Investor sentiment in check amid weak US data
Investor sentiment was in check amid mixed signals on the trade front and the weak patch of US data. ISM manufacturing activity was weaker than expected. The ISM index fell to 48.1 from 48.3 in October. Meanwhile, President Trump once again reiterated that the US will raise tariffs on China if no deal was reached.
Eurozone Manufacturing Rises Modestly
Manufacturing sector in the Eurozone rose slightly in November. The activity in the manufacturing sector rose from 46.6 to 46.9 during the month. Regional manufacturing activity showed that with the exception of French manufacturing, all other regions were in contraction.
EURUSD Rises to a 7-day High
The euro currency rose to a 7-day high. The gains came mostly on the back of a weaker US dollar. Technically price action hit the resistance level of 1.1062 – 1.1075. Unless there is a breakout above this level, we expect EURUSD to retreat. In the near term, given that the Stochastics is already overbought, we expect a correction. But price action will remain range-bound within 1.1062 and 1.1000.
Oil Prices Recover on Speculation of Longer Production Cuts
Crude oil prices recovered from the sell-off on Friday. The gains came amid rumors that OPEC and its members will be prolonging the production cuts. Reports indicated that Saudi Arabia will be pushing for oil restrictions through the middle of 2020. The gains in oil prices also came after the data over the weekend showed that China’s indicators beating estimates.
WTI Stays Range-Bound for the Moment
Despite the bounce, crude oil prices remain within range of 57.64 and 54.71. Currently, the retracement could result in a bearish flag pattern. If the pattern is validated, then a downside breakout could result in further declines. However, price action is on track to test the lower support at 54.71.
Gold Trades Flat Amid Equity Pullback
The precious metal was trading flat on the day amid a scale back in investor sentiment. Rising investor sentiment about a dovish Fed over the next few months also saw a modest increase in demand. Further to this, the weak stretch of US data added to the build-up in gold sentiment.
XAUUSD at Resistance – Will it Breakout Higher?
Price action is testing the resistance level of 1462.62. A breakout above this level could potentially open the way for further gains. The Stochastics oscillator is currently turning bullish. This could potentially trigger a build-up of momentum. But we expect prices to remain calm in the run-up to this Friday’s jobs report.