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Title: Dollar in retreat; Payrolls release looms large

Dec 02, 2022 03:03AM ET

By: AnalysisWatch

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The U.S. dollar edged lower in early European trade Friday ahead of the release of the widely watched monthly U.S. jobs report which could influence future Federal Reserve monetary policy.

At 03:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, fell 0.1% to 104.670, falling to its lowest level since August.

The dollar has been on the wane of late, having just recorded its worst month since 2010, as Federal Reserve Chair Jerome Powell largely cemented expectations that the U.S. central bank is set to cut back the size of its interest rate hikes at its meeting later this month, the so-called pivot.

Powell said on Wednesday that it was time to slow rate hikes, noting that "slowing down at this point is a good way to balance the risks," and this view was helped by the October core PCE index, the Fed’s favorite gauge of inflation, decelerating more than expected, to 0.2% month-on-month from 0.5%.

Now, attention turns to the labor market.

The U.S. jobs report is expected to show that about 200,000 jobs were added in November, down from 261,000 the prior month, and a downside surprise could prompt hefty dollar losses.

EUR/USD slipped to 1.0518, after gains of around 1% in the previous session following a reasonably hawkish speech by European Central Bank President Christine Lagarde.

Lagarde warned earlier Friday that some European governments' fiscal policies could lead to excess demand, which would mean that monetary policies would need to be tighter than would otherwise be the case.

GBP/USD traded largely flat at 1.2254, having touched a 5-month high of 1.2311 overnight, while the risk-sensitive AUD/USD climbed 0.2% to 0.6824.

USD/JPY fell 0.5% to 134.65, with the yen being the best-performing Asian currency this week, up over 3% to an over-three-month high as falling U.S. yields removed some pressure.

USD/CNY fell 0.1% to 7.0378, with the yuan continuing to benefit from the fevered speculation that China will relax its strict anti-COVID policies amid growing public discontent over the restrictions.

Elsewhere, USD/ZAR fell 0.4% to 17.5654, with the rand rebounding a touch after dropping more than 4% on Thursday following the news that an advisory panel found potential grounds for the impeachment of South African President Cyril Ramaphosa, following the theft of $580,000.

His departure could set back reforms aimed at bolstering economic growth, stabilizing public finances, and tackling graft.

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Title: Euro, sterling rise on hopes of China COVID policy relief

Nov 29, 2022 08:31AM ET

By: AnalysisWatch

 

Risk-sensitive sterling and euro rose on Tuesday against the weakening safe haven U.S. dollar amid hopes of a potential easing in China's strict pandemic restrictions following an unprecedented episode of unrest in the country.

News that China will speed up COVID-19 vaccinations for elderly people aiming to overcome a key stumbling block in efforts to ease unpopular "zero-COVID" curbs supported the yuan, while weakening the U.S. dollar against major currencies.

"People are getting quite excited about some sort of reopening," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

The U.S. dollar, which rallied in the previous session on mounting worries over China's COVID-19 situation, fell 0.4% to 106.19.

The offshore yuan surged 1% to 7.1777 a dollar. The onshore yuan was up 1% at 7.1732 per dollar.

Risk-sensitive sterling strengthened 0.5% to $1.2017, while the euro was up 0.34% at $1.0375, not far from a five-month peak of $1.0497 hit on Monday.

The Aussie, often used as a liquid proxy for the yuan, rose 1.35% to $0.6743. The kiwi similarly gained 1.4% to $0.6248.

The Japanese yen last traded about 0.7% higher at 137.98 per dollar.

Police on Monday stopped and searched people at the sites of weekend protests in Shanghai and Beijing, after crowds there and in other Chinese cities demonstrated against the country's strict zero-COVID policy.

Protests have spread to at least a dozen cities around the world in a show of solidarity.

Title: Russian rouble firms ahead of three OFZ bond auctions

Nov 23, 2022 03:15AM ET

By: AnalysisWatch

The Russian rouble strengthened on Wednesday ahead of three OFZ treasury bond auctions by the finance ministry, as the market awaited information on a price cap on Russian oil exports.

At 0802 GMT, the rouble was 0.3% stronger against the dollar at 60.48 and had lost 0.1% to trade at 62.37 versus the euro. It had firmed 0.3% against the yuan to 8.45.

Russia has sharply increased its domestic borrowing in recent weeks after a months-long hiatus. The finance ministry sold a record volume of government debt in a single day at last week's auctions and will once again offer three papers at auctions later on Wednesday.

Traders are waiting for a Group of Seven nations' price cap on Russian oil exports to be announced, which is due to be implemented on Dec. 5, as part of sanctions intended to punish Moscow for its actions in Ukraine.

Uncertainty surrounding Russia's oil exports is weighing on the oil and gas sector on Russian stock markets, Sinara Investment Bank said in a note, but the announcement of the price ceiling today should bring clarity.

Brent crude oil, a global benchmark for Russia's main export, was up 0.9% at $89.1 a barrel.

Russian stock indexes were lower.

The dollar-denominated RTS index was down 0.6% to 1,136.1 points. The rouble-based MOEX Russian index was 0.7% lower at 2,181.2 point

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Title: EUR/USD Price Analysis: Scope for extra gains near term

December 2, 2022 08:08 AM ET

By: AnalysisWatch

EUR/USD keeps the optimism in full force and rises to new highs at 1.0550, an area last reached at the end of June.

After breaking above the 200-day SMA and the 10-month resistance line, the pair's gains should now gain momentum. In contrast, there are no significant resistance levels until the June high of 1.0614 (June 27).

As long as EUR/USD is above the 200-day SMA, which is at 1.0365 today, further upside is expected.

Title: GBP/USD Price Analysis: Bulls have the upper hand above 200 DMA, US NFP awaited

December 2, 2022 04:44 AM ET

By: AnalysisWatch

The GBP/USD currency pair consolidated its recent gains to the highest level since June and traded in a range below the 1.2300 level in the first half of European trading on Friday. Meanwhile, the technical bias remains in favor of the bulls and supports further near-term upside prospects.

Overnight strength and acceptance above the technically significant 200-day simple moving average (SMA) for the first time since 2022 could be seen as a fresh trigger for bullish traders. Moreover, the recent move higher since late September has been along an ascending channel, indicating an established short-term positive trend. Moreover, the breakout and close above the 1.2150 key level may now be evidence of a long-term trend change from a downtrend to an uptrend, as this is the third breakout and retraction of the downtrend line from the February 2022 high. The triple break of the primary trend line suggests that the trend has now reversed. While this is not a definitive guarantee of a trend reversal, it is another indication in favor of a long-term uptrend.

Moreover, the oscillators on the daily chart are comfortably in positive territory and still far from the overbought area. However, the GBP/USD pair remains limited near the trend channel resistance as traders prefer to move to the sidelines ahead of the release of the highly anticipated US monthly jobs report (FMP). However, pullbacks and dips can be bought at a profit.

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Title: USD/JPY Price Analysis: Hangs near multi-month low, below 200-day SMA ahead of NFP

December 2, 2022 08:10 AM ET

By: AnalysisWatch

The USD/JPY pair continues its downward trend for the fifth consecutive day on Friday, marking the ninth day of negative movement in the last ten days. It has dropped to its lowest level since August 16.The pair now appears to have entered a bearish consolidation phase, hovering around the 134.00 level as traders await the US Non-Farm Payrolls (NFP) report for fresh momentum.

The inexorable sell-off in the U.S. dollar continues as the belief that the Federal Reserve will slow the pace of its rate hike cycle takes hold. In addition, the recent sharp decline in U.S. Treasury bond yields is narrowing the interest rate differential between the U.S. and Japan, benefiting the Japanese yen. This, along with aggressive signals overnight from Bank of Japan board member Asahi Noguchi, contributes to the strongly bullish tone surrounding the USD/JPY currency pair.

A subsequent drop below the horizontal support at 137.65–137.50 and the psychological 135.00 level is seen as a new trigger for bearish traders. Moreover, the acceptance below the very important 200-day simple moving average (SMA) supports the prospects of an extension of the recent downtrend in the USD/JPY pair.

Nevertheless, the oscillators on the short-term charts already indicate oversold conditions and urge caution. Nevertheless, the USD/JPY pair seems to be ready to weaken further and test the level below 133.00. The downtrend could eventually pull spot prices below the round number of 132.00, towards the next relevant support in the 131.50 area, on the way to the 131.00 level and the August low, which is in the 130.40-130.35 area.

Title: AUD/USD sits near multi-month peak, just above 0.6800 as traders await US NFP report

December 2, 2022 04:05 AM ET

By: AnalysisWatch

The AUD/USD pair reversed its intraday slide to levels below 0.6800 and turned positive for the fourth consecutive day on Friday. Steady intraday gains continued throughout the first half of the European session, lifting the spot price to the 0.6835 region, bringing it close to the highest level since September 13 reached on Thursday.

US Dollar selling remained unabated amid rising bets for less aggressive policy tightening by the Fed, which in turn acted as a tailwind for the AUD/USD pair. Dovish-sounding comments by Fed Chair Jerome Powell, along with signs of easing inflationary pressures, reaffirmed expectations that the US central bank will slow down its rate hike cycle. This was reflected in surging US Treasury bond yields, which continued to weigh on the greenback.

Moreover, hopes of more stimulus from China and an easing of tight COVID-19 restrictions in the world's second-largest economy offered additional support to the China-proxied Australian dollar. Nonetheless, the cautious market mood could act as a headwind for the perceived riskier currency and restrain further upside for the AUD/USD pair. Traders seem hesitant to place aggressive bets ahead of the US monthly employment report.

The popularly known NFP report will be released later during the early North American session and will provide fresh insights into the US labor market. This could influence the Fed's policy outlook and boost USD demand ahead of the December 13-14 FOMC meeting. Furthermore, the broader market risk sentiment should benefit the AUD/USD pair. Nevertheless, spot prices seem poised to post gains for the second consecutive week.

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