Daily Market Report - 12th Nov 2020

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EURUSD

The EUR/USD pair extended its weekly decline to 1.1745, to stabilize in the 1.1770 price zone during American trading hours, as volatility shrank due to a US holiday and an empty macroeconomic calendar. Equities maintained the positive bias, and in the US, the Nasdaq Composite was the best performer, following a poor performance on Tuesday. Meanwhile, the number of new coronavirus cases in the US and Europe is in a clear upward trend. The US reported a record of over 130K new contagions in one day, while Italy announced new restrictive measures to curb contagions.

ECB’s President Christine Lagarde offered the opening remarks at the ECB Forum on Central Banking. Among the most notable comments, she said that the recovery from a services-led recession tends to be slower than from a durable goods-led one, also mentioning that developments in the exchange rate may hurt the path of inflation recovery.

This Thursday, Germany will publish the final version of its October inflation, while the EU will publish September Industrial Production figures. The US will publish October CPI and weekly unemployment figures.

The EUR/USD pair is trading around the 50% retracement of its latest daily advance, and the 4-hour chart shows that the risk is now on the downside. The pair is trading well below its 20 SMA, which turned south around 1.1840, while the price is also below the 100 SMA. Technical indicators have pared their declines well into negative territory but give no signs of turning higher. The 61.8% retracement of the mentioned rally comes at 1.1725, providing immediate static support.

Support levels: 1.1725 1.1680 1.1630

Resistance levels: 1.1800 1.1840 1.1885  

USDJPY

The USD/JPY pair posted a modest advance this Wednesday, extending its weekly advance to 105.67 and settling for the day a few pips below such a level. The pair was underpinned by the positive tone of equities, as most indexes edged higher, although a holiday in the US kept volatility at check by the end of the day.

On the data front, Japan published the preliminary estimate of October Machine Tool Orders, which were down 5.9% YoY, improving from -15%. This Thursday, the country will publish September Machinery Orders and the October Producer Price Index. Later in the day, the country will also release the September Tertiary Industrial Index.

The USD/JPY pair has room to extend its advance towards the 106.00 price zone, as the 4-hour chart shows that the 200 SMA continued to provide support, while the 20 SMA crossed above the 100 SMA, both below the larger one. The Momentum indicator eased within positive territory, rather reflecting the lack of progress than suggesting an upcoming decline. The RSI indicator continues consolidating near overbought readings.

 Support levels: 105.20 104.90 104.50 

Resistance levels: 105.65 106.00 106.40

GBPUSD

The GBP/USD pair continued advancing at the beginning of the day, reaching a fresh 2-month high of 1.3313, but finally gave un and closed the day in the red around 1.3210. The British Pound got hit by Brexit-related headlines, as trade talks between the UK and the EU are set to continue next week, despite the previous speculation that a deal would need to be closed this week to get parliamentary ratification before December 31. Ireland’s Foreign Minister Simon Coveney said that if a deal is not got by next week, “we will have real problems."

The UK macroeconomic calendar will be quite busy on Thursday, as the country will publish the preliminary estimate of Q3 Gross Domestic Product, foreseen up by 15.8% after falling 19.8% in the previous quarter. The country will also publish September Industrial Production and Manufacturing Production, and the Trade Balance for the same month.

The GBP/USD pair bottomed for the day at 1.3191 and trades nearby ahead of the Asian opening. The 4-hour chart shows that it´s struggling to remain above a mildly bullish 20 SMA, which remains well above the larger ones. Technical indicators eased from daily highs but hold within positive levels, the Momentum stable and the RSI heading lower, skewing the risk to the downside.

Support levels: 1.3185 1.3140 1.2990

Resistance levels: 1.3280 1.3335 1.3380

AUDUSD

The AUD/USD pair traded in a well-limited range for a third consecutive day, consolidating last week´s losses just ahead of the 0.7300 level. Demand for the American currency was offset by stocks advance, leaving the pair directionless. Australia November Westpac Consumer Confidence came in at 2.5% in November, well below the previous 11.9% and missing expectations of 3.8%. The country will publish Consumer Inflation Expectations this Thursday, seen at 3.2% in November, from 3.4% in the previous month.

 The short-term picture for the AUD/USD pair offers a neutral-to-bearish stance. The 4-hour chart shows that the pair is below a flat 20 SMA, which remains above the larger ones. The Momentum indicator has turned south within negative levels while the RSI continues to consolidate around 55. The risk is skewed to the downside, yet the pair would need to break below the 0.7210 support to turn bearish.

 Support levels: 0.7250 0.7210 0.7170

Resistance levels: 0.7300 0.7345 0.7390

SILVER

Despite the decline seen in Gold, silver managed to outperform the yellow metal and at least end the day virtually unchanged dragging the Gold to Silver ratio to sub-77.00. Optimism on the vaccine, global growth and industrial production is supporting Silver due to its usage in key industries. Therefore, Silver might hold its stance better compared to Gold in the coming term.   

Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the targets up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.

Support Levels: $22.90 $20.75 $18.42

Resistance Levels: $25.21 $26.00 $27.00 

CRUDE WTI

WTI rejected at $43.00 after the strong vaccine-rally lifted the black gold from $37.00 levels. Earlier in the day, Algerian Energy Minister Mohamed Arkab said that OPEC+ could extend oil production cuts into 2021 or deepen them as required by market conditions. Although these comments helped crude oil prices continue to push higher, OPEC's monthly report painted a dismal picture of the market. Also, OPEC said it lowered its forecast for global oil demand growth to 6.25 million barrels per day (BPD) for 2021 from 7 million BPD in July's report. "The oil demand recovery will be severely hampered and sluggishness in transportation and industrial fuel demand is now assumed to last until mid-2021," OPEC further noted in its publication, as reported by Reuters. As another risk factor for oil, OPEC’s October oil output increased by 320,000 BDP as the production in Libya recovered.    

If WTI manages to hold over $40.56 ($65.62-$0.00 61.80%) level, the targets upside can be followed at $41.00, $46.57 (March decline start) and $50.00 levels. Below $40.00, the supports can be followed at $39.00 and $32.81 ($65.62-$0.00 50.00%) and $31.00 levels.

Support Levels: $39.00 $32.81 $31.00 

Resistance Levels: $41.00 $46.57 $50.00 

DOW JONES

Dow Jones faced a technical correction on Wednesday but managed to hold over the 29,000 level. Markets are still cheering the vaccine developments that sparked the risk-on rally earlier this week. The elections in the US are now ignored by the markets after the Democrat candidate Biden’s victory. However, the status of the Senate is still unclear as the Democrats remained in control of the US House of Representatives. The positive developments regarding the vaccine also shadowed the second stimulus deal. While a blue wave win for the Democrats might end-up with a bigger stimulus deal, the possibility of treatment sooner than expected and better macro data readings might lower or even cancel the stimulus package. On Thursday the markets will follow the consumer price index in the US.

From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.

Support Levels: 28,400 28,000 27,770

Resistance Levels: 29,500 30,000 30,500

GOLD

Gold gave away almost all previous day’s gains on Wednesday as the USD index DXY managed to regain 93.00 level. Earlier this week, the positive news from the coronavirus vaccine from Pfizer and its German partner BioNTech changed all the course of the market fueling the risk appetite. Ten-year yields rocketed higher dragging the indexes higher in the US. On the other hand, the USD benefited from the possibility of a smaller or no stimulus package at all in case of a successful vaccine treatment which might end or at least slow the pandemic. At this point, precious metals are in the mercy of the risk appetite fueled by the vaccine news as the US election losing its effect on the markets.   

Below the $1,860 level, the supports can be followed at $1,763 ($1,451-$2,075 61.80%) and $1,700 levels. Over the $1,860 level, the resistances can be followed at $1,900 with $1,956 ($1,451-$2,075 38.20%) and $2,000 levels.

Support Levels: $1,860 $1,763 $1,700

Resistance Levels: $1,900 $1,956 $2,000

MACROECONOMIC EVENTS

* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

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