Daily market analysis

December 5, 2021

Market Focus

US stock fall last Friday amid a sharp selloff witnessed in huge technology companies, extending their weekly slide. The concerns about the new Omicron variant remained, as investors worry about that an outbreak could slowdown the recovery in global economy. Moreover, US Nonfarm Payrolls released last Friday rose by 210K in November, which is lower than market’s expectation of 550K. But the Federal Reserve is likely to follow through with faster tapering despite the dismal jod data, as the pressure of elevated inflation continues to rise.

The benchmarks, S&P 500, Dow Jones and Nasdaq both declined last Friday as the mixed US jod report increased the volatility of equity markets. S&P 500 was down 0.8% on a daily basis and the Dow Jones edged lower with a 0.2% loss for the day. Eight out of eleven sectors stayed in negative territory as the consumer discretionary and information technology sectors are the worst performing among all groups, dropped 1.84% and 1.65%, respectively. Consumer staples and utilities were the only major groups to climb higher on the day. The Dow Jones lost the most with 1.7%.

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自動產生的描述

In Asia, shares of Chinese companies traded in the US tumbled on Friday, as the The Chinese ride-hailing company, DiDi, decides to delist its American depositary shares from the New York Stock Exchange and pursue a listing in Hong Kong. The announcement adds even more uncertainty to the prospects for other US-listed Chinese firms.

 

Main Pairs Movement:

The US dollar edged higher last Friday, gathering some pace and retests the daily highs around 96.45 at the end of the week. After touching a fresh three-day high, the DXY index retreated to 96 level during mid American session and posted a 0.02 gain on a daily basis. The hawkish tone from Fed chair Powell continued to acted as a tailwind for the greenback, as he suggested that the Fed will discuss adopting a quicker tapering pace at the December meeting, all pointing to a rates lift-off at some point in mid-2022.

GBP/USD declined last Friday, dropping below 1.324 level amid rebounding US dollar. The pair reached a daily top in late European session but failed to preserve its bullish momentum. EUR/USD rebounded slightly amid the decline in US yields, rising 0.06% on a daily basis.

USD/JPY touched a fresh daily top after the release of US job reports, but then started to see heavy selling and dropped below 112.6 area. The pair is now trading at 112.88, rising 0.11% for the day.

Gold gained upside traction and rebounded above $1782, as the downbeat market sentiment lend some supports to the precious metal. Gold is now rising 0.02% on a daily basis. WTI stayed in negative territory and slumped 1.65% for the day.

  

Technical Analysis:

EURUSD (4- Hour Chart)

After previous day’s slide to 1.129 area, the pair EUR/USD consolidated in a range between 1.128 and 1.131 on Friday. The pair was flirting with 1.130 level during the Asian Session, then touched a daily high above 1.133 after US Nonfarm Payrolls released. However, the recovery witnessed in US dollar weighed on the pair, which surrendered most of its intraday gains and currently losing 0.17% on a daily basis. Nonfarm Payrolls rose by 210K in November, which is lower than market’s expectation of 550K and dragged the US dollar below 96 level right after the release. Despite the dismal data, the greenback has rebounded and posted a 0.22% gain at the moment. In Europe, European Central Bank President Christine Lagarde said that it is very unlikely to see rate hikes in 2022, therefore the dovish comments acted as a headwind for EUR/USD.

For technical aspect, RSI indicator 44 figures as of writing, suggesting tepid bear movement ahead. Looking at the MACD indicator, the MACD is now sitting below the signal line, which means a downward trend for the pair. As for the Bollinger Bands, the price is dropping out of lower band, therefore a trend continuation could be expected. In conclusion, we think market will be bearish as long as the 1.1383 resistance line holds.

Resistance: 1.1383, 1.1464, 1.1606

Support: 1.1236, 1.1186

 

GBPUSD (4- Hour Chart)

The pair GBP/USD declined sharply and refreshed 2021 low on Friday, staying under pressure amid renewed US dollar strength. The pair flirted with 1.329 level in early trades and edged lower during European session. After the release of US Nonfarm Payrolls, the cable touched the lowest level since December 2020 below 1.322, currently staying in negative territory with a 0.60% loss for the day. The US dollar remained its bullish traction despite downbeat NFP report, as the hawkish Fed continued to lend support to the greenback with the aspects of a rate hike in 2022. In the UK, UK Final Services PMI downwardly revised to 58.5 in November. On top of that, the UK-EU impasse over the Northern Ireland Protocol and the worsening row over the post-Brexit fishing rights both acted as a headwind for the British pound.

For technical aspect, RSI indicator 32 figures as of writing, reflecting that the bearish momentum should persist for a while before there’s a trend reversal. As for the Bollinger Bands, the price moved out of the lower band, therefore a strong downward trend continuation could be expected. In conclusion, we think market will be bearish as the pair is eyeing a test of the 1.3195 support. The next target on the downside aligns at 1.3106.

Resistance: 1.3370, 1.3514, 1.3607

Support: 1.3195, 1.3106

  

USDCAD (4- Hour Chart)

The pair USD/CAD advanced amid falling oil prices on Friday, rebounding back from daily lows that touched earlier in the session. The pair saw some buying and touched a daily top in mid European session, but then dropped to below 1.275 level amid dismal NFP report. USD/CAD now climbs towards 1.284 area and stays in positive territory, currently rising 0.22% on a daily basis. At the time of writing, WTI crude oil is losing 0.54% on a daily basis, as the OPEC+ decided to follow through on their plan to increase production by 400kb/d in January. The bearish news from oil market weighed on the commodity-linked loonie and pushed USD/CAD higher. In Canada, the Employment Change showed that the economy added 153.7K new jobs for November, which is a lot better than economists’ expectations of 35K.

For technical aspect, RSI indicator 57 figures as of writing, suggesting that the upside appears more favored as the RSI sits above the midline. As for the Bollinger Bands, the price rose sharply towards the upper band, therefore the bullish momentum could persist. In conclusion, we think market will be bullish as the pair is testing the 1.2849 resistance, and the next resistance sits at 1.2949.

Resistance: 1.2849, 1.2949

Support: 1.2714, 1.2645, 1.2493

  

Economic Data

Currency

Data

Time (GMT + 8)

Forecast

GBP

Construction PMI (Nov)

17:30

52.0