Going into this week the USD is on the front foot again. Lets have a look at key fundamental factors in global markets and then break down some charts.
ASIA MARKET
The IMF (International Monetary Fund) downgraded its 2021 forecast for the Asia economic growth from 7.6% to 6.5% as Covid-19 rears its ugly head back up in parts of the region. Despite the IMF downgrade Asia remains the fastest growing region of the world in 2021. Asia’s strong growth is led by projected figures from China and India.
EUROPE MARKET
The WHO (World Health Organisation) warned that if the Eurozone maintains its current trajectory it would see another 500,000 Covid related deaths by early 2022. European nations are beginning to reimplement Covid-19 restrictions. Business growth in the Eurozone dropped to a six month low in October, as supply chain issues wreaked havoc on the economy.
North American Market
The US Congress passed a short term debt limit increase in early October. This limit will be readdressed in early December, however Congress has been unable to agree on Biden’s infrastructure bill and Build Back Better legislation. Stalling on these issues will cause them to be put off until later, as the debt limit will need to be addressed.
Technical Chart Analysis
SPY (S&P500)
The pressed into all time record highs again last week, closing the week at $468. This clearly depicts the risk-on sentiment in global markets currently. How sustainable is this movement? The 52 week average currently trades at $412, and is trading upwards at a never seen before incline.
EUR/USD
Price is in a bear market, and printed fresh yearly lows last week at 1.15133. Price is trading under the 52 week average and is capped by the resistance trendline. The RSI is holding bearish levels, and price looks set to trade into the 50% fibonacci retracement level at 1.14927.
EUR/USD 1W Chart
AUD/USD
The Aussie sold off to start the month, bouncing out of the 52 week moving average as resistance. Current momentum is bearish, however it’s difficult to pick a clear trend direction as price has been generally ranging / grinding to the downside this year. I favour a downside move below the 0.700 mark by the end of 2021.
AUD/USD 1W Chart
GBP/USD
Price has slipped below the 21.4% Fibonacci level last week, and pressed into the 2021 low. I’ll be watching this week to see if price can make a clear break below the yearly low (1.34116).
XAU/USD
Gold has broken back above the 52 week average for the first time since June, and is approaching the resistance trendline. I’m interested to see if gold can break above this, as the precious metal has been corrective for quite some time. Many anticipate gold to trade back above 2000 by the end of this year, and in line with their expectations I am bullish.
