The market mood improves on hopes zero COVID will soon end
DAX=> The index steadies at 14400
BTC/USD =>The cryptocurrency rises towards 16.5k
USD/CAD=> The pair falls below 1.3450
DAX rises ahead of inflation data
The DAX is holding steady on Tuesday after losses of 1% from the previous session amid surging China COVID cases, more lockdown restrictions, and widening social discontent. Lockdown restrictions in China in the pandemic and the resultant supply chain disruptions and bottlenecks were key contributors to soaring global inflation. The overriding concern was that more lockdowns in China could prolong supply chain bottlenecks and keep inflation high. Today the mood has improved, and stocks in China surged amid optimism that the protests could bring about a sooner end to zero-COVID. German inflation data will be in focus and is expected to show that inflation slowed in November to 11.3% from 11.6%. Hotter-than-forecast inflation could raise concerns over how aggressively the ECB will need to raise interest rates and hurt demand for stocks.
Where might the oil price head to?
The DAX ran into resistance at 14580 and rebounded lower, bringing the RSI out of overbought territory but still well above 50. The 50 sma appears to be crossing above the 100 sma in a bullish signal. However, the bearish engulfing candle could also keep sellers hopeful of further downside. Sellers could look for a move below 14140, the mid-November low. Buyers could look for a move over 14580 to extend the bullish move towards 14700, the June high.
BTC/USD recovers ahead of China COVID announcement
After spending much of Monday in the red, BTC/USD is rising and trades around 1.5% higher at the time of writing. The improved market mood ahead of an imminent COVID announcement in China is boosting risk sentiment and riskier assets across the board, even as the industry continues to assess the fallout from FTX. Crypto lender BlockFi filed for Chapter 11 bankruptcy as the latest victim of contagion within the industry. There could still be more to follow in the coming weeks. Looking ahead, developments in China and US consumer confidence data will be in focus.
CAD looks to GDP data as oil rebounds
USD/CAD rose to a two-week high on Monday on risk aversion and despite dovish Federal Reserve commentary. Protests in Chia furled risk aversion on concerns that the zero-COVID strategy could derail the global economy. Meanwhile, New York Fed President John Williams said that the Fed could cut interest rates next year in a dovish comment which pulled the pair off the daily high. Today the mood has improved, and oil is rebounding on speculation that OPEC+ could cut output. Datawise, the focus is on Canadian GDP, which is expected to show that the economy grew at 0.4% QoQ in Q3, a slower pace than the 0.8% record in Q2, but still showing resilience amid rising prices and high inflation. More recent data, such as retail sales and factory sales in October, have also supported the view that business activity and household spending remain resilient.
|CAD Q3 GDP QoQ||Expected: 0.4% (0.4%)||Previous: 0.8%|
Support could be seen at 1.33 (round number) and 1.3240 (November low).
Resistance could be seen at 1.3495 (weekly high) and 1.3565 (50 sma).