Yesterday’s Market Wrap

Last week the USD resumed the decline by the middle of the week after US PMI manufacturing showed that this sector fell in contraction while the FOMC minutes sounded less hawkish, pointing to a slowdown in rate hikes. Although the volatility declined toward the end of the week, with the US markets being off for the Thanksgiving holiday. But yesterday the volatility picked up and the USD resumed the decline, falling nearly 2 cents against most currencies, while risk assets surged higher during the early European session.

But the risk turned negative pretty quickly by midday as protests erupted in China after the death of 10 people in a fire and the covid lockdowns are blamed. Although, the idea that we would get some kind of velvet covid revolution in China is a bit far-fetched. The USD turned bullish and almost erased all losses, while risk assets declined. Oil made some decent gains though on rumouors that OPEC would seriously consider some output cut.

This Week’s Market Expectations

Late yesterday we heard the previous mouthpiece of the Chinese government Hu Xijin say that ‘China may walk out of the shadow of COVID-19 sooner than expected’. That would be great news for risk sentiment and risk assets, since it would open up the economy and relieve the supply lines and manufacturing remains in contraction there, ass today’s report showed. Shortly the Eurozone flash CPI inflation report will be released, which is expected to show a slight cool-off this month. In the US session we have the US prelim GDP reading for Q3 and JOLTS job openings.

Forex Signals Update

Yesterday the volatility picked up again as the USD turned bearish and lost nearly 2 cents across the board. But, it reversed higher as protests in China erupted and lost most of the gains. We opened several signals, in commodities and forex and came out at break even on such conditions.

 USD/JPY Makes New Low

The bullish momentum ended for this pair and now the sentiment for USD/JPY has turned bearish. Last week we saw a 400 pip decline after the US manufacturing PMI report showed that this sector fell into contraction this month, while yesterday we saw a 200 pip decline. But the risk sentiment turned negative later which sent risk assets lower, hence the bullish reversal in USD/JPY. Although the 50 SMA (yellow) is acting as resistance on the H1 chart, rejecting the price twice so far, so we decided top open a sell forex signal just below that moving average.

USD/JPY – H1 chart

GOLD Rejected at the 50 SMA

Gold has been on a bearish trend since March after failing to hold gains above $2,000, but turned really bullish early in November as the USD turned bearish. Although the price has been stuck between the 50 SMA (yellow) at the top which rejected the price yesterday and the 100 SMA (green) at the bottom.

XAU/USD – H4 chart

Cryptocurrency Update

Cryptocurrencies continued to decline early last week, with Bitcoin making a new low for the year at around $15,500 while Ethereum fell below $1,100 again. Although we saw some improvement as the week progressed, with the sentiment being positive in financial markets.

[[Bitcoin] Consolidating at Moving Averages

Bitcoin turned bullish last week after retesting the lows on Monday at around $15,500 pushing below the post FTX exchange crash. The price moved above the 20 SMA (gray) and the 50 SMA (yellow) but the 100 SMA (green) is still holding as resistance, so we’ll see if the bullish momentum will continue this week.

BTC/USD – H4 chart

ETHEREUM Finding Support at MAs

The situation in Ethereum is similar to that of Bitcoin, having crashed after the FTX bankruptcy and moving averages turned into resistance. Although it didn’t make a new low this week and now the price has broken the MAs which were acting as resistance, so now they have turned into support.

ETH/USD – H4 chart