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The US Core Personal Consumption Expenditures accelerated 3.6% YoY in September, reaffirming…

The US Core Personal Consumption Expenditures accelerated 3.6% YoY in September, reaffirming the theory that the Fed will be forced to accelerate its monetary normalization plans

20211101
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Market Focus

Stocks ended at records on Friday as investors digested disappointing earnings results from Apple (AAPL) and Amazon (AMZN) that came during an otherwise solid quarterly reporting season from many major companies. The S&P 500 set record intraday and closing highs. The index posted a monthly gain of over 6.5% in October, or its best single-month advance since November 2020. The consumer discretionary, energy and information technology sectors outperformed the others during the month. The Nasdaq also eked out a fresh record level, even as a couple of heavily weighted technology giants saw their shares dip.

While it seemed like Apple had avoided the chip shortage, the company’s fortunes have now changed. On Apple Inc.’s quarterly earnings call Thursday, CEO Tim Cook was quick to tell investors and analysts that the company’s product shortages aren’t the result of a “fundamental error”, and that its supply chain strategy didn’t create the current troubles.

Instead, he laid the blame on suppliers. While Apple designs its products in-house and relies on contract manufacturers like Foxconn Technology Group to assemble its devices, it is dependent on hundreds of global suppliers to provide it with the parts and chips that make up an iPhone, iPad, Apple Watch, or other devices. If just one part is in tight supply, Apple can’t build and ship that device. Therein lies the problem—not Apple’s scrutinized manufacturers in China, Cook seemed to imply.

It’s not surprising to see Cook defend Apple’s supply chain strategy. After all, he was the one who helped forge the partnership with Foxconn and build its supply chain empire two decades ago. If it were not for its current problems, Apple would have reported a record $90 billion for its fiscal fourth quarter. And instead of missing analyst expectations for total sales—as well as falling short in revenue from the iPhone, Mac and accessories—it probably would have had a clean sweep of beating Wall Street forecasts.

Main Pairs Movement

The US dollar appreciated hugely on Friday as the market positions for the Fed’s meetings next week amid higher US Treasury yields. The dollar index surged 0.83% at the end of the week, with the Greenback beating all of its major rivals. The US Core Personal Consumption Expenditures accelerated 3.6% YoY in September, reaffirming the theory that the Fed will be forced to accelerate its monetary normalisation plans, which, less than one week ahead of November’s meeting, has boosted demand for the USD.

The shared currency erased all of its gains against its rivals as the GDP figures appeared disappointing. Cable closed the day in the red, dropping 0.76% throughout the day. Commodity-linked currencies are also lost significantly against the Greenback, as did the USD/JPY pair.

Gold slid to $1783/ounce amid the broader dollar strength. Crude oil prices closed mixed, with WTI posting a modest rise to $83.28, and Brent dropping over 1% to $83.62 after Iran’s return to the Joint Comprehensive Plan of Action (JCPOA), a nuclear agreement between Iran and some major countries, became possible.

Technical Analysis

USDJPY (4- Hour Chart)

USDJPY gained positive traction after the release of the US PCE Price Index, and is trading at 114.0215. The US dollar revived as a strong pickup in the US Treasury yields, boosting the demand for the Greenback. From a technical perspective, USDJPY remains supportive on Friday after the pair traded above the midline of the Bollinger Bands. However, from a broader outlook, the pair still maintained its bid tone as October’s trend is still in the descending mood. Thus, it will be prudent to wait for a strong breakthrough. The pair will need to break above 114.699, the next resistance, in order to reverse its current trend. The RSI indicator has not reached the overbought territory, giving room for the pair to extend further north.

Resistance: 114.699

Support: 113.38, 112.57, 111.91

EURUSD (4- Hour Chart)

After the release of US inflation data, EURUSD pushed lower toward 1.1580 at the time of writing. From a technical perspective, EURUSD lost its upside momentum after attempting to contest the resistance at 1.1685 on Thursday. It can be viewed as a technical correction as the RSI indicator on the 4- hour chart edged lower after reaching above 70, which is overbought territory. The outlook of the currency pair turned bearish as it traded below the Simple Moving Averages. At the same time, bears are supported by the negative MACD. On the downside, the pair is expected to head toward the next immediate support level at 1.1524.

Resistance: 1.1624, 1.1685, 1.1735

Support: 1.1524

GBPUSD (4- Hour Chart)

GBPUSD is on the back foot and is trading below 1.3700 as the US dollar rebounds in the American trading session. From the technical aspect, the outlook of the currency pair remains on the downside as it falls within the lower bounds of the Bollinger Bands and below the Simple Moving Averages. The RSI indicator has returned below 50, suggesting that buyers remain hesitant when it comes to a steady advance. At the moment, the pair is heading to the next immediate support level at 1.3673, while downside momentum continues to exist as the RSI has not yet reached the oversold territory, providing rooms for further southern movement.

Resistance: 1.3735, 1.3835

Support: 1.3673, 1.3623, 1.3573

20211101
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Facebook’s CEO, Mark Zuckerberg, has announced that beginning on December 1st, Facebook…

Facebook’s CEO, Mark Zuckerberg, has announced that beginning on December 1st, Facebook will be rebranded as Meta Platforms Inc and will be switching the ticker FB to MVRS

20211029
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Market Focus

U.S. equity markets bounced back strongly on Thursday as upbeat economic data and stellar corporate earnings results boosted market sentiment. The S&P 500 gained 1% to close at another record high of 4596.42. The Nasdaq gained 1.4% to close at 15448.12, and the Dow gained 0.7% to close at 35730.48. Since earnings season began, 82% of the companies that make up the S&P 500 has been able to report earnings that beat analyst estimates.  

The U.S. GDP grew by 2% quarter over quarter, marking the weakest quarter of growth since mid-2020. A surge in COVID cases and the supply chain crunch both hindered the growth over the past quarter. On the other hand, the Initial Jobless Claims figure hit a fresh pandemic low at 281,000. 

The 10-year Treasury yield increased slightly to settle at 1.578% and the 30-year Treasury yield increased slightly as well to settle at 1.979%.  

Facebook’s CEO, Mark Zuckerberg, has announced that beginning on December 1st, Facebook will be rebranded as Meta Platforms Inc and will be switching the ticker FB to MVRS. The new parent company will be devoted to creating a more immersive experience of the world wide web by combining virtual reality and building a virtual world where all media sources can be combined and utilized. 

Main Pairs Movement

The Greenback declined sharply at the onset of the Q3 GDP data release. The U.S. recorded a 2% growth in GBP, quarter over quarter, weaker than analyst estimates. Despite record-low jobless claim figures, the Dollar continued to dive as the DXY hit the intraday low of around $93. 

The Japanese Yen weakened as BoJ governor Haruhike Kuroda reiterated the central bank’s dovish monetary policy despite inflation rising to a 13-year high in September. The Euro traded higher against the Greenback, mainly due to the Dollar’s weakness as the ECB left monetary policy unchanged. The Sterling traded lower against the Dollar as well due to Dollar weakness across the board. 

Technical Analysis

USDJPY (4- Hour Chart) 

USD/JPY is hanging near two-week lows, trading around 113.41 at the time of writing. After Bank of Japan’s Haruhiko Kuroda’s commented on the outlook of Japan’s GDP and inflation, the currency pair witnessed some selling pressure. 

From the technical perspective, USDJPY remains depressed, hovering near the lower bound of the Bollinger Band and trading in the descending trend. However, the immediate support level at 113.38 would be a possible turning point as the RSI indicator has nearly reached the oversold territory, and is currently at the 36.6 mark, giving the pair room to rebound. At the same time, the MACD is nearly flat, indicating a possible direction change from sell to buy.  

Resistance: 114.70 

Support: 113.38, 112.57, 111.91 

EURUSD (4- Hour Chart) 

EUR/USD is trading monthly highs above 1.1680 as the US dollar sell-off picks up steam. The US dollar has lost strength and is having a hard time finding demand after the ECB’s cautious tone on European inflation outlook. From a technical standpoint, the 4-hour chart outlook for EUR/USD has provided a mildly bullish stance since mid-October. Today’s bullish move has breached the monthly highs, providing some supports to bulls. At the same time, the pair has recovered above its 20 Simple Moving Average, indicating a neutral-to-bullish trend. At the moment, the pair is heading to its next immediate resistance at 1.1697, which would be an obstacle to overcome as the RSI has nearly reached the overbought condition. At the same time, the currency pair has traded above the upper band of the Bolliger Bands. If EUR/USD can successfully breach the resistance level, then it will head toward the next level at 1.175. On the contrary, if the pair fails to penetrate the level, it will possibly consolidate for an adjustment.  

Resistance: 1.1697, 1.1750, 1.1180 

Support: 1.1631, 1.1524 

GBPUSD (4- Hour Chart)

GBP/USD extended, and is trading around the 1.3800 region as the US dollar loses traction after the disappointing Q3 GDP data. From the technical perspective, despite the recent recovery, the currency pair remains on the downside and is trading in a descending trend. However, the pair still has the potential to move further north as the RSI is only at the 59 level, with plenty of room to extend further. The short-term bulls are supported as the pair has traded above the 20 Simple Moving Average at the time of writing. For the upside, if the pair can break the next immediate resistance at 1.3801, then the bullish momentum would have a chance to bring the pair further toward 1.3835.

Resistance: 1.3801, 1.3835

Support: 1.3735, 1.3673, 1.3623

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The bank of Canada announced major changes to its quantitative easing measures,…

The bank of Canada announced major changes to its quantitative easing measures, they announced the end of its bond-buying program and an accelerated timetable for rate hikes

20211028
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Market Focus

The broad U.S. equity markets retreated during Wednesday’s trading. Indices fell from their previously recorded closes. The S&P 500 lost 0.51% to close at 4551.68, the Dow lost 0.74% to close at 35490.69, and the Nasdaq traded sideways to close at 15235.84.

Wednesday’s market retreat was led by the energy sector as oil prices saw their largest single-day decline in more than two months. The WTI December future dropped 0.56% as the U.S. reported a larger-than-expected rise in oil inventory; on the other hand, the Brent Crude December future dropped 0.45% as well.

The U.S. 10-year Treasury yield dropped to 1.54%, while the 30-year Treasury yield settled at 1.948%.

Apple Inc, Amazon Inc, and Samsung are due to report their quarterly earnings on the 28th.

The bank of Canada announced major changes to its quantitative easing measures. The BoC announced the end of its bond-buying program and an accelerated timetable for rate hikes as the bank has expressed its fear of continued inflation amid supply chain disruptions.

Main Pairs Movement

The Greenback depreciated slightly against other currencies as the dollar index closed 0.11% lower. Speculators will now turn their attention to the key economic data including the ECB monetary policy decision and the U.S. initial jobless claim report, which are both due on the 28th.

The yen continued to decline against the dollar, but the BoJ is due to provide monetary policy updates on the 28th, which will provide price actions for the pair. The Aussie dollar continued its second straight day of gains against the Euro as global energy continues to rise alongside upbeat inflation figures from the Australian central bank. The BoC’s firm hawkish stance, as well as its announcement to end quantitative easing, has fueled the Loonie to gain 0.24% against the dollar.

Technical Analysis

USDJPY (Daily Chart)

The USD/JPY pair underwent sudden selling pressure on Wednesday amid the dollar’s weakness, as the US Treasury yields plummeted during the day. The pair dived below the 114.00 threshold during the start of the European session and bottomed at 113.39, the lowest level of the week. However, after the decision of the Bank of Canada to end its QE program, the US bond yields surged and triggered a spike in USD/JPY to 113.83.

After a prolonged risk-on mood, market concerns about the central banks’ contraction moves have finally bubbled up. The rally of equities has slowed down. In some regions, equity prices have even started to fall, benefiting the safe-haven Japanese yen. However, as long as the Bank of Japan remains silent about its monetary policy on Thurday’s meetings, the depreciation of the yen should proceed, as the Fed’s tapering is on the schedule, which will keep lifting the value of the USD in the short future.

On the technical front, the daily MACD histogram turned slightly negative on Wednesday, and the RSI indicator is still lingering below the overbought territory, suggesting that upward traction is still under pressure. We are once again eyeing the 114.00 threshold, and the key resistance level for further uptrend requires passing the 114.30 barricade. If breached, then a fresh yearly high could be anticipated.

Resistance: 114.00, 114.30, 114.70

Support: 113.15, 111.32, 109.37

EURAUD (Daily Chart)

The EUR/AUD pair declined for a third consecutive day on Wednesday amid the flat EUR and the strong AUD, and is now hovering around the key support level of 1.5420, where the lows that were last seen in May sit.

The market mood got cautious on Wednesday. Mineral prices closed mixed, trimming the strength of the commodity-linked AUD. Investors are looking for direction, with all eyes on the ECB’s monetary policy decision, though it is expected to maintain its bond-purchasing plan and keep the interest rate near zero despite the persistently high inflation, to avoid tensions in some peripheral markets.

From a technical perspective, the MACD histogram remains in the bearish territory, suggesting that the selling stream of the cross may proceed. However, the RSI indicator dived deeper into the oversold region, and the growing pressure for sellers may trigger a short-term correction in the very near term, especially if the ECB springs any surprises during the upcoming meetings. On the downside, May’s low of 1.5420 would be a strong level of support against the bears, followed by 1.5250, the yearly low.

Resistance: 1.5616, 1.5776, 1.5910

Support: 1.5420, 1.5250

USDCAD (Daily Chart)

The USD/CAD slumped for the first time in the week, down 0.25% and trading at 1.2360 during the late New York session at the time of writing. Earlier, 30-minutes into the Wall Street opening, the Bank of Canada released its monetary policy decisions announcing the ending of its Quantitative Easing program, which was widely expected to be a reduction instead of a halt.

Before the announcement, the pair climbed above the 114.00 threshold and settled around the 1.2430 level, but soon plummeted over 130 pips after the release of the report, marking a daily low at 1.2300. However, the pair was soon back to its upward trajectory, posting a 60-pip recovery at the moment.

On the technical front, the daily MACD histogram is almost going to form a golden cross, while the RSI indicator is still under the bearish levels, though improving. The price actions are still hovering around the 61.8% Fibonacci. Looking forward, the US GDP reports are going to be released within hours. The pair may regain 114.00 with a boost by the upbeat news of the US.

Resistance: 1.2478, 1.2727, 1.2949

Support: 1.2229, 1.2007

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