Articles
AUD/USD surrenders modest intraday gains, flat-lined near mid-0.7200s
193077 December 31, 2021 21:12 FXStreet Market News
- AUD/USD consolidated its recent gains and remained confined in a range below the monthly high.
- A softer tone around the equity markets acted as a headwind for the perceived riskier aussie.
- The downside remains cushioned amid receding Omicron fears and thin end-of-year liquidity.
The AUD/USD pair surrendered its modest intraday gains and was last seen hovering near the lower end of the daily trading range, around mid-0.7200s.
The pair struggled to capitalize on its recent upward trajectory and oscillated in a narrow trading band, below the 100-day SMA for the second successive day on Friday. A cautious market mood – as depicted by a softer tone around the equity markets – acted as a headwind for the perceived riskier aussie.
That said, the recent optimism over signs that the Omicron variant might be less severe than feared and is unlikely to derail the economic recovery continued underpinning the risk sentiment. This, along with subdued US dollar price action, should help limit the downside for the AUD/USD pair amid thin end-of-year liquidity.
In the absence of any major market-moving economic releases, the broader market risk sentiment would drive the USD demand and allow traders to grab some short-term opportunities on New Year’s Eve. Nevertheless, the AUD/USD pair remains on track to end with modest gains for the second successive week.
The market focus now shifts to important US macro data, including the closely-watched US monthly jobs report (NFP), scheduled at the beginning of a new month. Apart from this, developments surrounding the coronavirus would assist traders to determine the next leg of a directional move for the AUD/USD pair.
Technical levels to watch
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Gold Price Analysis: XAU/USD tests monthly highs under $1820, still on course for annual loss of about 4.0%
193076 December 31, 2021 21:05 FXStreet Market News
- Spot gold consolidating close to monthly highs just under $1820, supported from earlier weekly lows by falling real yields.
- XAU/USD looks on course to post a yearly loss of about 4.0%.
- According to a Reuters poll, investors expect losses of a similar magnitude in 2022.
Spot gold prices are consolidating close to monthly highs just under the $1820 mark, have jumped from earlier weekly lows in the $1790 area after finding support at the 21-day moving average as US real yields slid. Despite a notable improvement in the market’s broader appetite for risk as Omicron-related fears about potential economic disruption and hawkish policy shifts at major central banks including the Fed, ECB and BoE, spot gold is on course to post a healthy monthly gain of about 2.5%, having rebounded more than 3.5% from earlier monthly lows under $1760.
Bond and FX market moves this month have been favourable to precious metals; the 10-year TIPS (real) yield is down roughly 12bps to back under -1.1%, while the DXY is flat on the month just under 96.00, having pulled back sharply from earlier monthly highs closer to 97.00. Recall that gold has an inverse relation to both real yields and the dollar as when the former rises, it raises the opportunity cost of holding non-yields gold and when the latter rises, it raises the cost of dollar-denominated gold for international investors.
On the final day of the year, XAU/USD looks on course to post a yearly loss of about 4.0%, its first annual loss in three. According to analysts at Reuters, the “global economic recovery made its (gold’s) safe-haven appeal less attractive… as central banks prepared to raise interest rates to contain inflation”. According to a Reuters poll released at the end of October which asked investors about their outlook for gold in 2022, the median forecast was for the precious metal to average $1750 throughout the year.
If XAU/USD closed out 2022 at this level, that would mark another roughly 4.0% annual decline. To summarise the thinking of many of the poll’s participants; “gold is unlikely to rise much while investors expect the U.S. Federal Reserve to reduce its asset purchases and raise rates” Reuters said, before quoting an analyst at Phillip Futures as saying that “both (QE taper and rate hikes)… are events that traditionally see gold prices put under pressure”.
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Ripple to continue uptrend in 2022 with investors ready to break out of pennant
193074 December 31, 2021 21:05 FXStreet Market News
- XRP price keeps respecting the longer-term green ascending trend line for the fourth consecutive week.
- To the upside, some moving averages are weighing on upside potential.
- Expect investors to wait for the perfect entry before the rally starts in 2022.
Ripple (XRP) is respecting both boundaries from both the upside and the downside, as the price action is in a weekly pennant with on the topside a red descending triangle from May and from below an ascending green trend line is giving support from December 2020. Although XRP price action looks more bearish, the green ascending trend line has been held on several occasions with good respect. Expect a possible brush against the ascending trend line to come in the first weeks of 2022 that will act as the starting point for the bull run that could shoot XRP back towards $1.36.
XRP is on the verge of a bull run in 2022
XRP price shows some signs of a more bearish trend with the last few weeks multiple tests on the green ascending trend line that has been forming the uptrend support throughout 2021. Each time a test saw a firm bounce off that trend line, the descending Simple Moving Averages (SMA) are posing a bit of a cap to further upside potential. Although this looks bearish, do not be fooled as bulls are patiently buying into the price action as the Relative Strenght Index keeps a moderate trend around 50 and has not dipped towards the oversold area throughout the year.
Investors in XRP will have used this week’s test and retest on the green ascending trend line to buy into XRP coins before the rally is unleashed at the beginning of 2022. With more investors adding cryptocurrencies as an asset to their portfolio, a lot of position-taking will trigger growing demand overall and see a solid bullish reaction with XRP breaking above the 55-day and the 200-day SMA retesting the red descending trend line around $1.0. Once broken above, expect markets to perceive this as any downforces to be broken and see an accelerated move towards $1.36, holding 65% of gains.
XRP/USD daily chart
Should some headwinds start to pop up at the start of 2022, for example, with the geopolitical tensions turning into a possible war between Russia and the US over Ukraine in case the talks at the beginning of January fail, expect a massive move into safe havens with cryptocurrency positions as first to be cut short. In that case, the green ascending trend line would break and test $0.60 as the first base. In case of very serious escalations of tensions and global markets sharply on the back foot, even a $0.30 would not be impossible.
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GBP/USD slips back under 1.3500 in holiday-thinned trading conditions, set to end month with decent gains
193073 December 31, 2021 20:40 FXStreet Market News
- GBP/USD has sliped back under 1.3500 but remains close to monthly highs amid choppy, holiday-thinned trading conditions.
- Following a BoE hike and improvement in Omicron-related sentiment, the pair is on course for a 1.4% monthly gain.
In thin trading conditions on the final day of 2021, GBP/USD is choppy and recently slipped back under the 1.3500 handle. Trading conditions are subdued with many European markets closed for the day and markets in the UK and France shutting early. Though the pair is down about 0.15% on the day as its trades in the 1.3475 area, it only trades about 0.4% below monthly highs hit earlier this week in the 1.3520s. Following a surprise (to some) 15bps rate hike from the BoE midway through the month coupled with a substantial improvement in the market’s appetite for risk as perceived risks to the global economy from the spread of Omicron subside, GBP/USD is on course to post a 1.4% gain on the month.
However, if the GBP/USD closes out the year at current levels, that would mean an annual loss of slightly more than 1.0%. Despite one of the strongest growth rates in the G10 in 2021 for the UK economy and a comparatively hawkish BoE, GBP has been unable to resist the advances of the US dollar, which has powered higher throughout the year as surging US inflation brought forward expectations for Fed policy normalisation. Indeed, some market participants are betting that the bank might immediately commence rate hikes right after the bank’s QE programme ends in March 2022.
Looking at the pair on a shorter time horizon, the fact that GBP/USD ran into resistance just above 1.3500 and failed to push above this level suggests that, for now, further gains may have to wait until the new year. The fact that the pair was able to clear its 50-day moving average with ease earlier in the week suggests that the short-term technical momentum is looking good. As long as the UK economy doesn’t face too much disruption from the spread of Omicron, thus keeping the BoE on course for another rate hike in February, the short-term fundamentals look positive for GBP as well. News on Friday that the UK’s drug regulatory had approved Pfizer’s highly effective at-home Covid-19 treatment pill Paxlovid may further support this positive narrative.
But some FX strategists think that the US dollar, which has pulled back sharply from earlier monthly highs despite continued evidence of elevated inflation, a hot labour market, strong growth conditions and a hawkishly shifting Fed, is overdue a short-term rebound. Perhaps further strong data in the form of next week’s US December labour market reports and December ISM PMI surveys could provide the catalyst for such a rebound. Key levels of support to keep an eye on if the bearish scenario unfolds would be in the 1.3375 area and then the 2021 lows in the 1.3160s.
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USD/CAD Price Analysis: Bounces off multi-week low, upside potential seems limited
193072 December 31, 2021 20:29 FXStreet Market News
- A combination of factors assisted USD/CAD to reverse the early slide to a three-week low.
- Ascending channel breakdown supports prospects for an extension of the recent decline.
- Any further recovery move might get sold into and remain capped near the 1.2800 mark.
The USD/CAD pair reversed an intraday dip to a near three-week low and was last seen trading around the 1.2730-35 region, just a few pips below the daily swing high.
A modest pullback in the equity markets benefitted the safe-haven US dollar for the second successive day on Friday. Apart from this, retreating crude oil prices undermined the commodity-linked loonie and assisted the USD/CAD pair to attract some dip-buying near the 1.2715 region.
Looking at the technical picture, the overnight fall and the subsequent decline during the early part of the trading on Friday confirmed a near-term breakdown through an upwards sloping channel. This might have already set the stage for an extension of the recent downfall.
Moreover, technical indicators on the daily chart have just started drifting into the negative territory and add credence to the negative outlook. Hence, any meaningful recovery attempt could be seen as a selling opportunity and runs the risk of fizzling out quickly.
From current levels, any further recovery move is more likely to meet with a fresh supply near the 1.2770-75 horizontal support breakpoint. This, in turn, should cap the upside for the USD/CAD pair near the 1.2800 mark, which should now act as a pivotal point.
That said, a sustained strength beyond might prompt some short-covering move and lift the USD/CAD pair back towards the 1.2835-45 supply zone. Some follow-through buying will negate the negative bias and pave the way for a further near-term appreciating move.
On the flip side, the daily swing low, around the 1.2715 region, now seems to protect the immediate downside ahead of the 1.2700 mark. Failure to defend the mentioned support levels could drag the USD/CAD pair to mid-1.2600s (50-DMA) en-route 100-DMA, around the 1.2625 area.
USD/CAD daily chart
Technical levels to watch
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Chile Industrial Production (YoY) rose from previous 1.3% to 2.5% in November
193071 December 31, 2021 20:29 FXStreet Market News
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India Infrastructure Output (YoY): 3.1% (November) vs previous 7.5%
193070 December 31, 2021 20:02 FXStreet Market News
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UK: Oral COVID-19 antiviral, Paxlovid, approved by MHRA
193069 December 31, 2021 19:35 FXStreet Market News
The UK’s Medicines and Healthcare Products Regulator Agency (MHRA) announced on Friday that they have approved the oral COVID-19 antiviral, Paxlovid, as reported by Reuters.
Key takeaways
“New combination treatment is for people with mild to moderate COVID-19 who are at high risk of developing severe COVID-19.”
“Too early to know whether Omicron variant has any impact on Paxlovid’s effectiveness.”
“Number of hospitalisations and deaths were 0.8% (3 out of 389) in the Paxlovid group compared with 7% (27 out of 385) in the placebo group.”
“The two active substances of Paxlovid come as separate tablets that are packaged together and taken together, twice a day by mouth for 5 days.”
“MHRA is proactively working with the company to establish the effectiveness of Paxlovid against omicron.”
“Paxlovid authorised for use in people aged 18 & above who have mild to moderate COVID-19 infection & at least 1 risk factor for developing severe illness.”
“Based on clinical trial data, Paxlovid is most effective when taken during the early stages of infection.”
“Before Paxlovid is prescribed, MHRA is advising that patients’ current medications should be carefully reviewed.”
Market reaction
This headline doesn’t seem to be having a noticeable impact on risk sentiment.
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India Bank Loan Growth remains unchanged at 7.3% in December 17
193068 December 31, 2021 19:33 FXStreet Market News
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India FX Reserves, USD down to $635.08B in December 24 from previous $635.67B
193067 December 31, 2021 19:33 FXStreet Market News
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The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
EUR/USD rebounds from 1.1300 mark, refreshes daily top amid thin trading volumes
193066 December 31, 2021 18:49 FXStreet Market News
- EUR/USD attracted some dip-buying near the 1.1300 mark amid subdued USD price action.
- Retreating US bond yields acted as a headwind for the greenback amid easing Omicron fears.
- The recent range-bound moves warrant caution before placing aggressive directional bets.
The EUR/USD pair rallied around 30-35 pips from the early European session low and sho to the 1.1335 region, or a fresh daily high in the last hour.
The US dollar struggle to gain any meaningful traction amid a softer tone surrounding the US Treasury bond yields and remained well within the striking distance of the weekly low touched on Wednesday. This, in turn, was seen as a key factor that assisted the EUR/USD pair to defend and attract fresh buying near the 1.1300 round-figure mark on Friday.
Apart from this, the latest optimism over signs that the Omicron variant might be less severe than feared and is unlikely to derail the economic recovery further undermined the safe-haven greenback. That said, the mixed performance in the equity markets, along with the Fed’s hawkish outlook should act as a tailwind for the greenback and cap the EUR/USD pair.
Even from a technical perspective, the pair has been oscillating in a familiar trading range since the beginning of this month. This constituted the formation of a rectangle on the daily chart, which points to indecision among traders. Hence, it will be prudent to wait for a strong follow-through buying before positioning for any further appreciating move.
In the absence of any major market-moving economic releases, either from the Eurozone or the US, the broader market risk sentiment and the US bond yields will influence the USD. This, in turn, might provide some impetus to the EUR/USD pair, though the momentum is likely to be restricted amid thin end-of-year trading volumes on New Year’s eve.
Technical levels to watch
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India Federal Fiscal Deficit, INR climbed from previous 5470.26B to 6956.14B in November
193065 December 31, 2021 18:49 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
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