THE LONDON OPEN 1-11-2022

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THE LONDON OPEN 1-11-2022

EUROPEAN STOCKS EDGE HIGHER AFTER A POSITIVE ASIAN SESSION; THE USD DECLINED AS TREASURY YIELD DROPPED BELOW 4%, WHILE INVESTORS START TO LOOK AT THE FED MEETING.

This morning the major European stock markets began trading positively, with all indexes above parity. The Asian session was similarly positive thanks to a remarkable performance by the Chinese stock exchanges, which recovered from yesterday’s losses following the Caixin Manufacturing PMI data that came in slightly above expectations but, more importantly, following the fact that investors, while concerned about the government’s zero-covid policies, are beginning to bet on further support packages for the dragon’s economy. Meanwhile, the U.S. dollar resumes its descent thanks to falling treasury yields. Although the curve still appears inverted, the yield on the benchmark 10-year is trying to trade back below 4%. Investors’ focus, in any case, is beginning to shift to the outcome of tomorrow’s fed meeting, which is expected to raise rates by a predictable 75 bp. What will be closely watched, however, is any sign of a change in monetary policy by the central bank, which markets could celebrate in a positive way. Finally, Australia’s central bank confirmed a 0.25% rate hike as expected.

Elsewhere, the USDJPY remains below 148, with Japan’s finance ministry explaining that it needed more than $40 billion in October for interventions to support the domestic currency. Slightly up on WTI after yesterday’s selling and after President Biden once again reiterated how the exceptional gains generated by oil companies this period will have to be reinvested in measures to calm prices, under penalty of potential additional taxes.

As for the macroeconomic calendar, today will feature the release of manufacturing data in the United Kingdom and the United States and New Zealand labour market data.

EURUSD, M15

The EURUSD posted a double bottom in the support area around the HVN and started to reverse its short-term bearish trend. From a technical point of view, the most critical intraday support area is the 0.9908 mark (blue line on the chart), while the most significant resistance area is the W-1 VAL. As long as prices remain above the support, a stretch to break the resistance is expected to target the W-1 POC. On the flip side, if prices break the support downward, a drop to the main medium-term support (between the HVN and the W-1 VAH) becomes the most likely scenario.

Main intraday support areas where to look for long trades in case of bullish candlestick pattern or short trades in case of bearish candlestick pattern: 0.9908, 0.9880, 0,9848.

Main intraday resistances areas where to look for short trades in case of bearish candlestick pattern or long trades in case of bullish candlestick pattern: 0.9929, 0.9968.

XAUUSD, M15

The Gold found buyers around the most significant medium-term support, the W-2 VAL, and started to rise toward the 1650 mark. From a technical point of view, the most important intraday support area is the 1641 mark (the blue line on the chart), while the most critical intraday resistance area is the W-1 VAL. As long as prices remain above the support, the most likely scenario is a continuation of the rise to break the resistance. On the other hand, If prices drop below the support, a decline to the W-2 VAL is expected.

Main intraday support areas where to look for long trades in case of bullish candlestick pattern or short trades in case of bearish candlestick pattern: 1641, 1634.

Main intraday resistances areas where to look for short trades in case of bearish candlestick pattern or long trades in case of bullish candlestick pattern: 1648, 1653, 1663.

Key:

POC= Point of Control

VAH= Value Area High

VAL= Value Area Low

LVN= Low Volume Node

HVN= High Volume Node

W-1= last week

W-2= two weeks ago

W-3= three weeks ago

D-1= yesterday

D-2= two days ago

D-3= three days ago

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