Swiss inflation falls to 1.4%, will it affect the SNB?
Swiss inflation is falling below expectations, and this may be a reason for the SNB to change its rhetoric next week. Consumer prices fell 0.2% in November, slowing the annual pace from 1.7% to 1.4%, while no changes were expected.
This is a two-year low and down under the historical 101-year average (1.75%), although above the 0.6% average since 2000 when the SNB moved to inflation targeting.
The strong franc is one of the reasons why inflation is falling faster than in the US and the eurozone.
Swiss inflation is falling below expectations, and this may be a reason for the SNB to change its rhetoric next week. Consumer prices fell 0.2% in November, slowing the annual pace from 1.7% to 1.4%, while no changes were expected.
This is a two-year low and down under the historical 101-year average (1.75%), although above the 0.6% average since 2000 when the SNB moved to inflation targeting.
The strong franc is one of the reasons why inflation is falling faster than in the US and the eurozone.
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By early December, the USDCHF pair was near the historical support line of 0.87, which has been in force for the last twelve years. EURCHF is also near historical lows, barring a brief collapse in January 2015.
Other crosses with the franc (JPY, CAD) have also been near historical extremes over the past few days.
The slowdown in inflation triggered an impulsive sell-off in the franc, which lost around 0.5% but almost recovered the losses during the day.
Markets are in no hurry to play down the news, preferring to wait until 14 December, when the Central Bank will present its critical rate decision and quarterly monetary policy estimates. However, today's data is the last piece of the puzzle, as before the rate decision, there will be only the publication of the unemployment rate, which increased from 1.9% to 2.1% in six months.
Other crosses with the franc (JPY, CAD) have also been near historical extremes over the past few days.
The slowdown in inflation triggered an impulsive sell-off in the franc, which lost around 0.5% but almost recovered the losses during the day.
Markets are in no hurry to play down the news, preferring to wait until 14 December, when the Central Bank will present its critical rate decision and quarterly monetary policy estimates. However, today's data is the last piece of the puzzle, as before the rate decision, there will be only the publication of the unemployment rate, which increased from 1.9% to 2.1% in six months.
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#Bitcoin surpassed $42K on Monday, adding more than $2,000. The last time Bitcoin traded above $40K was in April 2022, before the collapse of the Terra ecosystem triggered a massive #crypto market crash. Financial markets are seeing a second day of risk aversion, which has kicked off profit-taking in cryptos.
Bitcoin is losing 1.5% to $41.5K so far on Tuesday after a short squeeze into the $42.4K area. A broader move of profit-taking could take the price back to $40K before attracting new buyers.
According to CoinShares, crypto fund investments rose by $176 million last week; significant inflows continued for the sixth week in a row and the tenth week overall. Bitcoin investments increased by $133 million, Ethereum by $31 million, and Solana by $4.3 million.
Investments in crypto funds reached $1.76bn or 4% of assets under management in 10 weeks, the highest since October 2021 when the US futures ETF was launched. Trading volumes on ETPs remain strong at $2.6bn, CoinShares noted.
Bitcoin is losing 1.5% to $41.5K so far on Tuesday after a short squeeze into the $42.4K area. A broader move of profit-taking could take the price back to $40K before attracting new buyers.
According to CoinShares, crypto fund investments rose by $176 million last week; significant inflows continued for the sixth week in a row and the tenth week overall. Bitcoin investments increased by $133 million, Ethereum by $31 million, and Solana by $4.3 million.
Investments in crypto funds reached $1.76bn or 4% of assets under management in 10 weeks, the highest since October 2021 when the US futures ETF was launched. Trading volumes on ETPs remain strong at $2.6bn, CoinShares noted.
#DXY
The American dollar is fighting hard for the trend. For the last three trading sessions, the dollar index has been crossing up and down the 200-day moving average every day. All in all, the flirting with this level has been going on for more than three weeks, during which neither bulls nor bears were able to form a stable trend.
Right now, there are about equal chances of a trend forming in one direction or the other, so it is worth watching closely to see which trend crystallises.
The dollar bumped around in October and declined sharply in November, with only some stabilisation late last month. The recent settlement, from this point of view, looks like an attempt to stand still and gather strength before a new downward impulse.
The first signal to switch to a bearish bias could be a sharp downward impulse under the 200-day average at 103.3 versus the current 103.6. The final confirmation will come in the form of an update of the November lows at 102.37.
The American dollar is fighting hard for the trend. For the last three trading sessions, the dollar index has been crossing up and down the 200-day moving average every day. All in all, the flirting with this level has been going on for more than three weeks, during which neither bulls nor bears were able to form a stable trend.
Right now, there are about equal chances of a trend forming in one direction or the other, so it is worth watching closely to see which trend crystallises.
The dollar bumped around in October and declined sharply in November, with only some stabilisation late last month. The recent settlement, from this point of view, looks like an attempt to stand still and gather strength before a new downward impulse.
The first signal to switch to a bearish bias could be a sharp downward impulse under the 200-day average at 103.3 versus the current 103.6. The final confirmation will come in the form of an update of the November lows at 102.37.
But the situation is far from desperate for the bulls as well. The dollar showed a convincing close last month, managing to rebound sharply to close the month above the significant 200-day moving average. An attempt to sell the dollar last Friday failed to gain traction, and the index returned to growth on Monday.
The latest dollar momentum at least created a springboard for a broader bounce and extended profit-taking. A classic Fibonacci retracement of the November decline amplitude opens upside potential at 104.12 (+0.5% from current levels). The dollar's ability to overcome the last level and further gain will be the final confirmation of the trend change to growth.
The latest dollar momentum at least created a springboard for a broader bounce and extended profit-taking. A classic Fibonacci retracement of the November decline amplitude opens upside potential at 104.12 (+0.5% from current levels). The dollar's ability to overcome the last level and further gain will be the final confirmation of the trend change to growth.
Among other factors, we note the extremely dovish expectations from the Fed: rate futures give a 14.5% chance of a cut already in January, and at the March meeting, the odds of a cut exceed 62%. Less than two months ago, the market was giving roughly equal odds between raising and keeping rates on hold.
This dramatic revision in expectations has been the fundamental fuel for the weakening dollar and the rally in equities. In contrast, the Fed is more inclined to raise the rate and is setting up for an extended period of holding it. The return of market expectations to those of the Fed looks like a strong case for a dollar recovery in the coming weeks.
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This dramatic revision in expectations has been the fundamental fuel for the weakening dollar and the rally in equities. In contrast, the Fed is more inclined to raise the rate and is setting up for an extended period of holding it. The return of market expectations to those of the Fed looks like a strong case for a dollar recovery in the coming weeks.
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#CrudeOil remains under pressure, reflecting fears of demand cuts, despite verbal interventions by OPEC+ and US government officials over the past week to shift the balance in favour of a deficit.
Last week, the expanded OPEC+ agreed a production cut of 2.2 million bpd from the set quotas for the first quarter of next year. This is a reduction of 900k bpd from what we have had so far.
This news did not help to bring the oil price back above the 200-day average, which acted as resistance in November.
Already this week, cartel officials have reminded us that they may extend this or even deepen the cuts. But it seems that even this did not impress traders. #WTI prices updated the lows for five months, going under $72.40. #Brent, at the height of the European session on Tuesday, held slightly above the November low.
Last week, the expanded OPEC+ agreed a production cut of 2.2 million bpd from the set quotas for the first quarter of next year. This is a reduction of 900k bpd from what we have had so far.
This news did not help to bring the oil price back above the 200-day average, which acted as resistance in November.
Already this week, cartel officials have reminded us that they may extend this or even deepen the cuts. But it seems that even this did not impress traders. #WTI prices updated the lows for five months, going under $72.40. #Brent, at the height of the European session on Tuesday, held slightly above the November low.
US officials have indicated that they will buy back as much oil to replenish the strategic oil reserve as they can at current prices. Technically, this also supports the price.
It was logical to expect oil to quickly move higher on such news, but we see a fourth session of declines.
Apparently, sellers are on the side of falling actual demand, which pressurises prices despite promises to cut production.
But it is quite possible that the pressure on prices in recent days was a sell-off after a failed test of the 200-day moving average. From current levels, oil has downside potential to $66-70 per barrel WTI and $70-73 for Brent, from where it was repurchased from March to the end of June and several more times from July 2021. A decline in this area would bring the 200-week average back into focus, which requires global events such as a rupture within OPEC, a global pandemic or abnormal volatility in financial markets to break.
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It was logical to expect oil to quickly move higher on such news, but we see a fourth session of declines.
Apparently, sellers are on the side of falling actual demand, which pressurises prices despite promises to cut production.
But it is quite possible that the pressure on prices in recent days was a sell-off after a failed test of the 200-day moving average. From current levels, oil has downside potential to $66-70 per barrel WTI and $70-73 for Brent, from where it was repurchased from March to the end of June and several more times from July 2021. A decline in this area would bring the 200-week average back into focus, which requires global events such as a rupture within OPEC, a global pandemic or abnormal volatility in financial markets to break.
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There were more signs of a cooling US labour market ahead of Friday's employment report. The number of open job vacancies in October fell to 8.733 million from 9.35 million a month earlier and 9.31 million expected.
With occasional bounces, the figure is down from 12 million since March last year. However, the job market is still hotter than it was at its peak in January 2019 at 7.5 million.
US markets remain in "bad is good" mode. This logic makes sense for inflation, suggesting the Fed is easing its stance or bringing the date for an interest rate cut closer.
But it is a very volatile game when we look at indicators of economic activity such as the labour market or consumption. A deterioration in these indicators may first prove to be the cause of market turbulence before a softening of the Central Bank's stance and a "natural recovery" of the market reverses the trend.
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With occasional bounces, the figure is down from 12 million since March last year. However, the job market is still hotter than it was at its peak in January 2019 at 7.5 million.
US markets remain in "bad is good" mode. This logic makes sense for inflation, suggesting the Fed is easing its stance or bringing the date for an interest rate cut closer.
But it is a very volatile game when we look at indicators of economic activity such as the labour market or consumption. A deterioration in these indicators may first prove to be the cause of market turbulence before a softening of the Central Bank's stance and a "natural recovery" of the market reverses the trend.
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#WaveAnalysis
#EURUSD broke daily up channel
Likely to fall to support level 1.0700
EURUSD currency pair under the bearish pressure after the earlier breakout of the support trendline of the daily up channel, which enclosed the previous impulse wave (C) from the start of November.
The breakout of this daily up channel accelerated the active impulse wave 1.
Given the clear daily downtrend and the strong USD bullish sentiment seen today, EURUSD can be expected to fall further to the next support level 1.0700 (former monthly high from October).
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#EURUSD broke daily up channel
Likely to fall to support level 1.0700
EURUSD currency pair under the bearish pressure after the earlier breakout of the support trendline of the daily up channel, which enclosed the previous impulse wave (C) from the start of November.
The breakout of this daily up channel accelerated the active impulse wave 1.
Given the clear daily downtrend and the strong USD bullish sentiment seen today, EURUSD can be expected to fall further to the next support level 1.0700 (former monthly high from October).
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#WaveAnalysis
#Gold reversed from multi-year resistance level 2065
Likely to fall to support level 1900
Gold recently reversed down from the major multi-year resistance level 2065, which has been reversing the price from the middle of 2020, as can be seen below.
The resistance level 2065.00 was strengthened by the upper daily and the weekly Bollinger Bands.
Given the strength of the resistance level 2065 (which was never broken on a closing basis over the last few years) and the overbought weekly Stochastic, Gold can be expected to fall further to the next round support level 2000 – the breakout of which can lead to further losses to 1900.
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#Gold reversed from multi-year resistance level 2065
Likely to fall to support level 1900
Gold recently reversed down from the major multi-year resistance level 2065, which has been reversing the price from the middle of 2020, as can be seen below.
The resistance level 2065.00 was strengthened by the upper daily and the weekly Bollinger Bands.
Given the strength of the resistance level 2065 (which was never broken on a closing basis over the last few years) and the overbought weekly Stochastic, Gold can be expected to fall further to the next round support level 2000 – the breakout of which can lead to further losses to 1900.
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The crypto market made another leap forward on Tuesday afternoon after spending less than 24 hours in consolidation mode. In the last day, the total crypto cap reached $1.6 trillion, up 3.9% in a day, 11% in a week and 20% in 30 days. The acceleration in recent days is evident, which may reflect both speculators hastily closing short positions and increasing FOMO.
#Bitcoin is adding over 5% in 24 hours, trading near $43.7K at the time of writing and touching $44.5K at the start of the day. Previously, we have repeatedly noted "thin air territory" in the $40-46K range. The market did not linger here in previous times, and we should look for hints of turning points not earlier than the $46-47K area, where there was a reversal in March last year and temporary support in 2021.
#Bitcoin is adding over 5% in 24 hours, trading near $43.7K at the time of writing and touching $44.5K at the start of the day. Previously, we have repeatedly noted "thin air territory" in the $40-46K range. The market did not linger here in previous times, and we should look for hints of turning points not earlier than the $46-47K area, where there was a reversal in March last year and temporary support in 2021.
#Ethereum tested $2300 but has so far quickly retreated to $2260. In the dynamics of ETH since the middle of last year, a broad upward channel can be identified, the upper boundary of which now passes through $2430. It is worth being prepared for the bulls to pull the price closer to these levels before deciding to take profits.
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The Dow Jones index has switched into consolidation mode, joining the S&P500 and Nasdaq100, which did so almost two and three weeks ago, respectively. This could be consolidation before a spurt to new highs, but it's more likely that we're seeing a depletion of growth.
The Dow Jones index is trading just 0.8% away from its record close in December 2021 and 2% away from its all-time high, having added nearly 12% during the rally over the past five weeks. The rally has been so rapid that the RSI on the daily charts has exceeded 80, an extremely overbought zone. Sometimes, a move into this territory kicks off an even wilder rally, indicating extreme investor greed.
But a different pattern of behaviour seems to have been chosen this time. The Dow Jones index slowly slid on Monday and Tuesday. The S&P500 and Nasdaq100, the broader equity indices, did not connect to the upside and continued to consolidate at recent tops.
The Dow Jones index is trading just 0.8% away from its record close in December 2021 and 2% away from its all-time high, having added nearly 12% during the rally over the past five weeks. The rally has been so rapid that the RSI on the daily charts has exceeded 80, an extremely overbought zone. Sometimes, a move into this territory kicks off an even wilder rally, indicating extreme investor greed.
But a different pattern of behaviour seems to have been chosen this time. The Dow Jones index slowly slid on Monday and Tuesday. The S&P500 and Nasdaq100, the broader equity indices, did not connect to the upside and continued to consolidate at recent tops.
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Equally important is the behaviour of the currency market, where the dollar has been adding since late November, which is usually a bearish factor for the market. And this is clearly visible in the dynamics of other indices. Dow Jones, contrary to simple logic, has accelerated its ascent these days.
Such character of movement reminds one of active liquidation of short positions. We saw ruthless equivalents of such liquidations in gold, with the capitulation peak on the 1st and at the beginning of trading on the 4th of December. We saw the opposite situation in April 2020, with negative prices in some oil futures.
That is, technically, from current levels, it is now more comfortable to be bearish in the Dow Jones, assuming that the index is more likely to fall by 5% than rise by another similar amount. Fundamentally, it's also not easy to buy stocks whose prices include expectations that the Fed will cut rates by 150 points over the next year, with final demand and corporate profits remaining as strong.
Such character of movement reminds one of active liquidation of short positions. We saw ruthless equivalents of such liquidations in gold, with the capitulation peak on the 1st and at the beginning of trading on the 4th of December. We saw the opposite situation in April 2020, with negative prices in some oil futures.
That is, technically, from current levels, it is now more comfortable to be bearish in the Dow Jones, assuming that the index is more likely to fall by 5% than rise by another similar amount. Fundamentally, it's also not easy to buy stocks whose prices include expectations that the Fed will cut rates by 150 points over the next year, with final demand and corporate profits remaining as strong.
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ADP reported a 103k increase in new private sector jobs in the US, against expectations of 130k and 106k (revised from 113k) a month earlier.
This indicator was designed as the last insight on the jobs market before the official data. In the last three months, according to ADP, the private sector has been creating an average of 100k new jobs per month. We saw a similar slowdown at the end of 2018, followed by a year of stagnation and a reversal to decline before the pandemic hit.
The slowdown in the labour market comes as interest rates come under pressure and the potential for a quick recovery from the pandemic is exhausted.
The importance of the ADP reports to the markets is diminishing as they increasingly diverge from official data. The difference began to accumulate in 2018 when the official data continued the trend of employment growth with stagnant or declining numbers from an independent source.
This indicator was designed as the last insight on the jobs market before the official data. In the last three months, according to ADP, the private sector has been creating an average of 100k new jobs per month. We saw a similar slowdown at the end of 2018, followed by a year of stagnation and a reversal to decline before the pandemic hit.
The slowdown in the labour market comes as interest rates come under pressure and the potential for a quick recovery from the pandemic is exhausted.
The importance of the ADP reports to the markets is diminishing as they increasingly diverge from official data. The difference began to accumulate in 2018 when the official data continued the trend of employment growth with stagnant or declining numbers from an independent source.
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#WaveAnalysis
#Silver reversed from resistance level 25.80
– Likely to fall to support level 23.50
Silver falling strongly after the price reversed down from the key resistance level 25.80, which reversed the price multiple times in April and May.
The downward reversal from the resistance level 25.80 started the active minor corrective wave iv.
Given the strength of the resistance level 25.80 and the bearish sentiment seen across the precious metal markets today, Silver can be expected to fall further to the next support level 23.50.
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#Silver reversed from resistance level 25.80
– Likely to fall to support level 23.50
Silver falling strongly after the price reversed down from the key resistance level 25.80, which reversed the price multiple times in April and May.
The downward reversal from the resistance level 25.80 started the active minor corrective wave iv.
Given the strength of the resistance level 25.80 and the bearish sentiment seen across the precious metal markets today, Silver can be expected to fall further to the next support level 23.50.
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#WaveAnalysis #SPX
S&P 500 reversed from long-term resistance level 4600.00
Likely to fall to support level 4500.00
S&P 500 index under the bearish pressure after the earlier downward reversal from the long-term resistance level 4600.00, which stopped the sharp weekly uptrend in July.
The downward reversal from the resistance level 4600.00 stopped the previous minor impulse wave 3.
Given the strength of the resistance level 4600.00 and the still overbought daily Stochastic, S&P 500 index can be expected to fall further to the next round support level 4500.00.
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S&P 500 reversed from long-term resistance level 4600.00
Likely to fall to support level 4500.00
S&P 500 index under the bearish pressure after the earlier downward reversal from the long-term resistance level 4600.00, which stopped the sharp weekly uptrend in July.
The downward reversal from the resistance level 4600.00 stopped the previous minor impulse wave 3.
Given the strength of the resistance level 4600.00 and the still overbought daily Stochastic, S&P 500 index can be expected to fall further to the next round support level 4500.00.
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#Crypto market capitalisation changed little at the end of trading on Wednesday, remaining close to $1.59 trillion (-0.14% d/d). But this modest result is a show of strength, given the pressure in equity markets, which intensified selling in #Bitcoin and #Ethereum.
Meanwhile, Altcoins got their chance to catch up with the leaders. For example, XRP added 2% in 24h) and #Cardano added 4%.
#XRP has formed an upward trend since mid-October. An attempt to accelerate growth last month failed, but it also failed to break this line at the start of December. In addition to the trend line, the 50-day moving average, the touch of which stops the sell-off for the last 50 days, also turned out to be on the side of buyers.
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Meanwhile, Altcoins got their chance to catch up with the leaders. For example, XRP added 2% in 24h) and #Cardano added 4%.
#XRP has formed an upward trend since mid-October. An attempt to accelerate growth last month failed, but it also failed to break this line at the start of December. In addition to the trend line, the 50-day moving average, the touch of which stops the sell-off for the last 50 days, also turned out to be on the side of buyers.
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#JPY was the hero of the day on Thursday, adding over 1.7% vs USD and 1.6% vs EUR. The yen has been sided by Japan's regional banks, which are rumoured to be lobbying for the abandonment of the yield targeting policy. USDJPY dipped below 145, and EURJPY fell under 156.
Simultaneously, markets are laying that Fed and ECB rates have reached a plateau, and the next step will be to lower them. The logical outcome of this divergence is an accelerated narrowing of yield spreads between Japanese and other G7 economies bonds, bringing capital back into the yen.
Yen appreciation has been on a steady course since early November, a couple of weeks after the peak in US 10-year yields, when markets became convinced that their decline had become a trend.
Also, the yen may work the cautious mood of the stock markets in recent days. The yen is very often used as a funding currency to buy risky assets. The shift of market sentiment to profit-taking on major indices triggered a predictable deleveraging.
Simultaneously, markets are laying that Fed and ECB rates have reached a plateau, and the next step will be to lower them. The logical outcome of this divergence is an accelerated narrowing of yield spreads between Japanese and other G7 economies bonds, bringing capital back into the yen.
Yen appreciation has been on a steady course since early November, a couple of weeks after the peak in US 10-year yields, when markets became convinced that their decline had become a trend.
Also, the yen may work the cautious mood of the stock markets in recent days. The yen is very often used as a funding currency to buy risky assets. The shift of market sentiment to profit-taking on major indices triggered a predictable deleveraging.
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