Daily Market Outlook, December 1, 2022 

‘Powell Points To Moderating The Pace Of Rate Rises, Santa Rally To Start?’

Asian equity markets took their lead from the late surge on Wall Street, Fed Chair Powell delivered a speech on the economy, inflation and employment, during which he suggested it made sense to consider slowing the pace of rate hikes in the US, and highlighting that he didn’t want to fall foul of over tightening, risk appetite abounded on the back of these comment, the SP500 over 150 points, the Dollar and US treasury yields sagged. Overnight, reports suggested that China may be softening its stance on Covid restrictions, data out of China also showed glimmers of hope with an improvement in Caxian manufacturing, up from 49.2 to 49.4. This morning’s UK Nationwide house price index fell for the second month in a row as buyers remain sidelined due to the negative impact of rate rises. In Germany retail sales data showed a sharper than expected fall ahead of the all important holiday shopping season.

On the data front for the day ahead, the focus in the UK and Eurozone will be on PMI manufacturing data, flash reading have indicated that both regions are likely to remain in contractionary territory, completing and fifth month of depressed readings, this data will likely also confirm fears of negative Q4 GDP prints for both economies, however, on the positive side of the ledger their are nascent signs of the potential for peak inflationary pressures. In the US markets are poised for PCE deflator data which is expected to confirm the signal from October CPI, that inflation has started to slow. US ISM manufacturing data is expected to show activity continuing to slow, but markets expect it to hold the critical 50 level, representing contraction below, expansion above. The next major focus for markets will be tomorrow’s all important non Farm Payrolls data, any signs of deterioration in the employment landscape will likely be taken positively by markets based on the ‘bad news, good news’ dichotomy, with markets seeing weak data as supporting the potential for a Fed pivot on rate rises.

Overnight Headlines

  • Fed’s Powell Signals Fed Prepared To Slow Rate-Rise Pace In December

  • Fed’s Cook Says Smaller Rate Moves May Be Prudent Given Lags

  • US Economic Growth Slowed This Fall, Fed’s Beige Book Says

  • US House Votes To Block Rail Strike, Mandate Paid Sick Leave

  • Beijing City To Let Some Low-Risk Covid Patients Home Isolate

  • Beijing Sees Record 5,006 New Infections As Outbreak Persists

  • China’s Factory Activity Shrinks In Nov Amid Widespread Covid Curbs

  • Japan Firms Rising Capex Fuels Hopes For Smaller GDP Contraction In Q3

  • Japan’s Factory Activity Shrinks For First Time Nearly 2 Years

  • BoJ Policymaker Vows To Keep Ultra-Low Rates Until Wages Perk Up

  • Dollar Sinks To 3-Month Low Vs Yen As Powell Says Fed To Go Slow

  • Oil Dips On OPEC+ Uncertainty; Easing China Covid Curbs Cap Declines

  • US Stocks Record First Back-To-Back Monthly Gains Since 2021

  • Chinese Stocks Add To Historic Rally As Reopening Signs Grow

  • Tesla Is Planning A Massive Output Out Of Giga Texas In Q1 2023

  • Musk Says Apple Isn’t Removing Twitter App, Easing Standoff

  • TSMC Plans To Make More Advanced Chips In US At Urging Of Apple

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 4050

Technicals

  • Primary support is 4050

  • Primary upside objective is 4120

  • Next pattern confirmation, acceptance above 4050

  • Failure below 3930 opens a test of 3900

  • 20 Day VWAP bullish, 5 Day VWAP bullish

EURUSD Bias: Bullish Above Bearish below 1.0340

Technicals

  • Primary support is 1.0340

  • Primary upside objective is 1.0620

  • Next pattern confirmation, acceptance above 1.0485

  • Failure below 1.03 opens a test of 1.0220

  • 20 Day VWAP bullish, 5 Day VWAP bullish

Today’s New York Cut Option Expiries: EUR/USD: 1.0300-10 (1.58BLN), 1.0350 (393M), 1.0385 (256M), 1.0400 (275M), 1.0450 (212M), 1.0500-05 (556M) (477M), 1.0525 (246M), 1.0550 (261M), 1.0600 (1.2BLN)

GBPUSD Bias: Bullish Above Bearish below 1.1950

Technicals

  • Primary support is 1.1950

  • Primary upside objective 1.22

  • Next pattern confirmation, acceptance above 1.21

  • Failure below 1.19 opens a test of 1.1770

  • 20 Day VWAP bullish, 5 Day VWAP bullish

  • Today’s New York Cut Option Expiries: 1.1890 (309M), 1.1990-00 (359M)

USDJPY Bias: Bullish above Bearish Below 140

1.36 Target Achieved, New Pattern Emerging

Technicals

  • Primary resistance is 140

  • Primary downside objective is 135

  • Next pattern confirmation, acceptance below 136

  • Acceptance above 140 opens a test of 142

  • 20 Day VWAP bearish, 5 Day VWAP bearish

  • Today’s New York Cut Option Expiries: 137.00 (215M), 137.50 (250M), 137.90 (290M)

AUDUSD Bias: Bullish Above Bearish below .6650

Technicals

  • Primary support is .6650

  • Primary upside objective is .6900

  • Next pattern confirmation, acceptance above .6775

  • Failure below .6660 opens a test of .6600

  • 20 Day VWAP bullish, 5 Day VWAP bullish

  • Today’s New York Cut Option Expiries: 0.6800 (300M)

BTCUSD Bias: Intraday Bullish Above Bearish below 16500

17100 Target Achieved, New Pattern Emerging

Technicals

  • Intraday 16500 is primary support

  • Primary upside objective is 18000

  • Next pattern confirmation, acceptance below 17200

  • Failure 16400 opens a test of 16000

  • 20 Day VWAP bearish, 5 Day VWAP bullish