Markets have been extremely active over the past week and before the year is out we are set to see some large moves across the markets from the FED to the ECB it does not look like slowing down just yet, and the opportunities are ever persistent in the current market climate.
Oil markets have so far been a catch 22, as they struggle to find momentum in either direction and instead look to be playing in a tight range. Not even last Friday's strong non-farm payroll reading of 271k (183k exp) could lead to a jump in the prospect of economic growth, and in turn a jump in demand for oil. This seems a little surprising, but the US economy is in a strong position with unemployment at 5.0%, but there is still a surplus of oil flooding through the veins of the global economy and until this is corrected direction is going to be hard to find.
Support at 43.98 is looking rather strong at present and the market has so far looked to keep this level intact. A push further could lead to a sell-off to 42.62, beyond this it would take large surpluses to actually push through, and at present we only have small surpluses and a global economy slowly looking like it will recover; something which does not bode well for the prospect of further falls. I feel that a push through down to 42.62 could be met by fierce buying pressure again and below these levels markets will find these levels unsustainable at present.
The NZDUSD has taken some large swings since the weekend, and it has finally cracked through and pushed down to support at 0.6496 on the charts. Certainly this was not unexpected as the Reserve Bank of New Zealand (RBNZ) has been jawboning the NZD and also talking up the prospect of a rate cut, while across the pacific in the US there is talk of lifting interest rates, a start contrast which in turn puts pressure on the NZDUSD when it comes to trading time.
So far the 50 moving average has been acting as strong resistance for any movements from the NZDUSD, which indicates that markets are still expecting further swings lower. Any swing lower is likely to find support at 0.6440, and we may just find a catalyst for it in Graeme wheelers financial stability report due out on Tuesday. While the NZD will not be the main focus, it may present the governor of the RBNZ with the unique opportunity to take a swipe at any NZD bulls left in the market.
Lastly, gold prices have taken a dive compared to this time last week on the back of strong US data, and the ship has not yet sailed for people still looking to take a bite of the cheery. Support at 1072 is likely to be a strong level where I would anticipate a lot of activity. I'm unsure if gold can break through this level (though it's never had a better chance) but I feel that it will surely be tested. Historically gold also has formed strong double bottoms so I would be weary of this also.
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