A1 Trading Company

December 4, 2023

Big News for AUD, CAD & USD Early This Week

Frank Cabibi

The RBA statement, BOC statement & US PMI are to report in the first three trading days this week. Australia and Canada are expected to keep rates the same, while US PMI is looking to see an increase this month.

EdgeFinder Analysis

GU is now a strong bullish score on the EdgeFinder at +10. Risk-off assets such as this one have been finding some months of upside. As we roll into a new month, however, there seems to be a bit of a lull in the markets.

There are some worries as to whether PMI numbers and NFP come in higher as expected. According to the Fed, it still is pretty clear that their stance hasn't changed around monetary policy and inflation. So, the most likely scenario seems to be the currently high rates for longer.

After busting through all time highs, the metal proceeded to pull all the way back on a nearly 6% drop from the highs and 2% from the open. When you see a run like this, it becomes increasingly hard to ride the wave of momentum for the past month.

It may be time for gold to take a breather before we get another buying opportunity. Looking forward into the week, stronger PMI and NFP this Friday would not be good for the metal either as it tends to find strength in economic weakness.

AUDCAD is now sitting at a weaker bullish reading today after being a strong bullish setup in November. Both central banks are expected to maintain current rates and likely have similar policy statements about future hikes.

It appears that most countries cannot afford another rate hike due to rising borrowing costs and diminishing margins over time. This month is historically a positive one to cap off the year, but volatility may be limited after the rate decisions.

Retail Spotlight

CHF is retail's most shorted asset while the indices and gold are mixed. Bitcoin is being heavily shorted after running up into the $40k level.

Smart Money Spotlight

Pound was the most longed currency from the smart money side. US30 (Dow Jones) and gold were the runner ups. USD, JPY and oil were the most shorted assets in terms of money flow from last week.

Fundamental Spotlight

The labor study on the indices is a strong bearish signal due to falling NFP, higher jobless claims and higher UE rates. In general, these events are not good for the stock market. However, lower jobs numbers have been interpreted as bullish SPX for the hopes of ending monetary tightening from the Fed. So if NFP beats, the score will change positive, but it may be a mixed reception from investors.

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