• GBP/JPY imbalances in view from lower to longer time frame perspectives. 
  • Bulls seeking a breakout out of longer-term dynamic resistance. 

There is little to be said on the shorter-term time frames for GBP/JPY is the cross gyrates with no clear directional bias as the price rounds off the downtrend and teases with a change of trajectory:

GBP/JPY H1 chart

The price is wedged between dynamic support and resistance in the near term and trapped between horizontal support and resistance as well. The real meat on the bone will come from a break of these horizontal areas that would be expected to equate into a fresh trend, above or below the 50-EMA, one way or the other. 

GBP/JPY weekly W-formation

This brings us to the longer-term charts to give us some context. As illustrated, the price is in an overall uptrend. It has just compared a test of the neckline of the W-formation within the dominant uptrend which leaves the upside bias a favoured outcome. 

GBPJPY weekly  bullish outlook

The price fell sharply to the nose of the W-formation in a 61.8% Fibonacci retracement. This means there is little volume between here and the 156.20’s for which bulls will look to exploit. We can also see this clearly n the hourly chart:

This leaves the bias to the upside while the price pushes against the longer-term trendline resistance. 

GBP/JPY weekly bearish alternative

However, that is not to say that the bears are out of the game. Given the 38.2% Fibonacci retracement that we have seen already, subsequent attempts to sell into the strength as bears fade the bullish commitments could lead to a sharp sell-off. The imbalance between the 150.15 and 152.70s could be mitigated by the bears as well. However, the path of least resistance does currently appear to be to the upside.   

  • WTI picks up bids to reverse the pullback from weekly top.
  • OPEC panel anticipates 1.1 mbd excess supplies due to SPR.
  • Asia follows the US-led release of strategic oil reserves, EIA stockpiles increase.
  • Off in US, the light calendar will restrict intraday moves.

WTI prints mild gains above $78.00, near $78.20 during Thursday’s Asian session on the hawkish hopes from the Organization of the Petroleum Exporting Countries (OPEC).

The black gold took a U-turn from the weekly high to snap a two-day uptrend the previous day after supply concerns escalated. Also adding to the upside filter was the weekly official oil inventories from the US Energy Information Administration (EIA). It should be noted that the EIA Crude Oil Stocks Change rose to +1.017M versus -0.481M forecasts and -2.101M prior.

That said, Bloomberg came out with the OPEC panel forecasts while saying, “SPR (Strategic Petroleum Reserves) releases may massively swell global oil surplus. The news adds, “Oil excess in world markets may increase by 1.1 million barrels a day (MBD) in January and February.”

Given the OPEC’s fear of supply increase and a resultant price decline, chatters are loud that the cartel will cut the output goals and help the oil prices.

Even so, fears of the Fed rate hike and fresh covid woes from the Eurozone challenge the oil buyers.

To sum up, the oil prices are likely to stay sidelined with mixed catalysts. Adding to the indecision the Thanksgiving Day Holiday in the US and a light calendar elsewhere.

Technical analysis

Wednesday’s bearish spinning top teases WTI sellers but a 50-day EMA level of $78.00 restricts short-term moves, a break of which will direct oil sellers to a 100-day EMA level of 74.90.

 

  • AUD/USD remains sidelined after dropping to the lowest levels since late September.
  • Aussie data improved, virus fears recede at home but mostly firmer US data, covid woes from Eurozone favor bears.
  • Fed Minutes, Fed’s Daly also highlights rate hike calls to weigh on the pair.
  • US holiday, light calendar in Asia hint at a sluggish session but virus, inflation headlines keep driver’s seat.

AUD/USD seesaws near 0.7200 amid early Thursday morning in Asia, following a south-run to refresh an eight-week low with 0.7183 figure the previous day.

The Aussie pair portrays the market’s sour sentiment amid escalating price pressure and fresh concerns over the return of the coronavirus-led lockdowns. In doing so, the quote ignores mildly positive fundamentals at home amid the Reserve Bank of Australia’s (RBA) repeated rejection to rate hikes.

With a 30-year high of the Fed’s preferred inflation gauge, namely Core PCE Price Index, joining welcome prints of Weekly Jobless Claims, the Fed policymakers’ concerns over tapering and rate hike seems justified, as reflected by the recent FOMC Minutes. Also highlighting the inflation fears and a push for the Fed rate hike were the recent comments from Federal Reserve Bank of San Francisco President and FOMC member Mary Daly who sees, per Reuters, the case for speeding up the QE taper and expects rate hikes at end of 2022.

Other than the fears of the Fed rate hike, worsening COVID-19 conditions in the bloc also weigh on the AUD/USD prices, due to its risk barometer status. After Austria and the Netherlands, record-high cases in Germany triggered multiple warnings to recall the lockdowns from the region.

At home, Construction Work Done during the Q3 improved from -3.1% expected to -0.3%, versus upwardly revised 2.2% previous readouts. Additionally, new daily infections in Australia remain sidelined around 1,500 since last month, helping the Pacific major to announce the easing of the virus-led activity restrictions.

Amid these plays, the US 10-year Treasury yields ease 2.2 basis points (bps) to 1.64% after refreshing monthly high. Even so, the US Dollar Index (DXY) remains firm around the 16-month top while the equities trade mixed of late.

Looking forward, the Thanksgiving Day holiday in the US and an absence of major data/events at home can restrict AUD/USD moves, suggesting a corrective pullback in case of surprise positives. However, bears are likely to keep the reins considering the latest challenges to market sentiment and favors for the Fed rate hike.

Technical analysis

With a daily closing below 78.6% % Fibonacci retracement (Fibo.) of August-October upside, AUD/USD bears are ready to challenge September’s monthly bottom of 0.7169, as well as support line of a month-long falling wedge bullish formation near 0.7165. However, oversold RSI conditions could restrict the quote’s further weakness. On the contrary, the stated wedge’s resistance line around 0.7270 guards the immediate upside of the pair.

 

Early Thursday morning in Asia, Canadian Finance Minister (FinMin) Chrystia Freeland crossed wires via Reuters.

The policymaker said she will provide some type of fiscal update this fall. “Will have more details in the coming days,” adds Freeland.

While speaking on inflation, Canada’s Freeland said, “Global forces are responsible for rising inflation, we cannot look for a made-in-Canada solution.”

FX implications

As the covid fears renew, hopes of additional stimulus from Canada could help the USD/CAD prices following the news. That said, broadly strong US dollar, backed by inflation and coronavirus fears, helps the Loonie pair to pause the two-day pullback from the highest levels since September by the press time.

Read: USD/CAD retreats from daily tops around 1.2700 after FOMC minutes