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Analysis

China’s Covid cases worry investors

  • Investors worry about the rise of Covid-19 infections in China
  • FOMC Meeting Minutes: The Fed is expected to remain aggressive
  • Saudi energy minister: OPEC might cut production
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Investors concerns about the rising numbers of Covid-19 cases in China and the expectation that the Minutes will reveal that the Fed is going to continue the fight against inflation pushes money into the dollar. This has weighs on risky assets sending commodity currencies and gold lower. USOIL has been volatile after The Wall Street Journal reported that OPEC would be considering a production increase in December. The report was, however, denied by Saudi energy minister Prince Abdulaziz bin Salman who said that a production cut was possible instead.

USOIL chart 11 22

USOIL recovers quickly

USOIL rallied quickly back above the weekly support level at the September low of 76.06. You might remember me saying yesterday that as long as oil trades inside the (big weekly) range we should be buyers at or near support and sellers at or near resistance. Yesterday those that remembered this advice and traded long once the market returned inside the range did very well! Now the market is trading at a resistance (80.37) and could therefore retrace some of the rally we saw in the US session yesterday. A break above the 80.37 level would open a way to 82 or so.

Gold chart 11 22

Gold bids stay soft

Gold is trending lower in the 2h timeframe. My downside targets (1726 and 1717) are valid below 1753. Above the level, the market is likely to test the 1767 resistance again. Gold has provided lots of trading opportunities on the short side over the last few days. Take advantage of my analysis and start trading gold now with tight spreads!

EURUSD chart 11 22

EURUSD drifts lower

EURUSD has broken supports and moved below a topping formation I talked about yesterday. The market is bearish below the key support level at 1.0280. My earlier trade idea still stands. I’m looking for short signals below 1.0305 with my target at 1.0171. If the market attracts buyers above 1.0305 I expect EURUSD to move to 1.0380 or so.

GBPUSD chart 11 22

GBPUSD trades inside a triangle

GBPUSD broke trades inside of a triangle formation and found support at the lower end of the formation yesterday. The Sterling has been relatively strong against the rising dollar over recent days. This means that either the GBPUSD pair will eventually give in and start sliding with the rest of the dollar counterparts or it rallies as soon as there are signs of USD weakness. If the triangle is resolved to the upside my target is at 1.2150. If the breakout happens to the downside I expect the market to trade down to the 1.1600 – 1.1620 range.

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USDCAD chart 11 22

Is the uptrend in USDCAD soon over?

USDCAD trends higher in the 2h chart and stays bullish above 1.3390 (the bull channel low). Below the level, the market probably trades down to 1.3350. Yesterday’s quick spike higher and the rejection that followed worries me a bit though. This could mean we’ve seen the high for this uptrend. With oil’s quick reversal yesterday we could now see USDCAD traders selling the rallies. This means that my upside target range might not be valid anymore.

 The Next Main Risk Events

  • AUD – RBA Gov Lowe Speaks
  • CAD – Core Retail Sales m/m
  • CAD – Retail Sales m/m
  • USD – Richmond Manufacturing Index
  • USD – FOMC Member Mester Speaks
  • USD – FOMC Member George Speaks
  • USD – FOMC Member Bullard Speaks

For more information and details see the TIOmarkets economic calendar

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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