Solid ECN - Fundamental Analysis

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US Stock Futures Rise: A Sign of Economic Optimism​

On a recent Wednesday, the US stock market showed signs of optimism before the market opened. Futures, which are contracts to buy or sell assets at a later date for a price agreed upon now, indicated an upward trend. Both the S&P 500 and the Dow Jones, two major stock market indices, were expected to rise by approximately 0.3%. The Nasdaq 100 futures, representing a third significant index, were poised to see an even more substantial increase of nearly 0.4%.
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Factors Influencing the Market​

Several factors contributed to this positive outlook. First, comments from officials at the Federal Reserve, the central bank of the United States, suggested a more accommodating monetary policy. They hinted that the period of increasing interest rates might be over, raising hopes of reduced borrowing costs in the coming year. This change in tone from the Fed can make it cheaper for individuals and businesses to borrow money, potentially stimulating economic activity.

Additionally, a decrease in Treasury yields, which are the returns on government securities, was seen as favorable for stocks. Lower yields often make stocks more attractive to investors compared to bonds.
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Key Economic Indicators and Corporate News​

Investors were also anticipating the release of revised figures for the US Gross Domestic Product (GDP) growth and initial data on corporate profits. GDP growth rate is a crucial indicator of the overall health of the economy, reflecting the total value of goods and services produced over a specific period. Positive GDP growth suggests a thriving economy, while a decline can indicate economic challenges.

On the corporate side, General Motors (GM) saw its shares jump over 5% in premarket trading. This surge was a reaction to the company's announcement of a $10 billion share buyback program, indicating confidence in its future financial performance. In contrast, shares of Las Vegas Sands, a major hospitality and gaming company, fell by about 5% after news that its largest shareholder planned to sell $2 billion worth of shares.
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Assessing the Economic Implications​

The overall sentiment in the US stock market on this day was positive, which is generally beneficial for the economy. Rising stock prices can increase wealth for investors and boost consumer confidence, leading to more spending. When companies like GM announce significant share buybacks, it often reflects their confidence in their financial health, which can further stimulate economic growth.

However, large sales of shares, like in the case of Las Vegas Sands, can sometimes raise concerns about a company's future prospects, potentially impacting investor confidence.
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Impact on the Economy​

• Positive Indicators: Higher futures, dovish Federal Reserve comments, and rising corporate shares like those of GM are all positive signs for the economy. They indicate investor confidence and a potentially growing economy.​
• Cautionary Signs: Large share sales and fluctuations in key economic indicators like GDP growth and corporate profits require careful monitoring as they can signal shifts in economic stability.​

 

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EURUSD: Testing the Waters at 1.096

In the EURUSD market, the bears are currently putting pressure on the 1.096 support level. At the same time, the RSI indicator has exited the overbought zone, yet there's a noticeable divergence present. If the EURUSD manages to stay above 1.0963, the market sentiment is likely to remain bullish.

However, if the price of EURUSD dips below 1.0963, this bullish trend may pause. In this case, the focus will shift to how the market responds to the pivot point, which is also backed by the lower boundary of the bearish channel.​

 

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USDCAD Eases Selling Pressure, Eyes 1.35 Level

Today, the USDCAD experienced a reduction in selling pressure, settling below the flag's median line. The pair is now finding its footing below the middle line, around the 64.8% Fibonacci level on the 4-hour chart. A bearish movement towards 1.35 is anticipated, matching the 78.6% Fibonacci level.

A closer look at the 4-hour USDCAD chart reveals a divergence in the Awesome Oscillator with its bars turning green, while the RSI indicator suggests the likelihood of a price correction. The pair is currently restrained by the 23.6% Fibonacci level, which is preventing it from recovering more of its recent losses.

As long as it stays below this level, the price is expected to fluctuate within the 1.35 to 1.36 range.

 

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How Hong Kong’s Retail Sector Slowed Down in October​

In October 2023, Hong Kong’s retail sector grew by only 2.7% compared to the same month last year. This was a big drop from the 10.0% growth rate in September 2023. It was also the lowest growth rate since December 2022.

One of the main reasons for this slowdown was the decline in sales of some essential items, such as food, drinks, tobacco, fuels, and consumer durable goods. These items are usually bought by local residents for their daily needs. However, due to the high inflation and the COVID-19 pandemic, many people reduced their spending on these items.

Another reason was the weak demand for luxury goods, such as jewellery, watches, clocks, and valuable gifts. These items are usually bought by tourists and wealthy customers. However, due to the travel restrictions and the political unrest, many tourists and investors stayed away from Hong Kong.

On the other hand, some categories of retail sales still performed well in October 2023. These included clothing, footwear, and other consumer goods. These items are usually bought by young and fashionable customers. They also benefited from the online shopping platforms and the festive promotions.

Compared to September 2023, retail sales increased by 6.1% in October 2023. This was mainly because of the seasonal factors and the low base of comparison. However, this increase was not enough to offset the year-on-year slowdown.
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The Impact of Retail Sales on the Economy​

Retail sales are an important indicator of the economic health of a country or a region. They reflect the level of consumer confidence, income, and spending. They also affect the employment, tax revenue, and business activity of the retail sector.

Therefore, the slowdown in retail sales in Hong Kong could have a negative impact on the economy. It could reduce the income and profits of the retailers and their suppliers. It could also lower the tax revenue and the public spending of the government. It could also discourage the investment and the innovation of the retail sector.

However, the slowdown in retail sales could also have some positive effects on the economy. It could encourage the consumers to save more and spend less. It could also motivate the retailers to improve their efficiency and quality. It could also stimulate the diversification and the transformation of the retail sector.​

 

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Lithium Prices Continue to Fall​

The price of lithium carbonate, a key ingredient for making batteries, has dropped to CNY 120,000 per tonne. This is the lowest price since August 2021. The reason for this price drop is that there is more lithium than people need. People are not buying as many electric vehicles (EVs) as expected in China, which is the biggest market for lithium batteries. Instead, battery makers are using up their existing stocks of lithium, which they bought when the Chinese government gave them a lot of subsidies in 2021 and 2022. Some experts now think that there will be enough lithium for everyone until 2028. This is a big change from the previous predictions that there would be a shortage of lithium soon. In November 2022, the price of lithium was as high as CNY 600,000 per tonne.

The situation is not much better in other countries. In the US, people are not buying many EVs either, because they have to pay more interest on their loans. This makes them less willing to spend money on big items like cars. Meanwhile, the production of lithium is still going strong. Mineral Resources, the second-largest producer of spodumene, a type of lithium ore, plans to double its output in Western Australia next year.
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The Effect of Lithium Prices on the Economy​

Lithium prices are an important indicator of the economic health of the battery and EV industries. They show how much demand and supply there is for lithium, and how much profit and cost there is for the producers and consumers of lithium. They also affect the employment, tax revenue, and business activity of these industries.

Therefore, the fall in lithium prices could have a negative impact on the economy. It could reduce the income and profits of the lithium miners and battery makers. It could also lower the tax revenue and the public spending of the governments that support these industries. It could also discourage the investment and the innovation of these industries.

However, the fall in lithium prices could also have some positive effects on the economy. It could encourage the consumers to save more and spend less. It could also motivate the lithium miners and battery makers to improve their efficiency and quality. It could also stimulate the diversification and the transformation of these industries.​

 

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EURUSD

The EURUSD currency pair's downtick slowed near the lower line of the bullish flag. This pivotal mark is additionally supported by the Ichimoku cloud. For the bullish trend to maintain, the price should hold above the cloud and/or the 23.6% Fibonacci level. In this case, we can expect the EURUSD to continue its upward trend inside the flag.

To trigger a long trade on the pair, it is recommended to patiently wait for the technical indicators to support the bullish scenario. The Stochastic oscillator hovers in the oversold zone, while the ADX indicator is about to cross above the 20 level. While the ADX indicator demonstrates that the trend is lacking momentum, the stochastic oscillator or RSI should cross above the signal lines.

Conversely, the bullish flag will be invalid if the bears close and stabilize the price below the 23.6% Fibonacci level. Please note, this event won't invalidate the bullish trend as long as the EURUSD hovers above the Ichimoku cloud.​

 

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UK Housing Market Sees Hope: Latest Trends in House Prices​

In recent months, the housing market in the United Kingdom has seen a notable shift. As of November 2023, the Nationwide House Price Index, a key indicator of house price trends, reported a year-on-year decrease of 2%. This figure is particularly interesting as it's the smallest drop in house prices we've seen in the past nine months, since February. What's more, this reduction is less than what experts had predicted, which was a decline of 2.3%.

Month-on-Month Changes and Economic Impacts
If we look at the month-to-month changes, there's a small but positive sign. House prices in November edged up by 0.2% compared to October, which itself had seen a 0.9% increase. This upward trend, albeit slight, is a change from the continuous decline observed over the past ten months.
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The Role of Interest Rates​

A key factor in this scenario is the change in interest rate expectations. These expectations have recently gone down, leading to a decrease in longer-term interest rates. This is important because these rates heavily influence the pricing of fixed-rate mortgages, a common choice for homebuyers.

Robert Gardner, Nationwide's Chief Economist, commented on this development. He believes that if these trends continue, they could significantly ease the financial burden on potential homebuyers. This easing could, in turn, revive activity in the housing market, which has been somewhat subdued in recent times.
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Economic Assessment: Beneficial or Detrimental?​

When assessing the economic implications of these developments, it's a mixed bag. On one hand, falling house prices can indicate a weakening economy and lower consumer confidence. On the other hand, a slower decline in prices, along with reduced interest rates, could encourage more people to enter the housing market, potentially stimulating economic activity. This could be beneficial for the economy, as a robust housing market often reflects and contributes to overall economic health.​

 

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France's Manufacturing Sector Faces Continued Challenges in 2023

In November 2023, the French manufacturing sector faced its tenth straight month of downturn, indicating persistent challenges in the industry. According to the S&P Global France Manufacturing PMI, the index saw a slight increase to 42.9, a marginal improvement from the preliminary estimate of 42.6 and a small step up from 42.8 recorded in the previous month. Despite this slight uptick, the situation remains concerning as this represents the most significant contraction since May 2020.


Factors Behind the Contraction

This continued decline can be attributed to a notable drop in demand. The new orders that factories received kept falling, mostly due to overall weaker market conditions. As a consequence, manufacturing output saw its sharpest decline since May 2020. This decline in production and orders has led to various repercussions within the manufacturing sector. Factories have been reducing their workforce, cutting down on purchasing activities, and experiencing significant drops in their stock of inputs, the largest since May 2020.


Price Trends and Future Outlook

On a somewhat positive note, the rate of input price inflation has stabilized, following a six-month trend of decreasing prices. However, looking forward, the mood among manufacturers remains overwhelmingly gloomy. With expectations of reduced orders, especially from the automotive and construction sectors, there's a strong sense of pessimism for the year ahead.


Economic Implications

The prolonged contraction in France's manufacturing sector is a concern for the economy. A healthy manufacturing sector is often a sign of a robust economy, as it creates jobs, stimulates trade, and contributes to GDP growth. The current downturn could lead to job losses, reduced consumer spending, and a slowdown in economic growth. However, the stabilization in input prices may provide some relief to manufacturers, potentially easing cost pressures.

 

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Bitcoin Bulls Break Resistance, Eye $40,000 Next

The price of bitcoin climbed over the 38,250 level in the latest trading session, continuing its bullish trend. However, the bitcoin bulls are facing the middle line of the bullish flag as their next obstacle. The technical indicators show that the RSI still has some space to reach the overbought zone. At the same time, the awesome oscillator bars changed to green, indicating the strength of the upward movement.

The middle line of the flag is unlikely to resist the buying force. As a result, analysts at FxNews predict that the BTCUSD price will go up and target the $40,000 mark, which matches the top line of the flag.

This analysis is valid as long as the pair is trading within the bullish flag.​

 

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USDCAD Downtrend Continues, Fibonacci Levels in Focus

The downward trend of USDCAD has reached 1.352, which pushed the Stochastic oscillator into the oversold zone. At the same time, the RSI indicator is also approaching the oversold level, which suggests that the pair may enter a consolidation phase in the next week.

In this case, the pair may face the %38.2 level of the fibonacci as a resistance. This level could attract more sellers to put more pressure on the pair and extend the downtrend to the %50 level Fibo and then the %61.8 level.​

 

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Spain's Tourism Bounces Back to Pre-Pandemic Heights

In October 2023, Spain saw a significant surge in foreign tourist arrivals, marking a 13.9% increase compared to the previous year, with a total of 8.2 million visitors. This figure not only surpasses last year's statistics but also shows a 7.8% growth from the pre-pandemic levels of October 2019, highlighting a robust recovery in the tourism sector.

The majority of these tourists came from the United Kingdom, accounting for 1.7 million visitors (12.2% increase), followed by Germany with 1.1 million visitors (8% increase), and France with 990,000 visitors (9% increase). Additionally, there was a significant rise in visitors from the United States (25.7% increase), the Netherlands (19.6% increase), and Ireland (15.1% increase), indicating a growing global interest in Spanish destinations.

Catalonia emerged as the most popular region, attracting 20.4% of the total tourists. Reflecting on the first nine months of 2023, Spain welcomed 74.7 million international visitors, which is 18.2% more than in 2022 and marginally higher (0.2%) than the pre-pandemic figures of 2019. These numbers signify a strong recovery and a positive outlook for Spain's tourism industry, re-establishing its position as a top global destination.​

 

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EURUSD at a Crossroads: Resistance Clash and Trend Predictions

The EURUSD pair is approaching a critical point, the 23.6% resistance level, which interestingly aligns with the Ichimoku cloud. Currently, the technical indicators are hinting at a potential sell-off. If the price manages to remain under the cloud, there's a strong chance we'll see a further downward trend, potentially reaching the 38.2% level, and maybe even the 50% mark.

However, there's another side to consider. Should the EURUSD pair successfully break through the 23.6% resistance and maintain its position above this level, it would suggest a shift in momentum. In such a scenario, the current bearish outlook would no longer be valid, indicating a possible change in trend.​

 

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Latest on GBPUSD: Bullish Flag & Ichimoku Insights

The GBPUSD currency pair is trading inside the bullish flag and above the Ichimoku cloud, indicating a bullish trend. However, the ADX indicator is approaching the 20 level, which suggests that the trend is weakening and the pair is losing momentum.

We expect the value of GBPUSD to rise again and target the upper band of the bullish flag, which is a continuation pattern of the previous uptrend.

On the other hand, the bullish scenario would be invalidated if the GBPUSD price falls below the cloud, which would signal a bearish reversal.​

 

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EURJPY Dips Below Key Level: A Closer Look

We've noticed a significant drop. Recently, it slipped under the important support mark of 159.37.

Looking at the Relative Strength Index (RSI), it's clear that there's a downward trend in momentum. This hints that we might see this decline continue. We're expecting the pair to keep dropping, possibly reaching the next support point at 158.32. Interestingly, this level is right where the lower edge of the bearish flag pattern lies. This pattern often signals that the current downward trend could keep going.​

 

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USDJPY's Bullish Stance Meets Resistance

Currently, the USDJPY pair is positioned within a bullish flag formation. Yet, there's been a notable change - the price has fallen below the Ichimoku cloud, hinting at a potential shift in the market's direction. As of now, the pair is undergoing a test at the lower boundary of this flag, and the ADX indicator is suggesting that we may see significant fluctuations ahead.

If the price drops past this crucial point, it's likely we'll see a further slide down to the 144.5 support level. This would be a key movement to watch for.

On the other hand, if the bulls succeed in keeping the price stable above 146.2, it could signal a continuation of the upward trend. In such a scenario, the pair might target the 23.6% mark on the Fibonacci retracement scale, possibly even stretching to the 38.2% level.​

 

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Canadian Stocks Dip Slightly on Commodity Price Declines

On Monday, Canadian stocks saw a slight downturn. The S&P/TSX Composite Index dropped a bit, staying close to the 20,500 level. This mild decline comes after reaching a ten-week high in the previous session. The fall can be attributed mainly to a significant drop in commodity prices at the start of the week. This decline particularly affected the index, which is heavily influenced by commodities.

Major energy companies felt the impact of falling metal and oil prices. Canadian Natural Resources saw a 1.6% decrease, Suncor Energy went down by 1.1%, Cenovus Energy also dropped by 1.6%, and Imperial Oil experienced a slight 0.2% loss. In the basic materials sector, there were noticeable declines as well. Wheaton Precious Metals led the way with a 1.9% fall, followed by Agnico Eagle Mines with a 1.5% drop, and Barrick Gold losing 0.8%.

However, the banking sector provided some stability. Royal Bank stood out with a 0.3% gain, TD Bank followed with a 0.4% increase, and Bank of Montreal rose by 0.9%, helping to offset further losses in the market.​

 

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European Stocks Steady as Investors Await Key Data

European stock markets showed little change on Tuesday, pausing after their recent strong performance which saw key indexes reach four-month highs. The STOXX 50 and the broader STOXX 600 both experienced a minor decline of 0.1% during morning trading. Investors are closely watching a range of economic data, including final PMI figures, Eurozone producer prices, and US job openings set to be announced later in the day.

In corporate news across Europe, several developments are drawing attention. Brenntag, the German chemical distributor, is hosting its investor day. Barclays is in the spotlight after Qatar Holding sold around £510 million of its shares at a 1.4% discount compared to Monday's closing price. Additionally, SSP Group, known for operating eateries, has resumed paying out its annual dividend. Meanwhile, pub group Marston's reported a 28% increase in annual profit, lower than expected, although its Christmas bookings have already surpassed last year's numbers.​

 

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AUDUSD Pair in a Downward Trend: What are the Key Levels to Watch?

At the moment, the AUDUSD pair is facing a significant drop of almost 0.63% on a daily basis and is approaching the support levels that are determined by the lowest points of the last day of November.

If the pair breaks below this structure, it may encounter the next support level at the 200-day exponential moving average (golden curve), which also coincides with the 61.8% Fibo retracement of the upward movement that started in October 2023. On the other hand, the main resistance level could be the local highs near the 50% Fibo retracement.​

 

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EURUSD Continues Downtrend After Consolidation

Solid ECN – The EURUSD pair keeps falling in today's market after a brief pause near the 38.2% mark of the Fibonacci retracement. The ADX indicator shows that the market is in a strong trend, as it stays above the 40 line. Therefore, we expect the EURUSD value to face more downward pressure and reach the next support at the 50% Fibo level.

 

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How OPEC+ Cuts and Middle East Conflict Affect Oil Prices

Solid ECN – Oil prices continue to go down to $72.3 per barrel on Tuesday, the lowest since five months ago. This is because people are not sure if the OPEC+ group can reduce the oil supply enough and they are worried about the lower demand for energy due to weaker data in big economies.

Last week, some OPEC+ members, such as Saudi Arabia, UAE, and Kuwait, said they would cut more oil supply by 2.2 million barrels per day, but some members have not agreed yet. Saudi Arabia’s energy minister also told Bloomberg on Monday that the OPEC+ group might keep cutting the oil supply after the first quarter if needed. However, traders are still nervous about the rising conflict in the Middle East, especially the increased fighting in Gaza over the weekend.​