Market Update by Solidecn.com

[Solid ECN]

GBPUSD Soars: Overbought Signals Emerge

Today's trading session saw the GBPUSD climb sharply. The pair broke through the top boundary of its bullish trend, indicating strong buying interest. At the same time, the RSI indicator moved into an area typically considered overbought, while the Awesome Oscillator pointed towards a possible divergence. These signals hint at a potential downward adjustment in the GBPUSD's price in the next trading session. It's expected that the pair might give back a portion of its recent gains, possibly retesting the 23.6% Fibonacci level and then maybe the 38.2% level.



Moreover, these levels could act as appealing entry points for buyers looking to capitalize on the uptrend, suggesting the bullish momentum may persist.

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Natural Gas Futures Hit 12-Week Low: Factors Behind the Fall

Solid ECN - US natural gas futures have witnessed a significant drop, falling more than 5% towards $2.7/MMBtu, the lowest in twelve weeks. This decrease is attributed to factors such as high storage levels, record production, and a decrease in demand.


Storage and Production Factors

The US Energy Information Administration (EIA) reported a lower-than-expected withdrawal from gas storage for the week ending November 17, at only 7 billion cubic feet (bcf). This figure is substantially less than the 60 bcf withdrawal during the same week last year and below the five-year average decline of 53 bcf. Currently, gas stockpiles in the US are about 7% above the typical level for this time of year.


Impact of Weather on Demand

One key factor contributing to the surplus is the warmer-than-average winter weather, resulting in a reduced need for heating. Forecasts suggest a 4% decrease in heating degree days compared to the last 10-year average, leading to a 2% drop in space heating consumption from the five-year average. Additionally, average gas output in November has increased to 107.6 billion cubic feet per day (bcfd), up from the previous record of 104.2 bcfd in October.

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GBPJPY: A Strong Bullish Momentum

During the most recent trading session, the GBPJPY pair maintained its upward trajectory, achieving a significant milestone by surpassing the median line of its bullish flag pattern. This development strongly highlights a continued positive trend for GBPJPY, signaling a robust bullish momentum.



With this upward movement, the focus for traders is now set on the GBPJPY pair reaching the upper boundary of the bullish flag. This target is the next critical point for the ongoing bullish trend.

The prevailing trend for GBPJPY can be described as distinctly bullish, especially as the pair remains actively trading within the boundaries of the bullish flag. This trend is expected to persist as long as the pair continues its movements within this pattern.

[Solid ECN]

AUDUSD Bullish Trend: A Closer Look at the Rising Tide

FxNews - The current trading session has witnessed a significant rise in the AUDUSD's value. Notably, the Australian dollar (AUD) has broken above the crucial 50% Fibonacci retracement level, a move that aligns with the top edge of the bullish flag pattern on the daily chart.

As the Relative Strength Index (RSI) edges closer to overbought conditions, the AUDUSD pair might be gearing up for a phase of range-bound trading, especially above the 65.8% resistance level. Given the heightened demand driving up the AUDUSD price, now may not be the best time for investors to take on long positions.




A Word of Caution for Retail Investors

Retail traders should approach with caution. A prudent strategy would be to wait for the AUDUSD pair to dip back to the midpoint of the bullish flag pattern. This area, coinciding with the 38.2% Fibonacci level, presents a potentially favorable entry point for those looking to buy.

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Turkish Lira Hits Record Low Despite Aggressive Rate Hikes

The Turkish lira remains stagnant at an all-time low, sitting at 28.9 against the US dollar. This comes even after Turkey's central bank made an unexpected move, raising interest rates significantly by 500 basis points in its latest November meeting. This decision surpassed investors' expectations, who had predicted a rise of only 250 basis points.




Trend of Depreciation

In the last three months, the Turkish lira has been on a steady decline, setting new daily lows. The average daily loss has been slightly over 0.1%. This pattern suggests a controlled devaluation, likely orchestrated by the central bank. To manage this situation, the bank has implemented stricter reserve requirements for the lira. This step is aimed at pulling liquidity from the interbank market, thereby increasing local interest rates and aligning them more closely with the costs of borrowing lira internationally.


A Steep Drop in Value

Since the beginning of 2023, the Turkish lira has seen a dramatic depreciation, losing over 50% of its value when compared to the US dollar. This significant drop highlights the ongoing economic challenges faced by Turkey.

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Malaysian Palm Oil Market Overview

In recent trading, Malaysian palm oil futures were seen hovering around 3,900 MYR per ton. This movement indicates an effort to bounce back from the recent decline in prices, which had dropped to a low of 3,886 MYR. The potential recovery is spurred by positive signs in export figures.


Export Trends

Data from AmSpec Agri Malaysia, an independent inspection company, reveals that between November 1 and 25, there was a 7.2% increase in the export of Malaysian palm oil products, reaching 1.15 million tons compared to 1.08 million tons in the period from October 1 to 25. Similarly, Intertek Testing Services, another cargo surveyor, reported a 13.6% increase in exports during the same time frame, with figures rising to 1.26 million tons from 1.11 million tons.


Factors Influencing Market Dynamics

However, the upward trend in palm oil futures is being restrained by several factors. Notably, there's a decline in competing Dalian oil prices, and there are concerns about upcoming economic activity data from China for October. The uncertainty surrounding China's economic indicators and the impending rainy season are causing market caution.

Moreover, the Indian market, a significant buyer of Malaysian palm oil, is reducing its orders for December and January. This decrease in demand is attributed to the rising cost of palm oil and the negative profit margins faced by refiners, who have recently made substantial imports.

[Solid ECN]

What to Expect Next Week - Nov 27th

The US will have a busy week with many important economic indicators and events. The main ones are:

• PCE prices, personal income and spending: These will show how much inflation, income and consumption changed in October. They are closely watched by the Fed and the markets as they reflect the health of the economy and the impact of the pandemic.
• ISM Manufacturing PMI: This will measure the activity and sentiment of the manufacturing sector in November. A reading above 50 indicates expansion, while below 50 signals contraction. The manufacturing sector has been recovering from the Covid-19 shock, but faces challenges from supply chain disruptions and labor shortages.
• Fed speeches: Several Fed officials, including Chair Powell, will speak at different events throughout the week. They will likely provide more insights into the Fed’s views on the economic outlook, inflation, and the tapering of its asset purchases.

Other notable releases and events in the US include:

• CB Consumer Confidence: This will gauge the level of confidence and optimism of consumers in November. Consumer confidence is a key driver of spending and growth, especially during the holiday season.
• Q3 GDP growth rate (2nd estimate): This will revise the preliminary estimate of the annualized growth rate of the US economy in the third quarter. The first estimate showed a 2% increase, below market expectations of 2.6%.
• New and pending home sales: These will report the number of new and existing homes sold in October. They are indicators of the demand and supply conditions in the housing market, which has been affected by rising prices, low inventory, and higher mortgage rates.
• Q3 corporate profits: This will reveal the earnings of US corporations in the third quarter. Corporate profits are a measure of the profitability and performance of the business sector.

Meanwhile, other countries and regions will also have some significant developments to watch. These include:

• Monetary policy decisions: The central banks of South Korea and New Zealand will announce their interest rate decisions. Both are expected to keep their rates unchanged, but may signal their future policy stance amid rising inflation pressures and Covid-19 risks.
• Speeches from ECB and BoJ officials: Several officials from the European Central Bank and the Bank of Japan will deliver speeches at various occasions. They will likely comment on the economic situation and outlook of their respective regions, as well as their monetary policy actions and plans.
• Inflation rates: Several countries and regions will release their inflation data for October. These include Germany, the Euro Area, France, Italy, Spain, the Netherlands, Poland, and Australia. Inflation has been rising globally due to higher energy and commodity prices, supply chain bottlenecks, and pent-up demand.
• GDP growth rates: Some countries will publish their GDP growth rates for the third quarter. These include Turkey, India, Canada, and Switzerland. These will show how their economies performed amid the pandemic and its variants, as well as the vaccination progress and the fiscal and monetary support.
• China’s Manufacturing and Services PMIs: These will indicate the level of activity and confidence of the manufacturing and services sectors in China in November. China’s economy has been slowing down due to the Delta variant, regulatory crackdowns, power shortages, and debt woes.
• Manufacturing PMIs: Other countries will also release their manufacturing PMIs for November. These include South Korea, India, Russia, Italy, and Canada. These will reflect the state and outlook of the manufacturing sector in these countries, which are influenced by the global demand and supply conditions.
• Germany’s GFK consumer confidence and retail sales: These will measure the confidence and spending of German consumers in November and October, respectively. Germany is the largest economy in the Euro Area and its consumer behavior has implications for the rest of the region.

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LTCUSD

FxNews - Litcoin 4H Chart shows AO signals a divergence. We expect Litecoin to decline, maintaining the bearish trend.

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CAD Strengthens as Inflation and Growth Slow

As November drew to a close, the Canadian dollar found itself trading at approximately 1.37 against the US dollar, marking a notable recovery from its near one-year low point of 1.386, recorded on October 31st.



This resurgence can be largely attributed to the weakening of the US dollar, following indications that the Federal Reserve's period of monetary tightening might be drawing to a close.

In Canada, the inflation rate took a surprising dip to 3.1% in October, a figure notably lower than the Bank of Canada's projected rate of about 3.5% for the upcoming year. This decrease in inflation, when viewed alongside the slowing pace of the Canadian economy, is fueling speculation that the Bank of Canada might put a pause on any further increases in interest rates.

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Swiss Franc Climbs High: November 2023's Financial Outlook

In November, the Swiss franc reached 0.88 against the US dollar, marking its strongest position in over two months. This rise was primarily influenced by the widespread weakening of the dollar, spurred by a series of weaker economic indicators. These indicators have led to increased speculation that the Federal Reserve might start reducing interest rates by the second quarter of 2024.

Within Switzerland, the economic landscape also contributed to the franc's trajectory. The country's restrained inflation rate, which remained under 2% for the fifth month running in October, coupled with a stagnating economy, limited the support from monetary policy for the franc. Specifically, the Gross Domestic Product (GDP) of Switzerland showed no growth in the second quarter.




Moreover, the easing of tensions in the geopolitical conflict between Israel and Gaza played a role in reducing the demand for the franc as a safe-haven currency. This situation led to the franc trading near its lowest in four months against the euro. Despite these various factors, the franc is projected to end 2023 stronger against both the dollar and the euro. This strength is largely attributed to the Swiss National Bank's (SNB) reduction in foreign currency reserves, which dropped to their lowest in nearly six years in October. - Source