying between the key resistance level 760.00 (which has been reversing the price from April) and the upper daily Bollinger Band.
The downward reversal from this resistance zone started the active corrective wave (2).
Wheat can be expected to fall further toward the next support level 700.00 (low of the previous correction 4 and the target for the completion of the active corrective wave (2))
#NZDCAD reversed from support zone
• Likely to rise to resistance level 0.8715
NZDCAD currency pair recently reversed up from the support zone lying between the key support level 0.8625 (former Triple Bottom from June) and the lower daily Bollinger Band.
The upward reversal from this support zone will most likely create the second consecutive candlesticks reversal pattern Piercing Line.
Given the strength of the aforementioned support zone, NZDCAD currency pair can be expected to rise further toward the next resistance level 0.8715 (former low of the minor impulse wave 1 from the end of September).
• Likely to rise to resistance level 0.8715
NZDCAD currency pair recently reversed up from the support zone lying between the key support level 0.8625 (former Triple Bottom from June) and the lower daily Bollinger Band.
The upward reversal from this support zone will most likely create the second consecutive candlesticks reversal pattern Piercing Line.
Given the strength of the aforementioned support zone, NZDCAD currency pair can be expected to rise further toward the next resistance level 0.8715 (former low of the minor impulse wave 1 from the end of September).
The dollar pulled back from a one-year high area, with US stock markets closing higher on Wednesday and its futures adding in trading in Asia. This performance was a market reaction to inflation data and FOMC meeting minutes. The market was near extremes in several major instruments and indices.
First and foremost, traders should pay attention to the dynamics of the US debt market. Minutes from the September FOMC meeting indicate that tapering could start as early as mid-November, and a rate hike by the end of 2022 is already completely priced into the Fed Funds Rate Futures market.
At the same time, two- to three-year bond yields decreased, indicating that policy tightening would start quickly, but after that will be slower than previously expected.
This revaluation wasn't good news for the dollar, causing the DXY to retreat from 94.6 to 94.0. There is a potential for a further correction with price and RSI divergence and the latter retreating from the overbought area above 70 on the daily charts.
First and foremost, traders should pay attention to the dynamics of the US debt market. Minutes from the September FOMC meeting indicate that tapering could start as early as mid-November, and a rate hike by the end of 2022 is already completely priced into the Fed Funds Rate Futures market.
At the same time, two- to three-year bond yields decreased, indicating that policy tightening would start quickly, but after that will be slower than previously expected.
This revaluation wasn't good news for the dollar, causing the DXY to retreat from 94.6 to 94.0. There is a potential for a further correction with price and RSI divergence and the latter retreating from the overbought area above 70 on the daily charts.
EURUSD is also undergoing a critical test of the latest trend. The daily jump of 0.6% to 1.1600 lifted the pair above the downward resistance line, in force since early September.
A consolidation above 1.1600 today would be the first signal to break the upside trend of the dollar, and a rise above 1.1640 promises to be a confirmation signal.
We should point out that this jump in EURUSD is not a strength of the Euro against its peers. It remains near cyclical lows against the pound at 0.8475 in EURGBP and has broken the floor at 1.07 in EURCHF, melting to lows last seen in November.
A consolidation above 1.1600 today would be the first signal to break the upside trend of the dollar, and a rise above 1.1640 promises to be a confirmation signal.
We should point out that this jump in EURUSD is not a strength of the Euro against its peers. It remains near cyclical lows against the pound at 0.8475 in EURGBP and has broken the floor at 1.07 in EURCHF, melting to lows last seen in November.
The S&P500 is also testing its downside resistance. Futures have been trading above it since morning, but we should wait for the reaction of the US market. Better yet, a consolidation above the area of the prior local highs near 4400.
Gold made an almost 2% jump on Wednesday, approaching $1800, the 200-day moving average. A meaningful sign of a bearish trend reversal in gold would be a consolidation above $1800 and confirmation to overcome previous local highs at $1836. More on Gold we wrote yesterday.
Gold made an almost 2% jump on Wednesday, approaching $1800, the 200-day moving average. A meaningful sign of a bearish trend reversal in gold would be a consolidation above $1800 and confirmation to overcome previous local highs at $1836. More on Gold we wrote yesterday.
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At the beginning of 2021, AMD shares were unable to break above the $100 level, and a protracted correction began, although the company has many growth drivers and shows strong financial results.
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#NZDJPY broke pivotal resistance level 78.7
• Likely to test resistance level 80.15
NZDJPY currency pair under the bullish pressure after the price broke the pivotal resistance level 78.7 (which has been reversing the price from the start of July).
The breakout of the resistance level 78.7 accelerated the active minor impulse wave 3 – which is a part of the higher-order upward impulse wave (3) from last month.
NZDJPY can be expected to rise further toward the next resistance level 80.15 (multi-month high from May and the target price for the completion of the active wave 3).
• Likely to test resistance level 80.15
NZDJPY currency pair under the bullish pressure after the price broke the pivotal resistance level 78.7 (which has been reversing the price from the start of July).
The breakout of the resistance level 78.7 accelerated the active minor impulse wave 3 – which is a part of the higher-order upward impulse wave (3) from last month.
NZDJPY can be expected to rise further toward the next resistance level 80.15 (multi-month high from May and the target price for the completion of the active wave 3).
#NatGas reversed from support zone
• Likely to rise to resistance level 6.3
Natural gas recently reversed up from the support zone lying between the key support level 5.40 (low of the previous wave (a)), 20-day moving average and the 61.8% Fibonacci correction of the upward impulse from September.
The upward reversal from this support zone started the active minor impulse wave 5 – which is a part of the higher-order upward impulse sequence (5) from July.
Natural gas can be expected to rise further toward the next resistance level 6.3 (which stopped the previous waves 3 and (b)).
• Likely to rise to resistance level 6.3
Natural gas recently reversed up from the support zone lying between the key support level 5.40 (low of the previous wave (a)), 20-day moving average and the 61.8% Fibonacci correction of the upward impulse from September.
The upward reversal from this support zone started the active minor impulse wave 5 – which is a part of the higher-order upward impulse sequence (5) from July.
Natural gas can be expected to rise further toward the next resistance level 6.3 (which stopped the previous waves 3 and (b)).
The S&P500 index closed Thursday with the biggest gain in seven months, adding 1.7%. In a sharp move, the index managed to get back above the 50-day average and maintained its position above that line as of Friday morning.
Traders should pay attention to the trading around this level, which acted as support since November 2020 and turned into resistance in September 2021. The regular session and the weekend promise to set the tone for the next few days and even weeks.
The Japanese market in the form of the Nikkei 225 supports America’s optimism by adding 1.7% since the beginning of the trading session on Friday and surpassing the 29000 level and its 50- and 200-day moving averages. The weakening Japanese yen against its major rivals are keeping interest in shares of the Land of the Rising Sun alive. They also benefit from some pullback in energy prices, which are mainly imported.
Traders should pay attention to the trading around this level, which acted as support since November 2020 and turned into resistance in September 2021. The regular session and the weekend promise to set the tone for the next few days and even weeks.
The Japanese market in the form of the Nikkei 225 supports America’s optimism by adding 1.7% since the beginning of the trading session on Friday and surpassing the 29000 level and its 50- and 200-day moving averages. The weakening Japanese yen against its major rivals are keeping interest in shares of the Land of the Rising Sun alive. They also benefit from some pullback in energy prices, which are mainly imported.
The weakening of the yen overnight fits well with the persistent inverse relationship between its exchange rate and the demand for risk: low-yielding Japanese bonds are used as funding for purchasing risky assets such as stocks or high-yielding currencies. This factor has added to yen weakness as the trade balance shifts towards higher imports due to a jump in energy and metals prices.
Having surpassed 114 this morning, the USDJPY was near the upper end of its trading range since early 2017. On the charts up to the weekly timeframes, there is a clear overbought situation in the pair. The same is largely true for GBPJPY, which, having risen to 156.5, is testing its highest levels since mid-2016.
Having surpassed 114 this morning, the USDJPY was near the upper end of its trading range since early 2017. On the charts up to the weekly timeframes, there is a clear overbought situation in the pair. The same is largely true for GBPJPY, which, having risen to 156.5, is testing its highest levels since mid-2016.
Since early October, the yen’s dip has appeared too fast and abrupt, and the move could potentially be even stronger. In the coming days, we may see the sellers surrender on the rise above the turning points of recent years. Or, on the contrary, an increase in bear’s grip. Either way, there will be no dullness in the yen.
A further weakening of the Japanese currency would inflate the stock market’s sails and support a further strengthening of commodities and high-yielding currencies. Having started at the beginning of October, this momentum is relatively new and therefore, its potential is far from exhausted. On the other hand, there are also questions about its sustainability because massive bond placements from the US Treasury should be on the horizon, drawing liquidity from the market and supporting the demand for the dollar.
A further weakening of the Japanese currency would inflate the stock market’s sails and support a further strengthening of commodities and high-yielding currencies. Having started at the beginning of October, this momentum is relatively new and therefore, its potential is far from exhausted. On the other hand, there are also questions about its sustainability because massive bond placements from the US Treasury should be on the horizon, drawing liquidity from the market and supporting the demand for the dollar.
Rising euro zone imports weaken EUR
The eurozone's trade surplus is under pressure this year, reducing support for the single currency against rivals. Data published today showed a reduction in the seasonally adjusted trade surplus to 11.1bn, compared with the expected 14.1bn and 13.5bn a month earlier.
Except for April and May 2020, these are the lowest levels since October 2018, when oil and gas prices also rallied violently.
Admittedly, energy prices have risen more dramatically between August and now, promising an even more significant jump in the cost of imports.
It is also noteworthy that exports seem to be hitting a glass ceiling close to EUR 200 billion, chipping away at it from 2019.
The weakening trade surplus underlines the difficulties for the region's economy amid rising commodity prices. This is a new batch of bad news for the Euro, whose dynamics this year are closely mirroring those of the trade surplus.
The eurozone's trade surplus is under pressure this year, reducing support for the single currency against rivals. Data published today showed a reduction in the seasonally adjusted trade surplus to 11.1bn, compared with the expected 14.1bn and 13.5bn a month earlier.
Except for April and May 2020, these are the lowest levels since October 2018, when oil and gas prices also rallied violently.
Admittedly, energy prices have risen more dramatically between August and now, promising an even more significant jump in the cost of imports.
It is also noteworthy that exports seem to be hitting a glass ceiling close to EUR 200 billion, chipping away at it from 2019.
The weakening trade surplus underlines the difficulties for the region's economy amid rising commodity prices. This is a new batch of bad news for the Euro, whose dynamics this year are closely mirroring those of the trade surplus.
US retail sales significantly exceeded expectations, continuing a series of healthy data supporting global risk demand. US Census Bureau reported a 0.7% rise in sales for September after a 0.9% (revised from 0.7%) increase a month earlier.
Sales excluding autos added 0.8% after jumping 2% earlier. This is solid data and has the potential to allay some fears that the impending Fed stimulus rollback will come as a shock to equity markets. Investors may well be satisfied with the report and strengthened in the belief that demand will continue to enhance soon.
Strong retail sales are also good news for the Dollar, as markets continue to put an increasingly early hike in interest rates into quotes. The latest data indicates that the first rate hike is already priced in as early as September next year, although only a couple of months ago, no one was expecting a hike before 2023. The approach of the projected rate hike date is pushing the Dollar upwards.
Sales excluding autos added 0.8% after jumping 2% earlier. This is solid data and has the potential to allay some fears that the impending Fed stimulus rollback will come as a shock to equity markets. Investors may well be satisfied with the report and strengthened in the belief that demand will continue to enhance soon.
Strong retail sales are also good news for the Dollar, as markets continue to put an increasingly early hike in interest rates into quotes. The latest data indicates that the first rate hike is already priced in as early as September next year, although only a couple of months ago, no one was expecting a hike before 2023. The approach of the projected rate hike date is pushing the Dollar upwards.
#NZDCAD broke key resistance level 0.8714
• Likely to reach resistance level 0.88001
NZDCAD currency pair continues to rise inside the corrective wave 2, which previously broke the key resistance level 0.8714 (former minor support from the end of September).
The breakout of this resistance level coincided with the breakout of the 50% Fibonacci correction of the downward impulse from the start of October.
NZDCAD can be expected to rise further toward the next resistance level 0.8800 (previous minor reversal high from the start of October).
• Likely to reach resistance level 0.88001
NZDCAD currency pair continues to rise inside the corrective wave 2, which previously broke the key resistance level 0.8714 (former minor support from the end of September).
The breakout of this resistance level coincided with the breakout of the 50% Fibonacci correction of the downward impulse from the start of October.
NZDCAD can be expected to rise further toward the next resistance level 0.8800 (previous minor reversal high from the start of October).
#Copper broke resistance zone
• Likely to test resistance level 480.00
Copper continues to rise after the price broke through the resistance zone lying between the two strong resistance levels – 462.00 and 468.00.
The breakout of these resistance levels accelerated the active multi-impulse upward impulse sequence made out of the impulse waves (iii), 3 and (3).
Copper can be expected to rise further toward the next resistance level 480.00 (former major resistance from May and the target for the completion of the active impulse wave 3).
• Likely to test resistance level 480.00
Copper continues to rise after the price broke through the resistance zone lying between the two strong resistance levels – 462.00 and 468.00.
The breakout of these resistance levels accelerated the active multi-impulse upward impulse sequence made out of the impulse waves (iii), 3 and (3).
Copper can be expected to rise further toward the next resistance level 480.00 (former major resistance from May and the target for the completion of the active impulse wave 3).
#EURGBP broke support level 0.8450
• Likely to fall to support level 0.8400
EURGBP continues to fall after this currency pair broke the key support level 0.8450 (previous monthly low from August).
The breakout of the support level 0.8450 accelerated the active impulse waves (iii), 3 – which belong to the extended impulse wave (3) from April.
Given the strong downtrend and high sterling bullishness – EURGBP can be expected to fall further toward the next support level 0.8400.
• Likely to fall to support level 0.8400
EURGBP continues to fall after this currency pair broke the key support level 0.8450 (previous monthly low from August).
The breakout of the support level 0.8450 accelerated the active impulse waves (iii), 3 – which belong to the extended impulse wave (3) from April.
Given the strong downtrend and high sterling bullishness – EURGBP can be expected to fall further toward the next support level 0.8400.
#NZDCAD broke resistance area
• Likely to rise to resistance level 0.8900
NZDCAD currency pair earlier broke the resistance area lying between the resistance level 0.8800 (which stopped the previous minor correction (iv) at the start of October) and the 38.2% Fibonacci correction of the downward impulse from September.
The breakout of this resistance area accelerated the active impulse wave (c) of the long-term ABC correction 2 from the start of October.
NZDCAD can be expected to rise further toward the next resistance level 0.8900 (target price for the completion of the active ABC correction 2).
• Likely to rise to resistance level 0.8900
NZDCAD currency pair earlier broke the resistance area lying between the resistance level 0.8800 (which stopped the previous minor correction (iv) at the start of October) and the 38.2% Fibonacci correction of the downward impulse from September.
The breakout of this resistance area accelerated the active impulse wave (c) of the long-term ABC correction 2 from the start of October.
NZDCAD can be expected to rise further toward the next resistance level 0.8900 (target price for the completion of the active ABC correction 2).
#Nasdaq100 broke resistance area
• Likely to rise to resistance level 15750.00
Nasdaq-100 index recently broke the resistance area lying between the round resistance level 15000.00 (which stopped the previous impulse wave (i) at the start of October) and the 50% Fibonacci correction of the ABC correction 4 impulse from the start of September.
The breakout of this resistance area accelerated the active impulse wave (iii), which belongs to the higher-level impulse waves 3 and (3).
Nasdaq-100 index can be expected to rise further toward the next resistance level 15750.00 (target price for the completion of the active impulse wave (iii)).
• Likely to rise to resistance level 15750.00
Nasdaq-100 index recently broke the resistance area lying between the round resistance level 15000.00 (which stopped the previous impulse wave (i) at the start of October) and the 50% Fibonacci correction of the ABC correction 4 impulse from the start of September.
The breakout of this resistance area accelerated the active impulse wave (iii), which belongs to the higher-level impulse waves 3 and (3).
Nasdaq-100 index can be expected to rise further toward the next resistance level 15750.00 (target price for the completion of the active impulse wave (iii)).