China’s has said it would stop updating daily covid case numbers, increasing the challenges for investors to assess the pandemic’s economic impact

What You Need To Know

Amid a new wave of COVID-19 infections, China’s National Health Commission said it would stop updating daily case numbers for the coronavirus, increasing the challenges for investors to assess the pandemic’s economic impact in China – leading a slight drop in the earlier session for the Australian and New Zealand dollars as investors reacted to the covid wave in China. Oil posted an appreciable weekly gain as Russia said it might cut crude oil production in response to the price cap imposed by the Group of Seven on its exports, pointing to risks to global supplies next year. 

Look Out For

Current rate hike bets on 1st February Fed interest rate decision: 

25 bps (63.4%) VS 50 bps (36.6%)

Market Movements

DXY

The U.S. Dollar dropped on Friday as PCE data showed the economy is cooling. The data has been released and showed an increase of 0.1% in November after climbing 0.4% in October. Moreover, the dollar dropped against most currencies as thin trading ahead of the holiday over the weekend. At the same time, the data indicate the economy is slowing down, reinforcing the expectation of smaller interest rate increases from the Fed and improving investor appetite. 

MACD remained to trade on the sidelines, indicating a very low fluctuation volume ahead of the holiday season. At the same time, RSI was trading at 52, indicating a neutral momentum would remain over the year’s end. 

Resistance level: 105.05, 108.35

Support level: 101.30, 99.05

XAU/USD

Gold prices gained a little to $1797 against the weakened US Dollar. The recent PCE data showed that the US economy is slowing down, increasing the dovish expectation of rate hikes from the Federal Reserve. This led to the dollar dropping and the gold price going up. The trading volume would be very low this week ahead of the holiday season. However, investors can focus on upcoming economic data for further trading signals. 

Gold is still trading on the sidelines after the retracement from the resistance level. MACD has illustrated a slightly bearish momentum. While RSI is at 45, indicating a bearish momentum ahead in the short term. 

Resistance level: 1820.00, 1870.00

Support level: 1770.00, 1730.00

EUR/USD

The euro rose little against the weakened dollar on Friday with a very low trading volume ahead of the Christmas holiday season. Furthermore, the European Central Bank is getting ready to take the heat and raise interest rates further. It might raise above market expectations if that is needed to bring down inflation, ECB policymaker Isabel Schnabel said on Saturday. Market participants now expect the rate that the ECB pays on bank deposits, currently at 2%, to rise to 3.4% next year, compared to a 2.75% peak priced in before last week’s decision. Investors could focus on the future inflation outlook for further trading signals. 

As for now, market participants are on holiday, and trading volume remains very low. Therefore, the pair remain trading on the sideline. MACD shows a steep movement due to low trading volume in the holiday season, indicating the pair is moving sideways within the year’s end. At the same time, RSI also indicates the same low trading momentum for the year-end session. 

Resistance level: 1.0792, 1.0988

Support level: 1.0581, 1.0354

BTC/USD

BTC edged slightly higher against the weakened dollar as the data showed the U.S. economy was slowing down. As for now, the nation’s capital has dramatically soured on the crypto market. Hence, the cryptocurrency players are defending due to some lawmakers-ready legislation to target the industry asset class and worsen the market directly. Yet, the overall trading outlook for the cryptocurrencies remained flat, as low trading volume was ahead of the year-end holiday season. 

Following the low trading volume during the year-end holiday season, the pair’s movement remains low fluctuation. The MACD is trading slightly vertically, indicating sideways momentum ahead. At the same time, RSI also indicates the pair remain sideways movement in the short term. 

Resistance level: 17174, 17838

Support level: 16647, 15498

DJ30

The Dow Jones index ended higher by 0.53% to 33,027 points on Friday with minimal trading volume as markets ahead of the Christmas holiday over the long weekend. Besides, Friday’s data showed that the economy is softening, proving that the Federal Reserve’s interest rate hikes had their intended effect. It indicates that smaller rate hikes might happen in the future, leading to a gain in the stock market. 

The Dow is trading within the range while currently testing the support level of 32617. However, MACD has illustrated a bearish momentum. While RSI is trading at 48, it indicates the index might remain in the sideways trend over the year’s end. 

Resistance level: 34109, 35320

Support level: 32617, 31166

GBP/USD

The pound rose 0.2% to $1.2058 against the weakened dollar on Friday, hitting its lowest level over three weeks. In addition, the overall trend for the pound has already been benefiting from expectations of a smaller rate hike from the Fed policy, expecting a potential uptrend that might extend into next year. Yet, we could expect the pound to find its support if signs grow closer that the Fed’s tightening cycle is ending. Therefore, traders could await clues about the Federal Reserve’s next move for further trading signals. 

The pound is trading sideways ahead of the Christmas holiday with the thin trading condition. The MACD is trading on the sidelines below the zero line, indicating sideway-bearish momentum ahead. At the same time, RSI is trading at 42, which indicates a slow bearish movement ahead. We expect the pair’s movement to stay on the sidelines within the year-end timeframe. 

Resistance level：1.2343，1.2664

Support level： 1.1936， 1.1697

NAS100

The Nasdaq dropped 0.21% to 10,497 points on Friday. Trading volume remained low as market participants likely took time off ahead of the long weekend as U.S. markets will be closed on Monday, the day after the Christmas holiday. However, Friday’s data and the fact that it slightly met expectations eased some of those concerns for now. 

Due to the less hawkish signal from the economic data, the Nasdaq edged higher on Friday. The MACD is moving downward, suggesting the index is still trading in bearish momentum. At the same time, RSI is trading at 37, indicating a bearish momentum.

Resistance level: 11479, 12158　

Support level: 10487, 9765

CL OIL

Oil prices rose by $3 per barrel higher on Friday for a second straight week of gains after Russia announced it could cut crude production in response to the G7 price cap on exports. However, Russia may cut its oil output by 5% to 7% in early 2023 as it responds to price caps and will produce at least 490 million to 500 million tons of oil in early 2023, Novak said on Sunday, reaffirming his earlier statement. The potential cut from Russia led to oil prices up. Besides, oil demand and output decreased due to shut-ins from a massive winter storm that cascaded across the United States. Several of the largest U.S. refineries closed due to the extreme cold, while output shut in Texas and North Dakota. 

Crude oil prices are trading towards their resistance level at 81.31. MACD has illustrated a bullish momentum, while RSI is at 61, suggesting the commodity is moving upward as a bullish momentum in the short term. 

Resistance level:81.31, 89.87

Support level:  77.55, 73.52