The Canadian dollar strengthened, surpassing the 1.35 per USD threshold, in the aftermath of the Bank of Canada's decision to maintain interest rates at a 22-year high. Despite a hawkish stance, the central bank expressed ongoing worries about inflation, recognizing a slowdown in economic growth and softening prices. Recent data indicated a drop in Canada's inflation rate to a four-month low of 3.1%, accompanied by an unexpected annualized contraction of 1.1% in the third quarter. Speculation about a potential rate cut in March has emerged, but Governor Tiff Macklem emphasized that the BoC is not currently contemplating easing measures, citing inflation persistently above the target threshold.

In a significant market move, the Canadian dollar displayed notable strength by crossing the 1.35 per USD mark following the Bank of Canada's latest decision to maintain interest rates at a 22-year high. While the central bank opted to keep its key overnight rate steady at 5%, it provided indications of potential future hikes, signaling a relatively hawkish stance.

The decision comes against the backdrop of the Canadian economy facing a set of challenges, including a recent slowdown in economic growth and a general softening of prices. Notably, recent data revealed a drop in Canada's inflation rate to 3.1% in October, marking a four-month low. The core inflation rate also saw a decline, hitting a 28-month low at 2.7%. Additionally, the economy unexpectedly contracted by an annualized rate of 1.1% in the third quarter, presenting a complex economic landscape.

Investors and analysts are now engaged in speculation about the possibility of a rate cut as early as March, considering the economic headwinds. However, Governor Tiff Macklem emphasized that, despite the challenging conditions, the Bank of Canada is not currently contemplating easing measures. Macklem pointed to the persistent elevation of inflation above the target threshold as a factor influencing the central bank's stance.

The Canadian dollar's surge beyond the 1.35 per USD mark suggests that market participants are processing the Bank of Canada's decision and its nuanced stance on monetary policy. While concerns about economic growth and inflation persist, the central bank's reluctance to consider easing measures in the immediate term has provided support to the Canadian dollar.

On the technical front, the USDCAD pair is exhibiting a consistent downtrend, with the last candle closing with robust bearish momentum.I am observing a repetition of the downtrend, and the pair appears to be closing in on the Fib Golden Ratio. Multiple technical indicators are aligning with a bearish outlook, emphasizing the pair's potential descent.

The USDCAD is currently entrenched in a daily and weekly downtrend, encountering resistance in the 1.35600-1.35800 range on the daily chart. Simultaneously, the intraday trend is exhibiting an upward trajectory. I advise to monitor a potential shift in intraday momentum from upward to downward, signaling an opportune moment to initiate a downward move toward the 1.34900 or 1.34500 levels.

This technical analysis complements the broader market context shaped by the Bank of Canada's decisions and economic indicators, providing traders with additional insights into potential USDCAD price movements.

ENTRY PRICE : 1.35600

STOP LOSS : 1.36200

TAKE PROFIT : 1.34500

EXP : 20/12/23

WTI crude futures experienced their fifth consecutive day of decline, falling below the $70 per barrel mark, a level not seen since early July. Surging US crude exports, approaching a record 6 million barrels per day, heightened concerns about oversupply in the global market. Doubts persist regarding the effectiveness of recent OPEC cuts, with the organization pumping 27.81 million barrels per day in November, a modest reduction of 90,000 barrels per day from October. Despite OPEC+ announcing additional cuts last week, including voluntary reductions by Saudi Arabia and Russia, market skepticism prevails. Russian Deputy Prime Minister Alexander Novak indicated the readiness of OPEC+ to implement deeper production cuts in Q1 2024 if current measures prove insufficient in curbing speculation and volatility. The article delves into the factors contributing to the decline and the potential implications for the oil market, considering both supply dynamics and geopolitical influences.

In a continuation of the bearish trend, WTI crude futures marked their fifth consecutive day of decline, plummeting below the $70 per barrel threshold on Wednesday. This downward trajectory, reaching levels last observed in early July, reflects growing concerns about heightened global oil supply.

A significant factor contributing to the negative sentiment is the surge in US crude exports, which are approaching a historic 6 million barrels per day. Notably, flows to both Europe and Asia have exhibited a steady increase, amplifying worries of an oversupplied market. This surge in US exports adds a layer of complexity to ongoing discussions about the impact of recent OPEC cuts.

According to recent data, OPEC maintained its oil production at 27.81 million barrels per day in November, signaling a reduction of 90,000 barrels per day from the previous month. While Saudi Arabia kept its November output close to 9 million barrels per day, Iran reported an increase in production. Despite the modest reductions, doubts persist in the market regarding the efficacy of OPEC's efforts to rebalance supply and demand.

Last week, OPEC+ members announced additional production cuts totaling 2.2 million barrels per day. However, a significant portion of this figure comprises extensions of voluntary reductions by key players such as Saudi Arabia and Russia. The market response to these measures has been skeptical, contributing to the continued decline in oil prices.

Russian Deputy Prime Minister Alexander Novak emphasized OPEC+'s readiness to implement deeper production cuts in the first quarter of 2024 if existing measures fail to address "speculation and volatility." This statement underscores the ongoing challenges faced by oil-producing nations in stabilizing the market.

From a technical standpoint, crude oil is currently entrenched in a bearish trend on a daily basis. Following an extended consolidation within a horizontal range, the market breached its support, establishing a new lower low. The subsequent retesting of the broken structure led to the market coiling within an intraday range, with the breakout of this support serving as a robust intraday confirmation. As a result, market analysts anticipate a continuation of the bearish movement, with a downside target set at least to $66 per barrel.

Considering these dynamics, the article explores the multifaceted reasons behind the decline in oil prices, including supply dynamics, geopolitical influences, and market sentiment. The potential implications of this trend for both producers and consumers are also examined, offering a comprehensive analysis of the current state of the oil market.

ENTRY PRICE : 72.00

STOP LOSS :  75.00

TAKE PROFIT : 66.00

EXP : 30/12/23

Affected by many factors, WTI crude oil fell for four consecutive days. First of all, the USD is recovering, and after Russia indicated that OPEC+ was prepared to further reduce production in the first quarter of 2024, demand concerns offset supply concerns, so oil prices fluctuated. The current price of WTI crude oil is US$72.72, down 0.1.5% in the day.

As we all know, the biggest factor in the current decline in crude oil prices is that the production reduction has not reached market expectations. At the same time, the only factor that can boost crude oil prices higher seems to be the weakening of the USD. As a part of risky assets, the current crude oil price is still affected by the strength of the USD.

After testing the low level of 102.47 on August 11, the U.S. Dollar Index (USDX) showed a short-term upward trend. As the market continues to increase bets on the Fed's interest rate cuts, the USDX will likely continue to fall.

Following disappointing October employment data and a faster-than-expected slowdown in inflation in the same month, Fed Governor Waller has further fueled expectations of a massive rate cut next year. Waller said early last week that if the decline in inflation continues for several months, they may begin to reduce policy rates, which is the first time that Fed officials have discussed the possibility of rate cuts.

The latest blow to the USD came from Federal Reserve Chairman Powell, who said that the risk of the Fed slowing down the economy excessively and the risk of not raising interest rates enough to control inflation have become more balanced. Although he did not close the door to further interest rate hikes when necessary, and was obviously more hawkish than Waller, the market may interpret his remarks about balancing risks as confirming the end of this tightening movement and has been encouraged to bet on interest rate cuts.

On the economic front, investors just got November ADP employment data. The data was weaker than expected. Last month, private sector employees increased by 103,000, and the number was revised down in October. The U.S. companies reduced their recruitment scale in November, and manufacturers reduced their jobs, which further proves that the labor market is cooling down. Since then, the USD has remained stable, supported by the fact that ADP employment has remained above 100,000.

The market now expects Friday's non-farm payroll data to be stronger, which in turn may suppress the Fed's hope of tightening policy.

However, leading indicators such as manufacturing PMI readings indicate that recruitment shrank again in November. In this case, the pessimistic official employment data may indicate that the Fed may stay put for a longer time, which may be negative for the USD and favorable for commodities such as crude oil.

Please note that the stronger-than-expected ISM Services PMI came in at 52.7 versus the market's general expectation of 52.2, signaling a stronger pace of growth and faster job growth this month.

Despite mixed technical indicators, WTI crude oil is still testing the bottom of a key range around US$71.00, but could also rebound to resistance at any time.

The 100 SMA is still below the 200 SMA, indicating that the path of least resistance is to the downside, or that support is more likely to hold. In this case, crude oil prices could rally to the same height as the rectangle pattern, i.e. by around US$6. Please note that the price is below both SMAs; therefore, these may also act as dynamic resistance levels around US$75.00.

Stochastic seems ready to pull higher from the oversold zone so that a rebound could be in the offing. Bullish divergence can also be seen as the oscillator has a higher low and the price has a lower low.

Similarly, the Relative Strength Index is starting to move higher from oversold territory, suggesting that bullish momentum may be about to return. Both oscillators have plenty of room to move higher before reflecting overbought conditions or bears' exhaustion. It is recommended to set the foundation.

Trading direction: Long

Entry price: 68.50

Target price: 77.78

Stop loss: 65.80

Deadline: 2023-12-18 23:55:00

Support: 70.17, 68.35, 66.93

Resistance: 70.18, 72.39, 73.69

Due to the impact of rising interest rates on consumers and trade activities, Australia's economy unexpectedly slowed down in the third quarter, with a slight MoM increase of 0.2%, which was lower than the expected increase of 0.5%. It increased by 2.1% YoY. However, when per capita GDP is considered, the situation is quite different, falling by 0.5% MoM and 0.3% YoY.

Katherine Keenan, Head of National Accounts at the ABS, said, "This was the eighth consecutive quarterly GDP growth, but the pace of growth has slowed in 2023." She noted that government spending and capital investment were the main contributors to GDP growth in the quarter.

Of this, the government's final consumption expenditure increased by 1.1%. In addition, gross fixed capital formation increased by 1.1%.

An interesting aspect of the September quarter GDP was the 0.4 percentage point contribution to GDP from the change in inventories. Notably, mining inventories increased by AU$2.4B, reflecting a larger decline in exports compared to production.

On the other hand, trade in services has a negative impact on growth. Service imports increased by 8.4%, much higher than the 1.9% increase in service exports.

Central banks: On Tuesday, the Reserve Bank of Australia (RBA) kept its cash interest rate target unchanged at 4.35%, which is in line with market expectations. The latest statement of the RBA shows that it remains open to further interest rate hikes, but emphasizes that any such decision "will depend on data and changing risk assessment". This position reflects a cautious attitude, because the RBA is waiting for more comprehensive data, especially the fourth-quarter inflation data released in January, and will hold its next meeting in early February.

In reviewing the "limited information" available since the November meeting, the RBA acknowledged that the data had been "broadly in line with expectations", and the October CPI update showed a continued slowdown in inflation, but did not provide substantial insights into the service sector inflation.

The RBA also stressed that the economic outlook "still has significant uncertainties". It points out the possibility of sustained inflation in Australia's service industry. Domestically, uncertainty includes the lag effect of monetary policy and residents' consumption patterns. On a global scale, the persistent uncertainty of China's economic trajectory and the wider impact of international conflicts are considered important factors affecting the Australian economic environment.

Market observation: Given the low tolerance of the RBA for the delay in the normalization of inflation, it is worth noting that the RBA did not provide much information about the inflation in the service industry in October.

The next two monthly inflation data and one quarterly data will provide more information. The dovish reaction in the market on Tuesday was mainly because the RBA made it clear that "wage growth is not expected to increase significantly further".

In addition, given the unusually long time until the next meeting, the market is expecting a more hawkish statement. Current expectations of a 200 bps rate cut by the Fed by the end of 2025 appear overly aggressive, compared to the very modest expectations of a 50 bps rate cut by the RBA by the end of 2025, which puts the RBA at a very high bar for achieving a more hawkish outcome.

The AUDUSD pulled back from a four-month high of 0.6690 for the second day in a row. Despite the AUDUSD edging higher, fresh weakness below the 200-day SMA at 0.6578 undermined the bulls' momentum for further gains. Meanwhile, a rebound in the USD and pressure from the RBA's decision to keep interest rates unchanged could limit the AUDUSD's upside.

Overall, the AUDUSD's break below the 0.6570 support level suggests that a short-term top has formed at 0.6689 after being rejected by the descending channel resistance, with a mild intraday bias to the downside. It is recommended to go short at the highs.

Trading direction: Short

Entry price: 0.6620

Target price: 0.6445

Stop loss: 0.6690

Deadline: 2023-12-20 23:55:00

Support: 0.6529, 0.6502, 0.6480, 0.6430

Resistance: 0.6578, 0.6591, 0.6614, 0.6663

The UK Services Purchasing Managers' Index (PMI) rose to 50.9 in November from 49.5 in October, indicating expansion for the first time in four months. The composite PMI also rose to 50.7, breaking the threshold of 50 for the first time since July.

Tim Moore, director of global market intelligence and economics at Standard & Poor's, said that in November, the UK service providers re-entered the expansion mode, and the stable demand situation helped commercial activities get rid of the recent malaise. Although the growth of service industry output is insignificant, it is the fastest since July, and slightly stronger than the previous "preliminary" estimate for November.

Supported by the moderate improvement in business activity expectations in the coming year, hiring has also resumed growth. However, despite the signs of temporary improvement in new orders, the respondents once again said that customers lack the willingness to spend. Many companies pointed out that the low level of business and consumer confidence, coupled with rising borrowing costs, limited sales opportunities in November.

On the central bank side, the market has increased its bet that the Bank of England (BOE) will cut interest rates ahead of schedule. The financial market has almost completely digested the impact of the BOE's possible first interest rate cut in June 2024. The BOE will release its monthly financial stability report on Wednesday to let investors know to what extent the BOE tends to be hawkish or dovish.

It is expected that the BOE will continue to convey the message that interest rates may remain at a high level for a longer period, and it seems premature to discuss interest rate cuts. The market now expects the BOE to keep the interest rate at 5.25% and the voting result of 6-3 is unchanged after three members voted for raising interest rates. For the majority of the Committee, hawkishness is less about raising rates and more about keeping them higher for a longer period. Although inflation news since last November has been somewhat muted, economic activity data has been slightly more buoyant.

The GBPUSD broke below the 1.2580 support level, signaling that the sharp price rebound from the bottom at the 1.2037 level may have topped out. Meanwhile, the 4-hour MACD is showing a bearish divergence and the Relative Strength Index is turning down in the bullish zone. The intraday bias is mild to the downside, with downside risks persisting with further pullbacks to the 55-day SMA (currently at 1.2427).

In the short term, the GBPUSD may continue to be supported in the coming sessions, especially if it breaks above the recent SMAs. However, a bearish round cannot be ruled out as oscillators suggest a bearish structure in the near term.

From a broader perspective, the GBPUSD's trend from 1.3141 is seen as an adjustment pattern of the uptrend from 1.0351. If the price remains resilient above the 200-week SMA and the 200-week SMA, bulls could push the close above the 15-month high at 1.3141. Thus, a successful rise could immediately shift attention to the 2022 high of 1.3750. It is recommended to set the foundation.

Trading direction: Long

Entry price: 1.2580

Target price: 1.2896

Stop loss: 1.2520

Deadline: 2023-12-20 23:55:00

Support: 1.2573, 1.2538, 1.2450

Resistance: 1.2653, 1.2732, 1.2747

During Wednesday's (December 6th) Asian session, WTI crude oil oscillated narrowly, and it is currently trading at 72.5 dollars/bbl. Oil prices plunged after rising. They first declined to 72.3 and then rebounded quickly to 74.3. Later, the API data indicated that the crude oil inventory accumulation exceeded market expectations, so the oil price retraced all the gains but was still above 72.1. Yesterday, our strategy of going long at 72.5 achieved the first take-profit target and we earned 1.5 dollars. The remaining position, however, failed to reach the second take-profit target at 75.5. This is how trading works. Just make the plan and wait for the market situation, especially for profits, because the only thing we can control is the loss! Looking at yesterday's market, the continuous increase in stocks strengthened the concerns of oversupply. Coupled with Saudi Arabia cutting oil prices to Asia, the signals of a weaker oil market were exposed again. This was the main reason for the downward trend yesterday. In addition, according to the price reaction, investors' current outlook for next year's production cuts remains unchanged, and pessimistic expectations have been lingering. Now, investors' confidence in future oil prices is important, which needs to be improved. However, the fact is that investors' confidence is beaten. Probably, this round of oil price trends will be like what happened at the beginning of June when OPEC+ announced that production cuts began in July. During June, oil prices oscillated at the bottom and waited for the recovery of market confidence. Therefore, we can expect a wide oscillating pattern. For some long-term investors, they can try to seize the opportunity to build up some bullish positions.

News: Saudi Arabia lowered its Arab light crude oil prices to Asia by 50 cents, and cut prices of all January-loading crude oil to Asia.

Inventory: API crude oil inventories rose by 594,000 barrels in the week of December 1st, exceeding expectations.

Today's focus: U.S. ADP employment, the October trade account, and EIA inventories.

WTI crude oil oscillated widely yesterday, once reaching the lowest level at 72.2 and the highest level at 74.3, closing the daily chart lower to achieve the 4-consecutive decline. Moreover, the bearish momentum has been released completely and the oil price returned to the previous low (the range from 72 to 72.5), or the upper area of the oscillation range in June and the starting point of July's appreciation. Currently, WTI crude oil is still running at the lower area of the previous channel, and there is valid support. So, investors should keep going long with small positions. Regarding the 1H chart, the oil price is running along the Bollinger lower band, and in the 4H chart, the MACD indicator suggests the formation of a golden cross at lows, which is also near the Bollinger lower band. Therefore, it is better not to go short, but to buy at lows when a reversal signal appears. For today, investors should trade between 72.300 and 74.500, where aggressive investors could buy low and sell high with more attention to buying at lows.  

Trading direction: Long

Entry price: 72.100

Target price: 75.500

Stop loss: 71.800

Support: 72.500/67.000

Resistance: 75.500/79.500