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  1. #21 Daily Market Analysis

    Trump hawks help push equities Daily Market Analysis

    The US political shake up has been polarising markets as of late, and none more so that in the Federal Reserve as there are 3 governors seats up for grabs on the FED board this year and it looks extremely likely that Trump will look to fill them all with hawks. The question will be how big will the impact be, many believe they will look to spend up heavily in infrastructure in the United States which will in turn lead to the US market rallying further and the USD jumping higher. The trade issues though are the black mark for many, and with Trump threatening them the flow over effects in to the FX and equity markets are likely to be great. For the equity markets though it's certainly a boost as many expect that US based companies will be the greatest benefactor as Trump is pro business and looking to stimulate the economy. So far the S&P 500 has seen some strong rallying and it was further helped by the news out of OPEC today, and during the last part of the year we traditionally see some further buying before the new year rolls over.

    The S&P 500 has so far struggled to maintain momentum past 2200, as it represents a psychological barrier for the market. For the next level of resistance I would expect the market to look for another level and this would be likely found at 2250. Support would likely be found at 2200 as well in the event it breaks out and looks to find some safety, with 2168 the next level of support. I would also be watching the 20 day moving average as this has previously been a key area for dynamic support for past movements.

    It's easy to forget the other parts of the world with the current market climate that we have today, but for the Australian dollar it has been a bumpy ride, and this even comes in the face of commodity prices rising recently. The Australian dollar had been causing headaches for the Reserve Bank of Australia given how high it has been in recent times and the recent rate cuts were meant to remedy that. However, as ever the case the markets have not agreed and the AUD had remained quite high. The recent political moves have in turn caused the USD to rise and the AUD to slip lower on the charts, and many are expecting further slips with the hawks likely to come to power in the FED in the USA.

    For the AUDUSD it's likely looking a little bearish despite the fixed interest rates being attractive to overseas investors. The recent bounce on support at 0.7328 has shown that the bulls are still in the market, but only at certain opportunities. Any larger drops will likely be to 0.7226 where it would struggle to find any further movements unless there was a strong sell-off in the AUD.

    [Only registered and activated users can see links. ]

    By Alex Gurr, Guest Analyst Daily Market Analysis

  2. #22 Daily Market Analysis

    NZ economy lifts on better than expected trade balance data Daily Market Analysis

    The New Zealand economy has been positive so far today after the recent trade balance data came out and was stronger than expected at -846M (-950M) this was lead in part by stronger than exported exports coming in at 3.90B (3.75B). It's likely that after the recent natural disaster that the New Zealand economy will see some GDP growth as spending picks up sharply in the wake of it all to repair everything over the next few years. It will be interesting to see how the Reserve Bank of New Zealand reacts in the coming months, and if inflation picks up in line with all the spending that is predicted.

    So far the NZDUSD on the chart continues to find heavy pressure by the bears as they look to push it lower on the back of USD strength. So far the NZDUSD has managed to find strong support at 0.6994 and the market is continuing to see if it can find itself below the psychological barrier level at 0.70. Further support levels lower are likely to be found at 0.6948 and 0.6888 as the market looks to drift lower. However, if the market were to turn upwards they would find resistance at 0.7030 and 0.7060, but given the current market sentiment which is bearish towards all commodity currencies it seems less likely to happen than the bears clawing their way down further.

    The Canadian dollar has also been one of the radar of traders with the recent movements in the oil markets and the likelihood that OPEC may in fact sign a deal in the short term. However with Iran and Iraq not agreed and American oil drillers likely to keep pumping at full capacity, it could be some time off before we actually see a rise in oil, and in turn a rise in oil prices which many have been predicting. For the Canadian dollar this means it's unlikely to fight back against the USD movements that we have been seeing lately.

    The USDCAD has been pushing up the charts on the back of the USD strength and the 50 day moving average has so far been acting as dynamic support. The market has seen some brief volatility and consolidation around the major support level of 1.3402 and this has so far held up against any bearish movements. I would anticipate that this area will likely see some further movement before the bulls look to continue on their recent run, especially as oil markets continue to show a lack of general momentum higher.

    [Only registered and activated users can see links. ]

    By Alex Gurr, Guest Analyst Daily Market Analysis

  3. #23 Daily Market Analysis

    Sterling shivers ahead of UK Q3 GDP Daily Market Analysis

    The ongoing Brexit saga has exposed Sterling to prolonged periods of pain this year with uncertainty effectively damaging buying sentiment towards the currency. It has become quite clear that Brexit fears have left a painful scar on the Pound, with weakness becoming the new norm as anxiety repels investor attraction. Much attention may be directed towards the latest third quarter GDP revision which most expect to come in unchanged at 0.5% on a quarterly basis and 2.3% annually. While the unchanged GPD figures could point to some economic stability, concerns still remain elevated over the Brexit outcome diminishing business investment and consequently pressuring the vulnerable Sterling further.

    Sterling/Dollar has been a major loser this year with the pair closing negative every month post Brexit. This pair remains heavily bearish on the daily timeframe with a resurgent Dollar reviving the parity dream. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A decisive breakdown below 1.240 could trigger a steeper decline lower towards 1.220. Daily Market Analysis

    EURUSD parity dream…

    The heightened fears over diminishing Eurozone growth coupled with ongoing political instability in Europe have left the Euro extremely vulnerable to losses. Sentiment remains firmly bearish towards the EUR with steeper declines expected as speculators bet over the European Central Bank extending its QE program at December’s policy meeting. The bearish combination of Euro weakness and a resurgent Dollar could ensure the parity dream on the EURUSD becomes a reality in the medium to longer term. From a technical standpoint, prices are bearish on the daily timeframe as there have been consistently lower lows and lower highs. Previous support around 1.065 could transform into a dynamic resistance which encourages a steeper decline lower towards 1.050. Daily Market Analysis

    Oil under pressure again

    WTI Crude edged lower on Friday with prices sinking towards $47.40 as expectations fluctuated over OPEC securing a meaningful freeze deal at next week’s formal meeting in Vienna. The persistent discussions over major oil producers cooperating to fight the oversupply woes have provided oil a temporary lifeline but fear still linger over the success of any OPEC deal. Many investors will be paying attention to how the cartel solves this classical prisoner’s dilemma which may dictate where oil concludes this year. The overall sentiment towards Oil still remains bearish with another OPEC let down sparking a sharp selloff towards $40.

    Commodity spotlight – Gold

    Dollars resurgence has made Gold a sellers dream while the mounting US rate hike expectations continue to sabotage any upside gains. This metal remains under noticeable pressure with prices hovering around 9-month lows of $1170.80 as of writing. Bears remain in firm control which should encourage steeper declines in the coming weeks. Previous resistance around $1200 could transform into a dynamic resistance which encourages a steeper decline lower back below $1170. Daily Market Analysis

    [Only registered and activated users can see links. ]

    By Lukman Otunuga, Research Analyst Daily Market Analysis

  4. #24 Daily Market Analysis

    Japanese data sets the tone for week Daily Market Analysis

    There has been no major moves economically speaking in the market, but there is plenty on the horizon and markets will shortly be focused on data out of Japan with household spending likely to be the main focus. Japan's ability to spend has been sharply in the microscope under Abenomics as he tries to break the culture of saving and push Japanese to be more consumer friendly with their cash to boost GDP but also to help increase tax revenue. It's likely that the market will be looking for weaker numbers here and expecting the market to rally further against the Yen, which has recently clawed back some ground against the USD.

    Technically speaking the USDJPY ran out of steam at resistance at 114, as the market started to unwind some of its positions to take profit. Since then we have also seen it push down to support at 111.843 before failing to find any further legs for the bears, this is a bullish signal for the most part and the market may look to restart further moves higher as a result. If we did see further drops I would expect the 20 day moving average to finally play catch up and act as dynamic support for the USDJPY. Expectations around the bulls breaking higher will find the next level of resistance at 116.591.

    On Thursday I spoke about the Canadian dollar and it continues to struggle to find any ground other than through the current OPEC meetings. There is however a number of Canadian economic events on the horizon which will have some impact, and I am expecting this to flow onto the market. It will be hard to beat the current USD strength though without some sort of major data boost or an OPEC deal (a struggle at this time). Certainly with the Trump dollar in full force and markets looking forward not backwards the USDCAD could certainly still remain in the territory of the bulls for the time being.

    The obvious correlation between oil and the CAD has so far helped it not further erode anymore ground to the USD and support at 1.3402 continues to be a major level which has prevented further drops on the charts. One thing that is worth noticing is the 50 day moving average which is creeping up the charts and looking very imposing as a possible catalyst for dynamic support, after future touches on the daily chart were met with strong buying. In the even the bulls do manage to regain control the market is likely to jump back up to 1.3542, but with the USDCAD long term horizons always need to be careful as the pair is known to range.

    [Only registered and activated users can see links. ]

    By Alex Gurr, Guest Analyst Daily Market Analysis

  5. #25 Daily Market Analysis

    Moment of Truth for OPEC, be ready for volatility ahead Daily Market Analysis

    Everybody wants a deal, but not everyone is willing to participate in making one. This is how it currently feels with just 24 hours before ministers from OPEC meet to reveal their strategy for ending a 3-year global supply glut. Iran and Iraq remain to be the major obstacle to any meaningful production cut, and Saudi’s energy minister comments on Sunday that the market would balance itself in 2017 even if producers did not intervene brings more pessimism and doubts than hopefulness over the long-term outlook.

    Although it might be true that markets will rebalance in 2017 whether a production cut is reached or not, oil bears are just waiting for a signal to push the sell button, and 15% decline towards $40 looks very reasonable incase no significant deal was reached. However, markets still believe that a production cut of 500,000 to 1 million barrel per day is achievable tomorrow and this explains Monday’s price action where both major benchmarks rose by more than 2%.

    A meaningful deal is required more than ever as GCC economies fiscal deficits continues to widen and lower public spending is weighing heavily on growth, but given the political differences between OPEC members there’s a high chance we’ll end up with only a face saver deal.

    Traders should be prepared for a volatile session ahead with many headlines to hit the wires in the next 24 hours and this volatility will spread beyond oil to equities and fixed income markets.

    The dollar rally coming to an end?

    Profit taking and mild declines in U.S. treasury yields pulled back the U.S. dollar slightly from its 13-year highs. Most of the sell-off was seen against the Japanese Yen which recovered almost 1.5% from its lowest levels since February. Monday brought the question on whether the rally on the U.S. dollar was over, or it’s only a slight correction before it resumes the uptrend? To answer this question, we need to know what is the Fed thinking of. Will they raise rates in December and wait longer for a second hike? Or a series of hikes will be projected for 2017? A couple of Fed presidents are scheduled to speak this week, and if they indicate that tighter monetary policy is needed in 2017 the dollar rally will likely resume, if no guidance is given then traders should rely on economic data, specifically Friday’s non-farms payroll. However, any declines in U.S. dollar are likely to be minor especially against the Euro and the Pound given that many political tensions are likely to hit the Euro Area in the next couple of weeks.

    [Only registered and activated users can see links. ]

    By Hussein Sayed, Chief Market Strategist (Gulf & MENA) Daily Market Analysis

  6. #26 Daily Market Analysis

    OPEC talks look set to falter Daily Market Analysis

    OPEC has dominated headlines today and with good cause, as the once former oil monopoly continues to struggle with internal politics in an effort to alter the current price of oil by cutting production and supply all together. There is only one problem... the rest of the world continues to pump oil outside of OPEC, and the various OPEC members are suffering from low prices so much that cutting production may not actually support them at all. It has so far got to the point where some pundits are calling the odds of an OPEC deal even happening at 50/50, my guess would be to put this figure much lower given the politics at play and how unlikely Iran is to enable any production freeze at all. So where to for oil markets from here? It's likely that markets will shift their focus back on US oil inventories data again as the main catalyst for movement and also focusing on global growth as a sign of a pick-up in the market.

    So where to now if the OPEC talks break down on the charts. My focus would likely be on the key support level of $42.00 at this stage, given that the market has rushed down to that level before and will look for some sort of land in the sand, failing that the next support level down could be found just below this around the $40.00 psychological level. While it's easy to play levels it's important to realise this is politically driven so the patterns will only support movements that depend on the OPEC deal and right now the market is predicting the talks might indeed fail, and cause Saudi Arabia to flood the market in any case.

    The US markets however continue to find strength from the economic data with recent figures out today on consumer confidence lifting to 107.1 (exp 101.2), this was a strong result when you compare the previous months reading of 98.6 and shows that consumers are looking to spend in the build up to Christmas. Preliminary GDP q/q also lifted to 3.2% (3.0% exp), and this is in-line with the expectations around Trump and the infrastructure building that is expected to take place over the next 4 years of his term to boost the American economy.

    The S&P 500 has benefited the most from the recent movements and its lift up the charts should come as no surprise as the hawks are back in play, but also there is a look for government to spend. At present the S&P 500 has pushed through the 2200 market and at present using this level as support before looking to push higher. Market expectations are that 2250 is likely to be on the cards in the short term given the optimism from a business standpoint in the US economy, but also based on the fact the USD continues to strengthen making it cheaper for US businesses to operate. Any further drops on the chart are likely to find support though on the 20 day moving average and I would expect this to play a big part if we do find any bears still present.

    [Only registered and activated users can see links. ]

    By Alex Gurr, Guest Analyst Daily Market Analysis

  7. #27 Daily Market Analysis

    It’s all about OPEC Daily Market Analysis

    A strong feeling of anxiety has gripped the financial markets this week with investor jitters rising as uncertainty over OPEC securing a meaningful freeze deal in today’s Vienna meeting weighs heavily on global sentiment. The many anomalies revolving around the deal continues to send ominous warnings while repeatedly conflicting reports of major oil producers cooperating and debating have left most market participants on edge. With the cartels credibility hanging on a thin line and the oversupply concerns intensifying by the day, OPEC has more to lose than gain from failing to secure a deal but can major producers decipher this logic? While there still remains a thick layer of uncertainty over today’s OPEC outcome, it may be certain that Oil is exposed to explosive levels of volatility as investors systematically offload and reload positions to be in the winning trade.

    WTI Crude is heavily pressured on the daily time frame and a breakdown below $45 could open a path lower towards $43. A failure to secure an effective deal today could ensure oil remains depressed for prolonged periods with price levels below $35 becoming a reality in the medium to longer term.

    US ADP report in focus

    The Greenback edged slightly lower on Tuesday with the Dollar Index hovering above 101.00 as investors took profit ahead of Wednesday’s heavily anticipated OPEC meeting. With expectations cemented over the Federal Reserve raising US rates in December, bullish investors still remain in control with the Dollar expected to remain buoyed. Some attention may be directed towards the ADP Non-Farm Employment Change which should act as an appetizer ahead of Friday’s NFP report. A strong ADP may encourage bulls to propel the Greenback higher during trading today.

    Currency spotlight – EURUSD

    The Euro continues to be battered by the painful combination of Eurozone growth concerns and fears of political instability in Italy. Tuesday’s positive stance from the ECB pledging to buy more Italian bonds post Italian referendum did little to quell the downside pressures on the EURUSD with bears exploiting this opportunity to send prices lower. Mario Draghi is due to speak about the future of the European economy in Madrid today with any dovish hints of extending QE in December enticing bears to attack. A resurgent Dollar amid the heightened US rate hike expectations could ensure the EURUSD concludes the year in losses.

    From a technical standpoint, prices are bearish on the daily timeframe as there have been consistently lower lows and lower highs. A breakdown back below 1.060 could open a path lower towards 1.050. Daily Market Analysis

    [Only registered and activated users can see links. ]

    By Lukman Otunuga, Research Analyst Daily Market Analysis

  8. #28 Daily Market Analysis

    NZD dips on trade index data Daily Market Analysis

    In recent days the NZD has managed to find itself in a bit of resurgence up the charts against the USD as positioned were unwound and people were looking for some positives out of the NZ economy. The bulls today have suffered a minor set-back as they look to climb they charts with the NZ trade index coming in much weaker than anticipated at -1.8% q/q (0.0% exp). This drop in the trade index has been lead by lower commodity prices at the farm gate and continues the trend in the last five quarters of a drop. The flow on effects to the economy at this stage are estimated to be substantial especially with the fixed income traders who have instead turned their attention back at the USD as it looks likely the NZ economy will have to sustain low interest rates for some time.

    The NZDUSD managed to fight back today but stalled briefly at the 100 day moving average, however it managed to quickly jump higher before the bears took a big swipe and have since pushed it back down aggressively on the chart. It has so far stopped just short of the 0.7061 support level as the market is once again frets with the idea of looking to push lower and take on the 70 cent psychological barrier. The hard level of support and floor that seems to be appearing is likely to be found flat on 0.6994, with multiple tests coming at this level. At present the 200 day moving average is also acting as dynamic resistance and I would expect it to continue to hold out against movements higher in the marketplace.

    Lastly oil has certainly made its mark today as OPEC stunned the vast majority of investors by actually coming to some sort of agreement. In the process though it did kick out Indonesia and then redistribute its supply amongst the members, which in turn has lead to this large rush, but not as big as one might expect. The next thing many are looking for is if the non OPEC countries like Russia look to actually play ball and cut back production as well in an effort to bolster prices further. Certainly there is still a glut of oil in the world, and something does need to happen for it disappear.

    Chart wise WTI oil has so far been looking strong with the bulls and rushed up to the $50 dollar a barrel mark before retreating slightly. Resistance for going higher is likely to be found at 49.80 and I would expect the market to struggle past this point unless the non OPEC countries come into line with the agreement. Any falls for oil are likely to be found at 47.88 which is acting as a hard level of support in the marketplace and with the 50 day moving average hovering around this area it will be tough for traders to push past with the current situation.

    [Only registered and activated users can see links. ]

    By Alex Gurr, Guest Analyst Daily Market Analysis

  9. #29 Daily Market Analysis

    OPEC is back, who else wants to join the party? Daily Market Analysis

    On Wednesday OPEC defied sceptics by telling the world we’re still united. When many thought that OPEC had no more influence on oil prices, yesterday proved them wrong with Brent prices surging by 9% to trade above $50. For the first time since 2008 the cartel members managed to put their political conflicts aside and strike a deal that benefits their economic agenda by reducing output 1.2 million barrels a day starting January 2017 for six months.

    Russia also said it will come on board and cut output by up to 300,000 barrels per day in H1 2017, and still to be seen whether other countries will join when OPEC and non-OPEC producers meet on December 9 in Doha.

    Energy stocks around the world are enjoying one of their best days in many years with S&P/ASX and Topix energy indices up by more than 7% and U.S. S&P500 energy index closing 5% higher yesterday.

    Will prices continue to move higher?

    If you were long oil early Wednesday, then you’ve received your Christmas gift already, but whether prices will continue to surge higher depends on multiple factors.

    • Which countries other than non-OPEC Russia will commit to a cut?

    • Will the process be monitored effectively, or chances of prisoner’s dilemma that encourages some members to exceed their production quota come into play?

    • Will U.S. drillers return fast if prices held above $50 and how many rigs will be reactivated?

    • On the demand side, are we going to see higher revisions due to Trump’s infrastructure policies?

    If oil prices traded in the range of $50-$60, shale isn’t likely to return in massive levels, however if prices spiked above $60 then the shale industry will return as a major player to rebalance prices. The bottom line is OPEC’s deal will put floor on the downside, but on the upside multiple factors should be taken into consideration.

    [Only registered and activated users can see links. ]

    By Hussein Sayed, Chief Market Strategist (Gulf & MENA) Daily Market Analysis

  10. #30 Daily Market Analysis

    Markets become increasingly acclimatized to negative news - adjustments never faster Daily Market Analysis

    Investors are getting used to bad news, and the lessons learnt in the past couple of months were implemented on Monday after the Italian referendum results. It’s true that a “No” vote was priced in to some extent, but the heavy defeat with 60% lead for those who rejected the reform of the constitution suggests that anti-establishment populists in Italy are on the rise. Although the Five Star Movement may be pushed away until the spring of 2018, there are many uncertainties ahead especially for Italy’s financial system.

    The Brexit vote took a couple of days to be shrugged off, and Trump's electoral victory shock lasted only a few hours before bulls took control of the market, so why not respond in a similar way to Italy’s referendum? The EURUSD fell more than 150 pips in the immediate aftermath of the vote result testing 1.0503, and in less than 24 hours the pair surged by 290 pips. We can have a list of reasons to justify the price action, such as buy the rumours sell the news, Italy’s referendum vote doesn’t mean Brexit, or short squeeze occurred, but the most obvious fact is that markets are acting in such a weird way, where bad news is received with open arms, and this trend may not last too long.

    Reserve bank of Australia held its final meeting for the year, and as expected kept rates at a record low of 1.5% after reducing them by 50 basis points in 2016. Very little changes were seen in the statement too, indicating that the central bank is in watch and see mode, and the Australian dollar reaction was mild, moving in a 40-pip range against the U.S. dollar. Traders should keep an eye on tomorrow’s GDP release where the Australian economy is expected to contract for the first time in 5 years.

    The key central bank meeting for the week is Thursday’s ECB meeting. The €80 billion asset purchase program will end in March 2017 and the key question is going to be whether the Central Bank will continue buying bonds at the same pace or reduce the amount in a similar tactic to the U.S. Fed, which started reducing its monthly purchases by $10 billion in December 2013. Italy’s no vote will undoubtedly be discussed; however, any sort of bailout will create political chaos, but it remains to be seen whether it will indirectly impact the ECB’s decision.

    [Only registered and activated users can see links. ]

    By Hussein Sayed, Chief Market Strategist (Gulf & MENA) Daily Market Analysis

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