The Nasdaq Composite is losing some momentum as we
approach the cycle high and many key economic releases in the next few weeks
that will culminate in the FOMC rate decision on the 13th of
December. The market at the moment is focused mainly on the rate cuts
expectations, which continue to support the upside as long as the data doesn’t
deteriorate faster.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq Composite
has lost some momentum as the index started to consolidate. We can expect some
profit taking around these levels after such an incredible rally in November
which might also provide a decent pullback for the buyers.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD recently
which is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal that we could indeed see at least
a deeper pullback soon. From a risk to reward perspective, the buyers would
have a much better setup around the 13700 support where we
can also find the confluence with the
38.2% Fibonacci retracement level of
the entire rally.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with the MACD since the breakout of the key trendline around
the 13700 level. The price yesterday broke below the lower bound of the rising
channel which might be the confirmation for the start of the pullback. The
sellers are likely to pile in to target the base of the channel around the
14040 level and upon a further break lower, aim for the support zone at the
13700 level.

Upcoming
Events

Today, we will get the latest US Consumer Confidence
report and it will be interesting to see how the US consumers see the labour
market. On Thursday, we will see the US PCE and US Jobless Claims data with the
market likely focusing more on the latter given that we already saw the latest
inflation data with the US CPI report just two weeks ago. Finally, on Friday,
we conclude the week with the US ISM Manufacturing PMI which missed
expectations by a big margin the last time.

This article was written by FL Contributors at www.forexlive.com.

• In an uncertain period, geopolitical tensions are a headwind for growth
• US-China tensions could be more significant to the world than other geopolitical tensions

He’s not wrong there in a sense. All other geopolitical tensions tend to come and go and have short-lived impacts. However, a deepening divide in US-China relations will have a much bigger impact on the global economy especially in the years to come.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as
  expected at the last meeting with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US CPI missed
  expectations across the board bringing the expectations for rate cuts
  forward.
• The labour market is
  starting to show weakness as Continuing Claims are now
  rising at a fast pace and the recent NFP report
  missed across the board. Last week though, the US Jobless Claims beat
  forecasts by a big margin, although volatility in the data is normal.
• The latest US PMIs came
  basically in line with expectations with a miss in the Manufacturing index and
  a beat in the Services measure.
• The recent Fedspeak has been leaning on
  the hawkish side, but the recent data suggest that the Fed is likely done for
  the cycle.
• The market doesn’t
  expect the Fed to hike anymore.

CAD

• The BoC left interest rates at 5.00% as expected at the last meeting but
  remains prepared to raise rates further if needed.
• BoC Governor Macklem delivered a less hawkish speech in
  the press conference compared to his previous remarks.
• The recent Canadian CPI missed expectations across the
  board and the underlying inflation measures eased, which was a welcome
  development for the BoC.
• On the labour market side, the latest report missed expectations
  across the board with negative figures in full-time employment and slowing wage
  growth, which is going to be another positive outcome for the central bank.
• The market doesn’t expect the BoC to
  hike anymore.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD broke
below the key trendline and
extended the drop into the 1.36 handle. From a risk management perspective, the
buyers would be better off waiting for a pullback as the price looks a bit
overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
break below the trendline last Friday and the retest yesterday before another
drop. The support zone
around the 1.3650 level will now be a key resistance as a break to the upside
might lead to a reversal back into the downward trendline around the 1.3750
level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is bouncing around the recent low at 1.3594. The sellers are likely to
lean on the downward trendline with a defined risk above it to target the 1.34
handle. The buyers, on the other hand, will want to see the price breaking
higher to invalidate the bearish setup and position for a rally into the 1.3750
level.

Upcoming Events

Today, we will get the latest US Consumer Confidence
report and it will be interesting to see how the US consumers see the labour
market. On Thursday, we will see the US PCE and US Jobless Claims data with the
market likely focusing more on the latter given that we already saw the latest
inflation data with the US CPI report just two weeks ago. Finally, on Friday,
we conclude the week with the Canadian Labour Market report and the Manufacturing
PMI, followed later by the US ISM Manufacturing PMI which missed expectations
by a big margin the last time.

This article was written by FL Contributors at www.forexlive.com.

• To pay more attention to cross-cyclical and counter-cyclical adjustment
• Will replenish monetary policy toolkit accordingly
• Will strive to foster sound monetary and financial environment
• To keep yuan exchange rate basically stable
• Will better support expanding domestic demand

This reaffirms their current policy stance as they are continuing to try and bolster conditions to support the economic recovery. Personally though, I still hold some reservations about the improving domestic demand in China as it has been crushed quite badly from early to middle of this year.

This article was written by Justin Low at www.forexlive.com.

• Prior -36

Sales continue to fall in November but at least the outlook for UK retailers are more optimistic than it was before. The outlook index improved to +4 from -14 in August. However, the headline reading still marks a seventh consecutive negative reading for retail sales. And that shows the squeeze is continuing for UK households even ahead of the Christmas shopping season.

This article was written by Justin Low at www.forexlive.com.

Last week, the Dow Jones didn’t move much given the
lack of economic events and the Thanksgiving holidays in the final part of the
week. The only two important reports were the US Jobless Claims and the US PMIs. The
former beat expectations across the board, while the latter came basically in
line with forecasts. This week we can expect more action with the holidays in
the rear-view mirror and some key economic releases on the agenda.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones is
getting closer to the cycle high at 35680 as this November rally just doesn’t
want to let up. The sellers are likely to start looking for a deeper pullback
around these levels, but it’s hard to fight such a strong bullish train without
a catalyst.

We can notice that the price is a bit overstretched
as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price has been diverging with
the MACD for
quite some time now. This is generally a sign of weakening momentum often
followed pullbacks or reversals. In this case, it might be a signal that we
could indeed see at least a pullback very soon.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see even
better the divergence with the MACD which has been going on since the break
above the key resistance around
the 34000 level. The buyers are likely to continue to lean on the minor trendline and
the red 21 moving average to
target the cycle high. The sellers, on the other hand, will want to see the
price breaking lower to pile in and target first the low around the 34800 level
and upon a further break, the support at 34000.

Upcoming Events

Tomorrow, we have the US Consumer Confidence report. On
Thursday, we will see the latest US Jobless Claims figures and the US PCE
report. On Friday, we conclude the week with the US ISM Manufacturing PMI which
missed expectations by a big margin the last time.

 

This article was written by FL Contributors at www.forexlive.com.

The antipodeans are the ones doing some work to start the new week, with AUD/USD testing waters near 0.6600 now and eyeing a stronger technical break as seen here. And NZD/USD is also facing a somewhat similar scenario as it runs up against its own 200-day moving average (blue line) at 0.6090 today.

The key level is still holding back price action for now but a firm break above that will allow for buyers to sail past 0.6100 in search of a potential return towards the April, May, and July highs. There’s not much resistance stopping the pair from doing so after a break of the key level highlighted above.

For today, the aussie and kiwi strength comes despite more tepid risk sentiment in broader markets. Equities are sitting slightly lower but that’s not hindering traders from going in search of a technical break. And that says a lot about the current momentum in both AUD/USD and NZD/USD as we head into November month-end.

This article was written by Justin Low at www.forexlive.com.

Following Thanksgiving in the U.S., this week is expected to start slow, with a relatively quiet economic calendar for the FX market.

On Monday, attention will turn to the United States for the release of New Home Sales data.

On Tuesday, we’ll get the release of BoJ’s Core CPI y/y data for Japan and the CB Consumer Confidence and Richmond Manufacturing Index data in the U.S. Several FOMC members are also expected to deliver their remarks.

Wednesday will shift the focus Down Under with the release of Australia’s CPI data. The highlight of the day will be the RBNZ monetary policy announcement. Other notable releases include several eurozone CPI prints, the Preliminary GDP quarter-on-quarter for the U.S. and a speech by BoE Governor Bailey at an event commemorating the 50th anniversary of the London Foreign Exchange Joint Standing Committee in the U.K.

Thursday will bring the KOF Economic Barometer for Switzerland, the OPEC-JMMC Meetings, the GDP month-on-month for Canada, and a series of U.S. releases, including the Core PCE Price Index m/m, the Unemployment Claims, the Personal Income m/m, the Personal Spending m/m and Pending Home Sales m/m.

The week will conclude Friday with the Employment Change and Unemployment Rate data for Canada, while in the U.S., the market will get the ISM Manufacturing PMI, the ISM Manufacturing Prices and a fireside chat titled „Navigating Pathways to Economic Mobility“ featuring Fed Chair Powell at the Spelman College in Atlanta.

Another aspect that could impact the market this week is the month-end rebalancing.

The U.S. new home sales are likely to drop from 759K to 724K. Higher mortgage rates are putting pressure on the housing market and further decline is expected in the near future.

Tuesday RBA Gov Bullock will speak in a panel discussion titled “Inflation, Financial Stability and Employment” at the Hong Kong Monetary Authority and Bank for International Settlement High-Level Conference. No market moving revelations are expected from her speech, but it’s worth watching in case she provides hints about future rate hikes. The focus of this talk will likely be the recently observed unusually weak productivity in Australia. The RBA remains focused on returning inflation back to target and current wage growth could help with that, but only if productivity recovers soon. However, without very clear reasons for the drop it’s hard to say if the trend will continue or if it’s temporary.

In Japan, the Core CPI y/y is expected to remain unchanged at 3.4%. This means that inflation is a bit higher than what the bank would want, but despite the elevated numbers, production and consumption for last month are expected to print above expectations due to the tight labor market conditions, according to ING.

The Australian CPI y/y is expected to drop from 5.6% to 5.2%. Last week we got hawkish inflation comments from Gov Michelle Bullock where she pointed out that inflation is kept high by strong domestic demand. She stressed that inflation numbers for Australia might remain above target for a while.

The RBNZ’s official cash rate is expected to remain unchanged at 5.50%. The focus at this week’s meeting will be mainly on the Bank’s updated projections and its likely goal of discouraging the market from pricing in rate cuts too early. Many analysts believe that the current rates are high enough to bring inflation into the desired target of 2-3% and the economic data released recently seems to back that up, but there is still a possibility for another hike in February next year before a pause until 2025, according to analysts at Westpac. New Zealand has seen weakness in retail sales and several PMIs, while the labor cost index for Q3 also printed softer than anticipated. Despite market anticipation for cuts, rates are likely to remain at current levels for the time being.

Over the past two months we’ve seen inflation data dropping more than expected in the eurozone and the market wants to see if the trend will continue. However, the fight against inflation is not over yet and there is still some inflation pressure on the horizon. Expectations for core inflation are 4% while for headline inflation are 2.7%.

The consensus for the KOF Economic Barometer is to rise from 95.8 to 96.2. 

Analysts at ING anticipate that the Core PCE Price Index, the Fed’s favorite measure of inflation, will see a 0.2% increase m/m. This is in line with what the central bank expects and they argue that if repeated over time, it will help bring inflation to the 2% target.

The employment change data for Canada is expected to rise from 17.5K to 18.5K and the unemployment rate is likely to remain unchanged at 5.7%. This means that the labor market conditions for Canada remain tight as wages are also elevated.

The ISM Manufacturing PMI in the U.S. is expected to rise from 46.7 to 47.7, a slight improvement, but still in contractionary territory without clear signs of a rebound in the near future.

This article was written by Gina Constantin.

This article was written by FL Contributors at www.forexlive.com.

• TUE: EZ M3 (Oct), US Richmond Fed (Nov).
• WED: RBNZ Policy Announcement; German Prelim. CPI
  (Nov), UK Mortgage Approvals/Lending (Oct), EZ Economic Sentiment (Nov),
  US GDP 2nd (Q3).
• THU: Chinese NBS PMIs (Nov), German Retail Sales
  & Import Prices (Oct), Swiss KOF (Nov), German Unemployment (Nov),
  EZ HICP Flash (Nov), US PCE Price Index & Personal
  Income/Consumption (Oct), IJC (20 Nov w/e), Canadian GDP (Q3).
• FRI: Swiss GDP (Q3), EZ/UK/US Final Manufacturing PMI, Canadian Jobs Report (Nov), US ISM Manufacturing PMI (Nov).

CHINESE INDUSTRIAL PROFITS (MON):

There are
currently no expectations for Industrial Profits YTD for October,
although the data comes against the backdrop of a slew of recently
announced economic stimulus measures. In terms of the prior release,
China’s industrial companies recorded profit increases for the second
consecutive month in September, reinforcing signs of a manufacturing
sector recovery. Profits rose by 11.9% year-on-year, following a 17.2%
surge in August. Despite recent gains, industrial profits for the first
nine months of 2023 fell 9% compared to the previous year – a reduced
pace of decline from an 11.7% drop in the first eight months. Meanwhile,
the latest PMI data for October “signalled a renewed deterioration in
overall manufacturing conditions across China in October, albeit one
that was marginal overall. Firms registered a fresh fall in production
amid slower growth in overall sales, with the latter dampened by weak
foreign demand. As a result, goods producers trimmed their purchasing
activity and ran down their inventories of inputs. Employment across the
sector also fell and at a quicker rate than in September. On the costs
front, manufacturers signalled the quickest increase in average input
prices since January, leading to a further rise in selling prices.”

RBNZ ANNOUNCEMENT (WED):

The RBNZ is expected to
keep the Official Cash Rate unchanged at 5.50% at its meeting next week
with money markets pricing in almost a 100% chance for rates to be
maintained at the current level. The central bank has kept rates steady
since its last adjustment in May which looks to be the case for the
foreseeable future as it sees the Cash Rate to remain on hold throughout
the entire of next year, while it reiterated at the last meeting in
October that the Committee agreed the OCR needs to remain at a
restrictive level and stated that demand growth in the economy continues
to ease. Furthermore, it stated that interest rates are constraining
economic activity and reducing inflationary pressure as required with
inflation still expected to decline to within the target band by H2
2024, although it acknowledged near-term risk that activity and
inflation do not slow as much as needed with a prolonged period of
subdued activity required to reduce inflationary pressure. The statement
lacked any major deviations or hawkish surprises and the rhetoric since
the last meeting has been light, while data releases also point to a
lack of urgency for a shift in the status quo with CPI and Labour Cost
Index softer-than-expected in Q3 and although Employment contracted, the
central bank would likely welcome this as further progress of its
restrictive policy.

CHINESE OFFICIAL PMIs (THU):

There are currently no
expectations for November PMI data, with the Manufacturing PMI
previously at 49.5, Services at 50.6, and Composite at 50.7. The latest
surveys also come amid the backdrop of several measures announced to
prop up the economy, namely the housing market, with the latest
suggesting China is reportedly mulling unprecedented builder support
with unsecured loans, according to Bloomberg sources. Meanwhile, Reuters
sources suggested earlier this week that Chinese government advisers
are set to recommend economic growth targets ranging from 4.5% to 5.5%
for 2024 at the upcoming Central Economic Work Conference. The preferred
target among most advisers is around 5%, in line with this year’s goal,
whilst noting that achieving these targets will likely require
increased fiscal stimulus. “After a surprise decline in manufacturing
activity for China last month, we are expecting the official
manufacturing PMI to bounce back to the expansion region at 50.1 and the
non-manufacturing PMI to accelerate to 51.2”, says the desk at ING.

OPEC+ PREVIEW (THU):

The Joint Ministerial
Monitoring Committee (JMMC) was initially set to meet on November 26th,
although this has now been moved to November 30th, and online. Policy
change recommendations are not expected, while Saudi Arabia and Russia
could extend or deepen their voluntary curbs. The latest reports suggest
talks reportedly ran into issues amid Saudi dissatisfaction with the
production level of other members, particularly Angola and Nigeria.
Compliance among members is expected to be stressed. The meeting is part
of routine confabs to evaluate market fundamentals. Saudi Arabia and
Russia have suggested voluntary cut decisions will be reviewed monthly
when they will consider deepening the reduction or increasing supply. In
terms of potential scenarios – 1) Extension of Current Cuts: The
current consensus among analysts is seemingly that at least Saudi Arabia
will extend its voluntary 1mln BPD production cuts until the spring. 2)
Deeper Cuts: With the backdrop of geopolitical tensions and market
volatility, there might be discussions about deeper production cuts,
although this could be more contentious among members. 3) No Changes:
Amid the fluidity of geopolitics and China’s recovery, there is a
non-zero chance the group may adopt a wait-and-see approach for the
month. In terms of current policy, Saudi Arabia and Russia, alongside
other OPEC+ members, have committed to reducing oil production by some
5.2mln BPD. This accounts for approximately 5% of the world’s daily oil
demand. The current cuts comprise 3.7mln BPD by OPEC+ collectively, with
further voluntary reductions made by Saudi Arabia and Russia. During
the last policy meeting in June, OPEC+ reached a consensus on a
comprehensive agreement to restrict supply into 2024. Additionally,
Saudi Arabia committed to a voluntary production reduction of 1mln BPD
for July – this commitment has been extended and is now set to continue
until the end of 2023. Russia pledged a voluntary supply cut of 500k BPD
for August and 300k BPD for September, with the 300k BPD export curbs
later extended until the end of 2023.

EUROZONE HICP (THU):

November’s headline Y/Y print
is expected to show a slightly lower pace of inflation, at 2.8% (prev.
2.9%), with the super-core seen slowing similarly, to 4.0% (prev. 4.2%).
A headline print which would push the metric further below the ECB’s
overall 2023 view of 5.6% and pertinently the 3.2% 2024 forecast, and by
extension, closer to the 2.0% target. This will likely spark commentary
from the ECB’s hawkish contingent who have been speaking extensively
recently in an attempt to keep the door to further tightening open;
despite markets pricing an unchanged December announcement with near
certainty.

US PCE (THU):

The headline PCE price index is
expected to be unchanged, at 0.0% M/M in October (prev. +0.4%), while
Core PCE is seen rising 0.2% M/M, cooling from the 0.3% pace in
September. The data will be looked to for confirmation that inflation
trends have eased – that was the message from the October CPI report,
which helped build conviction that inflation was moving back down to the
Fed’s 2.0% target. October CPI eased from 3.7% to 3.2%, while core
price fell from 4.1% to 4.0% – both below consensus and resulting in
expectations for an FOMC December rate hike diminishing significantly.
The slower rate of price growth was underpinned by a fall in gasoline
prices, which is expected to continue next month. The pace of shelter
price gains also eased. “With evidence of easing inflation across both
the goods and services sectors, the October CPI report underlines our
view that inflation is heading back to the Fed’s target whether or not
the recent resilience of the real economy continues,” Capital Economics
said, adding that “we continue to expect a further decline in inflation
over the coming months, which will bring interest rate cuts onto the
agenda before long.” Currently, the market is fully pricing a rate cut
next June, though implied money market rates suggest that there is a
decent chance of a cut in May.

US ISM MANUFACTURING PMI (FRI):

The consensus view
looks for the ISM manufacturing PMI to tick-up to 47.7 in November
(prev. 46.7). Oxford Economics said that “early indications are that the
ISM manufacturing survey bounced back in November but remains below its
2023 high from September (49.0) and squarely in contraction territory.”

This article was written by Newsquawk Analysis at www.forexlive.com.

Friday’s Canadian retail sales report for September far-surpassed expectations at +0.6% compared to a flat reading expected. In addition, the advance reading for October was +0.8% in a sign of even-more strength.

CIBC highlights a contrast in consumer spending patterns in the report. While auto sales surged, there was a noticeable dip in discretionary spending in areas like clothing, sporting goods, and furniture. The latter could reflect the ongoing correction in house prices and a slowdown in home sales.

„The September print suggests that overall GDP in that month will have looked slightly better
than the advance estimate, at 0.1% m/m,“ CIBC writes. „And while the underlying core group of sales continues to suggest a wilting
consumer, solid auto sales may prevent another drop in goods consumption in the final quarter.“

CIBC also notes that the October print could have been impacted by auto sales, which surged in part due to a delay in deliveries following a port strike.

Looking ahead, the risk here is that strong car sales hide a broader weakening of the consumer and delay Bank of Canada rate cuts beyond what’s prudent. Ultimately, that could kneecap the spring housing market and lead to a deeper downturn.

This article was written by Adam Button at www.forexlive.com.