Weekly Outlook: Nov 23 - Nov 27

We head in the week before the catalyst Non-Farm Payrolls report – for Fed’s first rate hike over nearly a decade - thus any fundamental news from the US will be scrutinized. Fed Chairwoman Janet Yellen underlined that interest rates will rise if the economic data does not turn to worse. Additionally, it is the last week before the ECB policy meeting on Thursday, December 3rd when the policymakers plan to “do what they must to raise inflation rate as quickly as possible” as ECB president Draghi said at his speech on Friday. The ECB policymakers concern for low inflation and considering to expand the 1.1 trillion euro QE program that started eight months ago or take other measures such as cut deposit rate further below zero.

[B]Monday [/B]is a PMI day as November’s preliminary figures for US, Germany, France and Eurozone as a whole are coming out. In Germany, the performance of the services sector is forecasted to have deteriorated slightly as well as in Eurozone, while the no change is expected in the manufacturing sector.

In US, only the Markit manufacturing is scheduled for release and predicted to decline slightly, in November, to 54.0 from 54.1 before. The US existing home sales for October are predicted to have slowed down marginally to 5.44M from 5.55M before. Overnight, the RBA Governor Glenn Stevens has a speech which is likely to affect the Australian dollar.

On [B]Tuesday [/B]morning, the German the final GDP for Q3 will be released, expected to be stable at 1.8%. The German IFO Survey will be out as well, with all of its three indicators, Current Assessment, Business Climate and Expectations anticipated to decrease in November. US will post its second preliminary GDP number for the third quarter and the economy is anticipated to show a greater expansion of 2% qoq from 1.5% the first preliminary figure. If such a strong number comes out, the odds for December’s rate hike will increase by far!

The flash personal consumption expenditures prices growth for Q3 will also be printed. November’s consumer confidence is likely to rise to 99.5 from 97.6 before as Fed getting nearer to a rate hike. After the noon, Bank of Canada will publish its quarterly review that contains featuring articles the Canadian economy and the central bank. During the night, Bank of Japan will publish its monetary policy meeting minutes. A while later Japanese leading economic index for September will be out as well.

On [B]Wednesday[/B], no significant news from Europe are scheduled on Economic Calendar, therefore all eyes will turn to US. Out of Personal Spending and Personal Income that are expected to rise up to 0.3% from 0.1% and 0.4% from 0.1% respectively, October’s Durable Goods Orders will be watched closely. The Durable Goods Orders are monitored by investors as are sensitive to the US economic situation. For October, they are expected to have increased by 1.3% from a slowdown of -1.2% before. Going forward, the preliminary Markit Services PMI for November is predicted to advance up to 55.0 from 54.8 the previous month.

[B]Thursday [/B]is a bank holiday in US, thereby I would expect less volatility than usual. In Germany, the Gfk consumer confidence survey will be out. Later in the day, Japan will release the national consumer price index alongside with October’s unemployment rate. Overnight, the Gfk consumer sentiment also for UK will be out.

On [B]Friday[/B], the second estimate for Q3 UK GDP will be out. The market consensus wants GDP to advance by 0.5% as the first estimate.

In Eurozone, various indicators regarding confidence from consumers’, businesses’ and industries’ sides of views for November will be out, expected to trigger mixed emotions. The Consumer and the Industrial Confidence are forecasted to worse marginally while the Services Sentiment and the Business Climate are predicted to improve slightly. Meanwhile, the Economic Sentiment Indicator is expected to remain stable at 105.9.

[B]EUR/USD – Technical Outlook[/B]
The EUR/USD pair has found support at 1.0660 and amid the upcoming December’s Fed interest rate decision the dollar is likely to lose some of its strength because of risk aversion. The pair has not still tested the broken ascending support and we believe that in the next couple of weeks we will see a bullish reversal and a retracement towards the 1.1100 resistance. This scenario is backed up by overall dollar depreciation as the greenback is losing strength not only against the single currency but against all other majors from the G10 basket.
From a technical point of view, the pair is in a downtrend but we believe that the bulls will take the dominant side before the pair drops below the main support zone at 1.0520. Our expectations are for a rally towards the 1.1100 resistance. On the other hand, if we see the pair traded below 1.0500 this will be a clear sign that further declines will follow towards the zone of parity.

[B]AUD/USD – Technical Outlook[/B]
After very long series of declines, the AUD/USD pair seems to have found the main support zone and the prices are ready for a retracement. The pair has been in a consistent downtrend since September 2014 and we believe that this economic cycle is about to end. The levels around 0.7000 are strongly oversold even for a weekly basis and the price action suggests that the downtrend is stopped and now the pair enters a consolidation or even trend reversal stage.
From a technical point of view, the rally should continue towards the first main resistance at 0.7380 as a daily close above that level would indicate that the bulls are going to pressure even further towards the 0.7530 resistance. On the other hand, the level at 0.7000 is a main psychological support and a drop below would be a clear indication that the bears are going to push the last active support at 0.6900.

[B]Technical analysis of USD/JPY for December 07, 2015 [/B]

The USD/JPY pair is expected to trade with a bullish bias above 123.05. Overnight, energy shares brought down the US stock indices as Nymex crude oil plunged 4.6% to $39.94 a barrel. The Dow Jones Industrial Average dropped 0.9% to 17729, the S&P 500 fell 1.1% to 2079, while the Nasdaq Composite was down by 0.6% at 5123. Gold lost 1.5% to $1,053 an ounce, while the benchmark 10-year Treasury yield rose to 2.178% from 2.155% at the previous session.

Meanwhile, the US Federal Reserve Chairwoman Janet Yellen expressed confidence in the country’s economic growth, which investors took as a signal that she is ready to raise rates this month. Also, the ADP private payrolls added 217,000 jobs in November (vs 190,000 rise expected, 196,000 rise in October). As a result the Wall Street Journal Dollar Index rose as high as 91.02, with is its highest level since December 2002. the EUR/USD pair declined 0.2% to 1.0611, GBP/USD dropped 0.9% to 1.4948, AUD/USD fell 0.2% to 0.7307, while USD/JPY was up by 0.3% to 123.24. The pair has entered the consolidation zone after surging as high as 123.67 overnight. Having the key support located at 123.05, it is currently trading in the support area around the rising 50-period intraday (30-minute chart) moving average. And the relative strength index is around the neutrality level of 50 lacking downward momentum. As long as 123.05 holds as the key support, the pair is expected to regain the first upside target at 123.75 (around yesterday’s high) before heading toward 124.00.
[B]
Trading recommendations:[/B]

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 123.75 and the second target at 124. In the alternative scenario, short positions are recommended with the first target at 122.75 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 122.50. The pivot point is at 123.05.

Resistance levels: 123.75 124 124.50

Support levels: 122.75 122.50 122.25

USD/CAD has provided a sell signal by breaking below and out of the rising wedge. Important resistance is found at 1.34 and as long as we are below it, the chances of a deeper downward correction are high.

Important support is in the 1.3280-1.33 area. Important resistance is set at 1.3410-1.3430. The price is moving sideways in the short term within the trading range. If support fails, we should expect the 1.31 level to be tested. If resistance is broken, the mark of 1.35 will be seen.

[B]NZD/USD technical analysis for December 7, 2015 [/B]

NZD/USD is trading in a bullish short-term trend, but there are signs of a possible reversal towards 0.66 or lower. The price is very close to daily resistance of 0.67, which can push prices towards 0.6850 in case it gets broken.
The NZD/USD pair has made a pullback after reaching a high of 0.6687. The price is challenging short-term resistance at 0.6660-0.6670. Support is found at 0.6640 today. In overall bulls need to be very cautious specially if a low of 0.6610 gets is broken as we could see a deeper pullback towards 0.65. For now bulls remain in control of the trend.


[B]Daily Fibonacci pivot points:[/B]
[B]
Resistance levels[/B]

R1: 1,065.03

R2: 1,069.75

R3: 1,077.35
[B]
Support levels:[/B]

S1: 1,049.85

S2: 1,045.15

S3: 1,037.50

Trading recommendations: Be careful when buying gold because we have a strong rejection from our resistance and gold is in the strong downward trend. Watch for potential selling opportunities.