Market Focus

Stocks surged at the end of the week, with major indices rallying to fresh highs as investors reacted positively to the October jobs reports, which showed a better-than-expected pickup in payroll growth and further improvement in the unemployment rate. The S&P 500 rose about 2% for the week to mark a fifth consecutive weekly gain — its longest winning streak since August 2020. The Nasdaq also jumped to a record high, boosted by tech shares, while the Dow reached a record close as well.

Meanwhile, Elon Musk’s Twitter followers have indicated that he should sell 10% of his stake in electric car maker Tesla. A majority of Musk’s 3.5 million Twitter followers have backed the move in a poll that Musk launched Saturday. The poll floated the idea of Musk selling his shares in Tesla, which is valued at about $21 billion based on 170.5 million Tesla shares he holds. About 58% of respondents backed the idea of the sale.

After the poll closed, Musk tweeted: “I was prepared to accept either outcome.”

In Sunday trading on FTX, a cryptocurrency version of Tesla’s shares recently fetched $1,138.95, 6.8% lower than Friday’s close for the real stock, suggesting Musk’s tweeting may cause the shares to fall on Monday.

While large sales by insiders are often seen as a negative signal, a sale of this magnitude won’t alter Tesla’s story in a meaningful way, said Dan Ives, an analyst at Wedbush Securities as demand remains high for Tesla shares among both institutional and retail investors. The unorthodox step of getting buy-in from fans and investors via a poll may also ease any concerns.

Main Pairs Movement

The Greenback was mixed against its G10 peers as the trading week gets underway in Sydney. The dollar’s strength shattered after the upbeat job reports, as the risk-on mood has risen, weighing on the save-heaven dollar.

EUR/USD was up 0.12% to 1.1568 after touching a year-to-date low of 1.1514 on Friday. Despite an abundance of Covid-19 shots, countries from Germany to Greece have reported record infections in recent days. GBP/USD declined a modest 0.03% to 1.3494 later in Thursday’s massive plummet. The impact of the Bank of England’s dovish statement was so huge that the pound had yet to recover from the loss.

USD/CAD held at familiar 1.2452 and closed last week up 0.6% for its third straight weekly gain. Bank of Canada Governor Tiff Macklem said that the central bank is “in control” of inflation. The November 17 CPI data will provide further insight into the bank’s statement. USD/JPY posted a 0.31% loss on Friday, plunging after the US NFP release and closing at 113.39.

Commodities ended the day in the green. Gold jumped nearly 1.5% to $1816.17 a troy ounce while crude oil posted gains as well. The WTI was last seen at $81.34, up 2.5% on Friday, and Brent was up 1.73% to $82.32.

 

Technical Analysis

GBPUSD (Daily Chart)

GBP/USD plummeted over 1.3% on Thursday after the Bank of England (BoE) voted to continue its bond-purchase program and to keep the interest rate unchanged at 0.1%. Cable extended further south on Friday and a recovery seems difficult in the short term. The pair is trading at 1.3440 at the moment of writing, and has declined 1.8% from the open price of the week.

On the technical front, after the failing attempts to breach the 20-day moving average (DMA) on Wednesday, the unstoppable downward traction has dragged Cable over the lower bound of the Bollinger Bands. Moreover, the longer-term DMAs shifted to the downside on Friday. The diving 50 DMA is endorsing the growing downtrend and could boost it with a bearish crossover of the 200 DMA. The MACD and RSI also appear bearish, and despite the huge selling pressure, the RSI indicator has not reached the oversold territory yet, suggesting the downfall may proceed.

Resistance: 1.3500, 1.3567, 1.3720

Support: 1.3410, 1.3135

 

AUDUSD (Daily Chart)

AUD/USD remains on the backfoot below 0.7400 and is looking to extend Thursday’s sell-off amid the recent strength in the US dollar against its major rivals. The Reserve Bank of Australia’s (RBA) dovish stance on the monetary policies also weighed on the Aussie, in addition to the recent plummet in commodity prices making the commodity-linked AUD less attractive.

On the other hand, the high Treasury yield levels and fresh concerns about the Chinese property sector continue to keep the greenback buoyant. The dollar index continues to hover around the highest levels throughout the year, which was last seen at 94.50.

Looking at AUD/USD’s daily chart, the price action on Friday is below all the moving averages, along with the bearish MACD histogram and RSI indicator, showing the downward traction is in charge and will prevail for some time.

Resistance: 0.7427, 0.7478, 0.7556

Support: 0.7300, 0.7220, 0.7106

 

USDJPY (Daily Chart)

USD/JPY seesawed around the familiar levels during the day, consolidating around a narrow range between 113.50 to 114.05. The pair witnessed some demand in the European session, posting a daily high at 114.03. However, after the upbeat NFP data was released, the pair plummeted around 50 pips and touched a daily low at around 113.50.

Looking at USDJPY’s daily chart, we can see the price action was simply lingering around the 76.4% to 100% Fibonacci interval since it jumped into this territory in mid-October. The pair seemed to lack the momentum to either penetrate the 76.4% support or refresh the yearly high. The technical indicators were also hovering around the average levels in this period, failing to provide insights for further directions. To the upside, the instant resistance will appear at 114.45, where the multiple October highs sit, followed by the yearly high of 114.70. On the flip side, the Fibonacci levels await, along with the daily moving averages (DMAs), especially the 200 DMA. A breach over that line may open a long-term downtrend.

Resistance: 114.45, 114.70

Support: 113.38, 112.57, 111.91