The Dollar’s Rally Is Bearish, and Suggests Going Short at High In the Short Term

Summary:

U.S. non-farm payrolls and November ISM services data strengthened unexpectedly. And the dollar has shown signs of gaining ground at the bottom recently, continuing to weigh on copper prices.

SELL COPPER

Close Time

CLOSED

8420.000

Entry Price

8000.000

8620.000

8430.695 +50.200 +0.59%

20000.0

Pips

Loss

8000.000

8622.605

Exit Price

8420.000

Entry Price

8620.000

Fundamentals

Tesla has scheduled to cut production at its Shanghai plant in December, the latest sign that demand in the Chinese market fails to meet expectations.

The National Association for Business Economics expressed that the U.S. economy will keep slowing and fall into recession next year, while the impact on the labor market will be limited.

ECB officials: inflation is close to peak, and interest rate hikes still need to continue.

Overall: US Non-Farm Payrolls and November ISM services data strengthened unexpectedly, and worries that the Fed will keep the rate hiking for longer are raising. As the dollar index rebounded, copper prices have been further pressed in the short term. And the tight liquidity overseas will put pressure on copper prices in the medium and long term. Coupled with the steady increase in domestic refined copper production, the global supply and demand will gradually turn into a surplus in 2023, and copper prices will be under stress for a long time. However, short-term copper prices may still be supported by expectations and inventories. Therefore, copper prices are still suitable for short-selling at high in the medium and long term.

Technical Analysis

Trading at the daily chart, the trend of double tops is becoming clearer, which is taking the final stroke. The resistance at the top is around 8588 and the first support at the bottom is around 8114. MACD is at a high golden cross currently, there are signs of overbuying and top divergence.

As the current price is close to the previous high, it is recommended that aggressive traders prepared for stopping loss and try to go short at the high.

Trading Recommendations

Trading Direction: Short

Entry Price: 8420

Target Price: 8000

Stop Loss: 8620

Support: 8114/7876

Resistance: 8588/8768

Risk Warnings and Investment Disclaimers

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Gold Approaching Key Resistance

Jason

Summary:

The dollar may see an oscillation or even a small retracement, but the overall downtrend remains unchanged, and the gold still has room to move up.

BUY XAUUSD

EXP

EXPIRED

1765.85

Entry Price

1784.33

1755.35

2019.16 +5.13 +0.25%

Pips

EXPIRED

1755.35

1794.01

Exit Price

1765.85

Entry Price

1784.33

Fundamentals

Gold rose slightly by 0.12% on Tuesday, with gains dominating in the Asian and European sessions, showing the strength of the market's expectations for a slowdown in interest rate hikes by the Fed. After entering the U.S. market, the weak US trade balance in October sparked market fears of an economic recession. This is because the narrowing trade deficit was one of the main factors behind the rally of US economic growth in the third quarter, and the sharp widening of the trade deficit in October will likely drag down US GDP growth in the fourth quarter. The risk aversion supports the dollar's rise, while gold is under pressure.

Since the release of the non-farm payrolls data last Friday, the recent data have all weighed on market expectations; but have not been able to shake market expectations. In other words, the dollar may see an oscillation or even a small retracement, but the overall downtrend remains unchanged, and the gold still has room to move up.

Technical Analysis

In the 4H chart, the gold overall is still in the 1735.418 - 1784.337 oscillation range, currently temporarily hovering around the 61.8% Fibonacci Retracement (1773.58) and lying within the top of the upward channel. The key support below is 1727.935, where both the 50% Fibonacci Retracement and the W-bottom neckline formed from September 13th to October 10th are located; the bottom of the oscillating range is also near this line, and a break below this line means the end of this round of gold rally. The strong resistance in the short term is at the top of the oscillation range at 1784.337. If the price breaks through this line, it is expected to continue to hit 1805.476. As for the indicators, Stoch, DMI, and Ichimoku all indicate that gold will start to rise after a decline. XAUUSD: Gold Approaching Key Resistance_1

XAUUSD: Gold Approaching Key Resistance_1

Trading Recommendations

Trading direction: Long

Entry price: 1765.85

Target price: 1784.337

Stop loss: 1755.35

Support: 1765.85/1761.29/1749.527

Resistance: 1773.58/1784.337/1794.595

Risk Warnings and Investment Disclaimers

Never Underestimate the Determination to Tighten, Keep Long at Lows

King Ten

Summary:

If the monetary tightening is not enough now or easing too early, inflation becomes entrenched and the need to tighten again in the future will be more costly. Thus, don't underestimate the Fed's determination to tighten.

BUY USDX

Close Time

CLOSED

105.500

Entry Price

107.800

103.500

103.128 -0.124 -0.12%

200.0

Pips

Loss

103.500

103.495

Exit Price

105.500

Entry Price

107.800

Fundamentals

In November, the U.S. labor shortage was not eased. In the same month, the labor force participation rate was 62.1%, 0.1% lower MoM. The Nonfarm sector added 263,000 jobs, rebounding from the previous month, with the average hourly wage of employees increased by 5.1% YoY and 0.6% MoM. Due to the aging population, the pandemic scar effect, and weak immigration, the U.S. labor supply is short. Besides, the "wage-price" spiral is still moving forward, and the current payroll growth rate is also well above the 2% inflation target.

There is a long way to go about fighting inflation. Volcker also cut interest rates in the mid-1980 due to the U.S. recession and then raised rates to double digits until the end of 1982 to press inflation to below 5%. The cost was two recessions in 1980 and 1982, which also buried President Carter's dream of re-election. To avoid a repeat of the economic stagflation of the 1970s and 1980s, Powell needs to be more resolute than Volcker. If the monetary tightening is not enough now or relaxed too early, inflation becomes entrenched and the need to tighten again in the future will come at a higher price, so don't underestimate Powell and the Fed's determination to tighten, as the short-term pain is less costly than the long-term pain.

Technical Analysis

Regarding the daily chart, the descending momentum has slowed down, and the opening of 5-/10-/20-day moving averages is shrinking while the pattern will narrow further as well. Furthermore, MACD oversold and formed a golden cross at the bottom, exhibiting stronger bullish signal in the near term. USDX: Never Underestimate the Determination to Tighten, Keep Long at Lows_1

USDX: Never Underestimate the Determination to Tighten, Keep Long at Lows_1

Trading Recommendations

Trading direction: Long

Entry price: 105.500

Target price: 107.800

Stop loss: 103.500

Support: 104.500/103.500

Resistance: 107.800/109.200

Risk Warnings and Investment Disclaimers

Refined Oil Products Are Heavily Depleted and Short-term Oil Prices Are Easy to Fall but Difficult to Rise

Winkelmann

Commodity

Summary:

Market worries about the Fed's continued aggressive rate hikes and global economic recession have intensified. Oil prices continue to be under pressure to the downside. The market may continue the downtrend in the short term, but you need to be careful of the risk of an oversold rebound.

BUY BRENT

Close Time

CLOSED

76.500

Entry Price

82.000

72.000

80.165 +0.136 +0.16%

379.7

Pips

Profit

72.000

80.297

Exit Price

76.500

Entry Price

82.000

Fundamentals

Recently, the market is currently focused on next week's Fed meeting, the dollar rebounds volatilely driven by non-farm payrolls and PMI and other positive data. Market worries about the Fed's continued aggressive rate hikes and global economic recession have intensified. Oil prices continue to be under pressure to the downside.

At the same time, last week, after the European and American sanctions on the Russian oil price ceiling and the end of the OPEC+ meeting, the positive support of crude oil supply has further failed, while the impact of the global economic downturn on oil consumption continues to reverberate. The consumption of refined oil products in Europe and the United States continues to weaken, especially the continuous accumulation of gasoline and distillate oil inventories in the United States, further hitting the oil price. The overall performance of crude oil is easy to fall but difficult to rise.

However, the Fed is likely to slow down the pace of interest rate hikes in December, and the dollar may weaken again. With the introduction of China's "20 measures to further optimize epidemic prevention and control work" and "10 prevention and control measures", pandemic prevention in major Asian countries is tending to relax, and oil demand expectations are expected to further increase, which could support a rebound in oil prices.

Technical Analysis

BRENT: Refined Oil Products Are Heavily Depleted and Short-term Oil Prices Are Easy to Fall but Difficult to Rise_1

In the daily chart, BRENT overall maintains the oscillating downward trend, and oil prices have now strongly fallen below the key support near 82.3, refreshing a new low for the year. The downside space is further open, short forces are strong, and the market may continue the downtrend in the short term. However, the indicator RSI is close to the oversold area, short positions are highly concentrated, and the short-term decline has been too large. "Short squeeze" and an oversold rebound phenomenon may appear. You need to pay attention to the nearest support below near 76.3.

It is recommended to majorly attempts bottom fishing in the short term. You can go long near the price down to 76.3. The target is set near the upper-pressure level of 82.3, and the stop loss is set below 72.5.

Trading Recommendations

Trading direction: Long

Entry price: 76.5

Target price: 82.0

Stop loss: 72.0

Support: 76.3/72.5

Resistance: 88.0/82.3

Risk Warnings and Investment Disclaimers

USD's Appreciation Will Stop at 106.034

Jason

Summary:

Market expectations have been heating up since Powell's speech last week, and recent data is ineffective. Also, the market is in the "boring" period to find new speculations, and this data is difficult to impact expectations. Therefore, the USD is still in a downtrend, the recent rebound space is limited.

SELL USDX

EXP

EXPIRED

106.034

Entry Price

105.000

106.518

103.128 -0.124 -0.12%

Pips

EXPIRED

105.000

105.316

Exit Price

106.034

Entry Price

106.518

Fundamentals

The USD continued its rally on Tuesday, but its momentum was tempered, and it closed with only 0.27% higher. The limitation of the rally was caused by the weak performance of the October trade account released yesterday. Besides, the narrowing of the trade deficit was one of the main factors behind the rebound in U.S. economic growth in the third quarter, and the sharp widening of the trade deficit in October will likely drag down U.S. GDP growth in the fourth quarter, which has caused the market to worry about a U.S. recession. It is important to note that this concern is triggered by trade, not by a slowdown in U.S. domestic demand. Therefore, the market did not link the data to the Fed's slowdown in rate hikes, which had little impact on market expectations.

Furthermore, recent market expectations have been heating up since Powell's speech last week, with the Nonfarm Payrolls, November ISM services index, and the article by Wall Street Journal reporter Nick Timmilaus showing limited effect. Moreover, due to the lack of significant economic data and events this week, data such as the services index PMI, trade accounts, etc., are just new speculation points that the market is looking for during the "boring" period, and it is difficult for these data to have an impact on expectations. Thus, the USD is still in a downtrend, and the recent rebound space is limited.

Technical Analysis

Referring to the 4-hour chart, the USD is currently oscillating around the 61.8% Fibonacci retracements (105.465). Although USD has temporarily broken through this line, it remains to be seen whether USD can stand still. In the short term, the USD will surge further if it breaks above 106.034. This line is the bottom of the 106.034 - 107.290 oscillation range, while the 100 SMA is also in its vicinity, which is strong resistance in the short term. Regarding downsides, focus on whether the USD can be stabilized below 104.651, and if it is stabilized below this line, the USD will open a new round of decline, which may fall to 103.1. For indicators, the upper, middle, and lower Bollinger bands have diverged, showing that the USD's short-term powerful growth has passed, and it is currently running against the upper Bollinger band, indicating that the USD could rise a bit further. In DMI, the ADX line is lower than ± DI and is located near 13, suggesting that the weakening of the USD downside momentum is close to the limit, while ± DI has signs of northward movement, meaning that the USD downside risk is accumulating. Additionally, Stoch is forming a dead cross. In general, it is recommended to wait for a slight appreciation of USD and then continue to go short. USDX: USD's Appreciation Will Stop at 106.034_1

USDX: USD's Appreciation Will Stop at 106.034_1

Trading Recommendations

Trading direction: Short

Entry price: 106.034

Target price: 105.00

Stop loss: 106.518

Support: 105.465/105.00/104.651

Resistance: 106.034/106.824/107.290

Risk Warnings and Investment Disclaimers

Take Short Positions at 1.3720

Eva Chen

Summary:

The Bank of Canada (BoC) will announce another rate hike on December 7. Despite the unexpected upturn in GDP and tight labor markets in Q3, the market expected it to raise interest rates by 25 basis points. The possibility of a greater rate hike seems remote, but such a statement could have a significant impact on the CAD.

SELL USDCAD

EXP

EXPIRED

1.37200

Entry Price

1.33750

1.39000

1.35978 -0.00154 -0.11%

Pips

EXPIRED

1.33750

1.36092

Exit Price

1.37200

Entry Price

1.39000

Fundamentals

One week before the meetings of the Federal Reserve and the European Central Bank (ECB) on December 14 and 15, respectively, the BoC will hold the eighth and final interest rate decision meeting in 2022. The interest rate will be announced at 15:00 GMT.

In October, the BoC failed to raise interest rates by just 50 basis points as expected, pushing the overnight rate to 3.75%. This is the highest level since 2008. The interest rate statement is relatively hawkish, opening the door for further interest rate increases. However, the market has been spooked by forecasts that the economy could stagnate in the coming quarters, raising concerns that other central banks would make similar economic comments.

The release of economic data has been positive since the October meeting. Canada's GDP grew at an unexpectedly annualized rate of 2.9% MoM in Q3, with the latest inflation figures showing signs of stabilization. Meanwhile, labor market data for October were stronger than expected, but retail sales for September turned out to be gloomy.

Similarly, BoC Governor Macklem and senior vice governor Rogers have been reiterating their hawkish views. While the market seems certain that they will announce another rate hike, the focus has been on the scale of the future rate hike and the final rate. Macklem has been outspoken about approaching the end of the rate-raising cycle, but it clearly depends on the development of inflation and the moves of other major central banks, especially the Fed.

Following a speech by US Federal Reserve Chairman Powell on November 30, especially after he hinted that the rate increase in the future would not be significant, the market is pricing in a BoC rate hike of 25 basis points to 4%. The likelihood of this outcome is high, currently over 80%, with the rest pointing to a larger 50 basis points.

A 25-basis-point move could send a strong message that the BoC is approaching the peak of its terminal overnight rate. This would have a little immediate impact on the USDCAD, but the reaction could be greater as the market digests the statement and its possible implications for other central banks.

Technical Analysis

The USDCAD traded in a narrow range on Tuesday and consolidated its strong overnight rally from below 1.3400. During the European session, the USDCAD is holding near one-week highs, and USDCAD bulls are now waiting for a break above the integer threshold of 1.3600 to sustain its strength. (We are more optimistic about the USDCAD testing 1.3700 in the days to come)

After that, if the BoC raises interest rates by more than 50 basis points on Wednesday, plus tougher hawkish comments at a press conference, it will allow a stronger CADUSD (the USDCAD falls). The CAD bulls will be focusing on 1.3375 of the 38.2% Fibonacci retracement of the April 5-October 13 uptrends and eventually 1.3295 of 100-day SMA.

Overall, we are more optimistic about the USDCAD pulling up first, and then pulling back significantly. It is recommended to go short at the highs.

Trading Recommendations

Trading direction: Short

Entry price: 1.3720

Target price: 1.3375

Stop loss: 1.3900

Deadline: 2022-12-20 23:55:00

Support: 1.3560, 1.3520, 1.3447

Resistance: 1.3646, 1.3746, 1.3809

Risk Warnings and Investment Disclaimers

Australia: The Reserve Bank of Australia Raised the Interest Rate from 2.85% to 3.10% Similar to Expectations

Mohammad Omar

Summary:

Eyes and Ears earlier today on the Reserve Bank of Australia interest rate decision that was released on December 6th, 2022. The RBA meeting earlier led to an increase of 25 bp in interest rates where traders, central banks, and governments are watching what will the rest of the central banks will do regarding rate increases in the upcoming meetings.

BUY AUDUSD

Close Time

CLOSED

0.67420

Entry Price

0.67800

0.66900

0.66143 +0.00071 +0.10%

38.0

Pips

Profit

0.66900

0.67801

Exit Price

0.67420

Entry Price

0.67800

Fundamentals

In today’s article, we will discuss the effect of the three different options of a rate increase. To start with, it is important to know that the RBA is increasing the interest rate to fight inflation. While this might be a short-term solution for inflation, it will have a massive effect on the market in the future, and a recession is expected. As a rule of thumb, a higher-than-expected rate is bullish for the AUD, and a lower-than-expected result is bearish for the AUD.

What could have happened if the RBA did not increase the rate by 25 bp?

A lower-than-expected interest rate decision will lead to a weaker AUD versus major currencies.

What could have happened if the RBA increase the rate by more than 25 bp?

A more-than-expected rate decision is considered bullish for the AUD, and it will gain momentum versus other major currencies.

What did happen?

The RBA decided to increase the interest rate by 25 bp as expectations. In this case, the market will not move a lot as this result was already expected and took effect on the market when it first was announced, that’s why no major effect on the AUDUSD pair was monitored.

Technical Analysis

AUDUSD Intraday Chart

Australia: The Reserve Bank of Australia Raised the Interest Rate from 2.85% to 3.10% Similar to Expectations_1

The Intraday AUDUSD Chart shows a bullish engulfing pattern with possible prices touching the 0.67800 level later today.

Support and resistance:

0.6722

0.6713

0.6708

Pivot: 0.6728

0.6751

0.6743

0.6737

Trading Recommendations

High Probability Scenario:

Long Above: 0.6740

Target 1: 0.6755

Target 2: 0.6780

Alternative Scenario:

Short Below: 0.6715

Target 1: 0.6703

Target 2: 0.6690

Risk Warnings and Investment Disclaimers

King Ten

Analyst

Focus on macroeconomic analysis with extra attention to the geopolitical impact on financial markets.

Ranking

Articles

316

Win Rate

0.00%

P/L Ratio

0.34

Focus on

XAUUSD, WTI, COPPER

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The Dollar’s Rally Is Bearish, and Suggests Going Short at High In the Short Term

Fundamentals

Technical Analysis

Gold Approaching Key Resistance

Fundamentals

Technical Analysis

Trading Recommendations

Never Underestimate the Determination to Tighten, Keep Long at Lows

Fundamentals

Technical Analysis

Trading Recommendations

Refined Oil Products Are Heavily Depleted and Short-term Oil Prices Are Easy to Fall but Difficult to Rise

Fundamentals

Technical Analysis

Trading Recommendations

USD's Appreciation Will Stop at 106.034

Fundamentals

Technical Analysis

Trading Recommendations

Take Short Positions at 1.3720

Fundamentals

Technical Analysis

Trading Recommendations

Australia: The Reserve Bank of Australia Raised the Interest Rate from 2.85% to 3.10% Similar to Expectations

Fundamentals

Technical Analysis

Trading Recommendations

Risk Disclosure