The Week Ahead 📈 29th NOV – 3rd DEC

Hello and welcome to the Key To Markets preview of the Week Ahead.

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Contents

• Currency Pair Performance
• 10 Big Stories Last Week
• Chart of the Week
• Economic Calendar Highlights
• 5 Things to Watch this Week
• Technical Analysis: EUR/USD | GBP/USD | USD/JPY | AUD/USD | USD/CAD | Gold | Oil | S&P 500

Currency Pair Performance

5-day performance as of November 25, 2021. 17:00 GMT

Source: finviz.com

10 Big Stories Last Week

In case you missed it….

King Dollar – It was another strong week for the buck as markets positioned for a more hawkish Federal Reserve.

Kiwi crushed – The New Zealand dollar was the worst FX performer despite the RBNZ hiking interest rates 25 BP to 0.75%. Markets have been pricing in a 50 BP move.

Oil ignores SPRs – The release of Special Petroleum Reserves in the US, China, Japan, India and the UK was brushed off by oil markets.

Gold loses shine – The yellow metal hit 3-week lows the week after reaching a 5-month peak thanks to bullish USD sentiment and higher yields.

ATHs – Although things got choppy for tech stocks, the S&P 500 notched another record high last week, helped higher by bank stocks.

Powell confirmed – Fed Chair Jerome Powell was reconfirmed as Fed Chair for the next four years by US President Joe Biden. Lael Brainard will be Fed Vice Chair.

Fed hawks – Federal Reserve meeting minutes showed stagflationary concerns among staff – lower growth and higher inflation.

Claims shrink – Weekly unemployment claims in the United States dived to 199,000 – the lowest number since November 1969.

Merkel gone – Olaf Scholz was confirmed as the new German Chancellor after 16 years of Angela Merkel at the top of German politics.

Covid crackdown – A number of European countries from Austria to Cyprus ramped up lockdown-like policies directed at the unvaccinated.

Chart of the Week

Source: Charliebilello

This table (ok not chart!) is a stunning example of indices at work. While the Nasdaq 100 index reached a record high, many of its constituents are well below record highs. A handful of stocks – the likes of which we are all very familiar with – Apple, Microsoft etc are carrying the index higher despite the weak performances above because of their strong performance and huge weighting.

Economic Calendar Highlights

Source: FXStreet

5 Things to Watch This Week

1)     NFP

The penultimate non-farm payrolls release in 2021 is coming next Friday and it’s the first one since Jerome Powell was renominated as Fed Chair for another four year term. The last report was a bumper one and helped relieve some stagflation concerns. Economists expect another solid report to continue to lower the rate of unemployment toward pre-pandemic levels.

2)      Bond yields

With inflation as the watch-word across markets, investors in FX and equity markets are taking their cues from macro investors in the bond market. Treasury yields soared last week, ecliping gains in bunds and gilts to send EUR/USD and GBP/USD lower. Traders are cutting loose of Treasury bonds as the Fed tapers and that continues to support the buck.

3)     Fed Speakers

The rising Treasury yields came for two reasons – the reappointment of Jerome Powell as Federal Reserve Chair and because other Fed policymakers via FOMC minutes and through speeches are talking up the possibility of a faster pace of tapering and possible US rate hikes next year. Look out for more hawkish Fed speakers.

4)     Cathie Wood

Cathie Wood, the director of the popular ARKK ETFs is feeling the heat after some of her top holdings, including Tesla and Zoom stocks saw heavy declines in the last fortnight. Outside of the FAAMG stocks there is major wobble taking place in the tech sector. Wood is now doubling down with a new fund that will aim to go short stocks that get disrupted by new technology.

5)     BTD in Gold?

Precious metals took a battering amid the jump in bond yields but was it deserved? Gold hit a 5-month high despite a strong dollar the previous week amid demand as an inflation hedge. Gold bugs may be looking to buy the dip (btd) if inflation concerns raise thor heads again but for now the plans seems to be ‘Don’t fight the Fed’.

Technical Analysis

Here you can find analysis of the major asset classes including the major forex pairs, gold, oil, and the S&P 500.

EUR/USD (H4 Candlestick Chart)

EUR/USD dropped under 1.12 as the downtrend continues. 1.11 is the next round number target with 1.125 then 1.136 as resistance.

GBP/USD (H4 Candlestick Chart)

GBP/USD failed to hold its base at 1.335 with a break to 1.33. Underneath 1.32 is a significant level because it was the high in March 2020 before the pair collapsed to 1.14.

USD/JPY (H4 Candlestick Chart)

USD/JPY made a false break below support at 113.7 to resume its uptrend above 115 to its highest since March 2017. The 2016 top at 118.5 is in play.

AUD/USD (H4 Candlestick Chart)

AUD/USD has now reversed its entire October rally with a test of the Sept 29 low under 0.72. There is no evidence that bulls are interested in the level and a steep downtrend remains in place.

USD/CAD (H4 Candlestick Chart)

USD/CAD is pulling back from the supply area created by the Sept 29 peak with possible support at 1.265 then 1.26.

Gold (H4 Candlestick Chart)

XAU/USD has rolled over sharply into a new downtrend after dropping through support at 1850. A retest of the October lows at 1750 looks probable. 1810 could be resistance to any bounce.

Brent Oil (H4 Candlestick Chart)

BRENT found support at 78.0 and has rebounded to a cluster of resistance just under 82.0 and the 20 DMA. A break out of the down-channel would imply a resumption of the long term uptrend.

US 500 (D1 Candlestick Chart)

US500 rebounded off 4650 and is travelling within two speed lines supporting the uptrend. 4700 has so far been a barrier to further gains. 4540 is deeper support.

Thank you very much for reading – and have a great week trading!

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