Previewing next week macroeconomic events in the United Kingdom, "Next week is pretty light in terms of market-moving events," note ING analysts.

Key quotes

"Data-wise, PMIs may point to further manufacturing weakness but should once again have limited market impact; on the political side, the first television debate between Mr Johnson and the Labour leader, Jeremy Corbyn, will be the highlight of the week."

"The general perception of who comes out as the “winner” may affect some markets expectations, although more opinion polls are probably going to be the major driver of the pound in the next few weeks.",

"The slew of data in the UK this week failed to drive any move in sterling as markets continue to focus solely on the upcoming general election. In the past few days, the Brexit Party pledged not to contest Conservative Party seats while presenting a candidate in all Labour-held seats. When adding a rising lead of Boris Johnson’s Conservatives in latest opinion polls, investors have been able to cement their expectations around a (market-friendly) Tory majority win."

  • After ranging throughout the week, crude oil is accelerating towards the 58.00 handle.
  • The level to beat for bulls is the 58.00 resistance.

Crude oil daily chart

The crude oil West Texas Intermediate (WTI) is currently holding above $57.00 a barrel and the 200-day simple moving average (DMA). The market has been trading sideways throughout the first half of November.

Crude oil four-hour chart

WTI is trading above the main SMAs, keeping the bullish bias intact while above the 56.00 support level. Buyers are likely looking for a daily breakout above the 58.00 level to potentially drive WTI towards the 59.00 and 60.00 price levels.

Crude oil 30-minute chart

The market is challenging the weekly highs and the 58.00 figure while currently above the main SMAs. Support is seen at the 57.50 level followed by 57.00 and the 56.40 levels.

Additional key levels

  • 10-year US Treasury bond yield posts modest gains on Friday.
  • Cautious optimism on US-China trade deal weighs on safe havens.
  • US Dollar Index stays in red near 98.

The precious metal struggled to find demand on Friday as the upbeat market mood on renewed hopes of the United States and China reaching a trade deal to avoid a tariff hike in December caused investors to move away from safe havens. Nevertheless, the broad-based USD weakness didn't allow the XAU/USD pair to fall sharply.

As of writing, the pair was down 0.3% on the day at $1,466 but was on track to post small weekly gains.

Trade headlines continue to impact risk perception

The United States' Commerce Secretary, Wilbur Ross, on Friday said that there was a very high probability that the US would reach a trade deal with China. "We're much farther along with details of the trade deal with China, there are many active calls," Ross told Fox Business Network. "There will be another trade call with China on Friday."

Reflecting the recovering sentiment, the 10-year US Treasury bond yield is up around 0.5% on the day and Wall Street's main indexes are adding between 0.55% and 0.65%.

On the other hand, today's disappointing macroeconomic data releases weighed on the greenback. The Federal Reserve's monthly publication revealed that the Industrial Production and the Manufacturing Production in October decreased by 0.8% and 0.6%, respectively. The US Dollar Index lost its traction and was last down 0.15% on the day at 98.

Technical levels to watch for

According to the latest GDPNow report published by the Federal Reserve Bank of Atlanta, the real gross domestic product (GDP) in the United States (US) following this week's macroeconomic data releases is expected to expand by 0.3% in the last quarter of the year.

"After this morning's retail trade releases from the U.S. Census Bureau, and this morning's industrial production report from the Federal Reserve Board of Governors, the nowcasts of fourth-quarter real personal consumption expenditures growth and fourth-quarter real gross private domestic investment growth decreased from 2.1 percent and -2.3 percent, respectively, to 1.7 percent and -4.4 percent, respectively," the Atlanta Fed explained in its publication.

  • USD/JPY is trading at daily highs into the London close this Friday.
  • The level to beat for bulls is the 108.90/109.03 resistance zone.

USD/JPY daily chart

USD/JPY is trading just below the 109.00 handle and the 200-day simple moving average (DMA) on the daily time frame. In the last two months, the market has been gaining considerable ground.

USD/JPY four-hour chart

USD/JPY is rebounding from the November lows while trading above the 100 and 200 SMAs. The market is approaching the 108.90/109.03 resistance zone near the 50 SMA. A break above it can lead to further gains towards the 109.33/109.47 resistance zone.

USD/JPY 30-minute chart

USD/JPY is challenging the 200 SMA on the 30-minute chart. Support can be found near the 108.72 and 108.47 levels, according to the Technical Confluences Indicator.

Additional key levels

Previewing next week's key macroeconomic events, "We expect the FOMC minutes from the October meeting to elaborate on the Committee's decision to ease while also setting a high bar for additional accommodation," noted TD Securities analysts and elaborated:

"We anticipate discussions to touch upon what "material reassessment" of the outlook would lead the FOMC to shift its policy stance. The minutes may also provide further insights into the Framework Review debate."

The Federal Open Market Committee's (FOMC) October meeting minutes will be released on Wednesday, November 20th, at 19:00 GMT.

According to the Federal Reserve Bank of New York's latest Nowcasting Report published on Friday, the United States' (US) economy is expected to expand by 0.4% in the last quarter of the year.

"News from this week's data releases decreased the nowcast for 2019:Q4 by 0.3 percentage point," the NY Des said in its publication. "Negative surprises from capacity utilization and industrial production data drove most of the decrease."

In the meantime, the US Dollar Index stays in the negative territory near the 98 handle, looking to register a weekly loss of around 0.4%.

Commenting on the Federal Reserve's monthly data that showed both the Manufacturing Production and the Industrial Production in the United States declined in October, "US industrial output plunged again in October as the combination of weak global activity, trade uncertainty and a strong dollar weighed on activity," said ING analysts. "Unfortunately, business surveys suggest there is more pain ahead for the sector."

Key quotes

"US industrial production fell 0.8% month-on-month in October – the biggest decline in output since May 2009 – as manufacturing, utilities and mining all posted declines. This is the third monthly output drop in the last four months with output now down 1.1% year-on-year."

"Manufacturing remains a clear concern as weakness in global growth, trade uncertainty and the strong dollar all weigh on sentiment and demand in the sector. Output fell 0.6% here after a 0.5% fall in September, bringing the year-to-date drop in output to -2.2%. In fact, output remains 5.5% below the peak seen in December 2007."

"The legacy of the GM strike is still in the data with output of motor vehicles down 7.1% MoM, but even when this component is excluded non-motor vehicle manufacturing output still fell 0.1% MoM."

  • DXY is ending the week with a slump to the 98.00 handle.
  • The next relevant support is seen at the 97.80 level.

DXY daily chart

DXY (US Dollar Index) is trading in a bull trend above the main daily simple moving averages (DMAs). This Friday the Greenback declined to its lowest in five-days.

DXY 4-hour chart

DXY is trading below the 50 and 200 SMAs, suggesting a bearish bias in the medium term. A break below the 98.00 handle can lead to further weakness to the 97.80 support level.

DXY 30-minute chart

DXY is down for the second consecutive day while trading below its main SMAs. The bias is currently bearish in the short term and resistances are seen at the 98.00, 98.10 and 98.20 levels.

Additional key levels

  • Euro erases most of weekly losses against Japanese yen, rising almost 80 pips from yesterday’s low.
  • Yen among worst performers amid rising equity prices and a stabilization in US yields.

The EUR/JPY pair is rising sharply on Friday, following five consecutive days of losses. An improvement in risk sentiment helped the pair moved off monthly lows and regained 120.00.

Euro finds support as Yen weakens

Wall Street indexes are higher today, trading at daily highs at moment with gains around 0.40%. At the same time US yields remain steady, following days of sharp declines. Those moves weakened the demand for the Japanese yen that is among the worst performers.

The euro found support today and the rebound of the EUR/USD back above 1.1050 added more momentum to EUR/JPY. The pair is having the best performance in more than a month and in a few hours trimmed most of this week losses.

Technical outlook

Yesterday EUR/JPY bottomed at 119.22, the lowest level in a months. Since then it has risen almost a hundred pips. It is trading at 120.15, testing the 20-day moving average and also Wednesday’s high. If the pair consolidates at current or higher level it could signal that a short-term bottom is in place. Above 120.15/20 the next resistance level might be seen at 120.35 followed by 120.55.

On the flip side, if the pair fails to break above 120.15 in the coming session, a correction seems likely. The critical immediate support might be seen at 119.80; a break lower would clear a slide to the next support at 119.55 (Nov 13 low).