November 2021 Macro Market Commentary

Bitcoin –

Bitcoin set another new all time high in November at $69,000 after setting a new high in October. The trend higher could be maintained with a higher low in December above the September low at $39,600 followed by price action above the November high.

• Goldman Sachs is exploring bitcoin collateralized loans without holding bitcoin on their balance sheet through a tri-party repurchase agreement according to CoinDesk. Goldman Sachs trades in regulated bitcoin futures and sees opportunities for cryptocurrency options markets to develop for hedging purposes as revealed in a CoinDesk panel discussion attended by Andrei Kazantsev, Global Head of Crypto Trading.
• While the United States Securities and Exchange Commission (SEC) has denied approval of WisdomTree’s application for a spot bitcoin exchange traded fund (ETF), it has not stopped the firm from launching three physically backed cryptocurrency basket exchange traded products (ETPs) on Swiss exchange SIX and German exchange Deutsche Boerse namely the WisdomTree Crypto Market (BLOC), Wisdomtree Crypto Altcoins (WALT) and the WisdomTree Crypto Mega Cap Equal Weight (MEGA).

DAILY TREND: UP

On 10th November, bitcoin set a new all-time high at $69,000 and exceeded the high that was set only in October.

XBT retraced to around $52,000 where it found some support and could find support around $42,000 which will have to hold to maintain its upward trend.

XBT turned its correlation to the U.S. Dollar Index ® negative this month.

XBT closed the month at $57,127 with a — 8.5% change from the month prior and -17.2% from the new high.

UPCOMING HIGH IMPACT EVENTS

• No major events listed

US Dollar –

The U.S. Dollar Index ® (USDX) closed +1.99% in November at 96.00, with a strong month of positive trading, finally breaking through the previous resistance area created September 2020 at 94.33–94.74 surging to a new 16-month high at 96.94.

• Nonfarm Payrolls data published by the U.S. Bureau of Labor Statistics on 5th November showed October payrolls increased by 531,000 which was beyond expectations estimated at an increase of 425,000 jobs. September payroll data was revised higher to 312,000 from 194,000. The USDX rose on this positive news reaching a fresh high for the year at 94.62 before pulling back to close slightly down for the day -0.03%.
• Consumer Price Index (CPI) data released on 10th November showed CPI all items at 6.2% posting the largest 12-month increase in 21 years (since the period ending November 1990). Prices for all items less food and energy rose 4.6% over the last 12 months, the largest 12-month increase since the period ending August 1991. The USDX acted positively on this news as demand for the dollar against major currencies increased and the USDX rallied to close at 94.85 +0.95% consuming the previous 3 days of weakness.
• FOMC Minutes released on 24th November provided further information based on the Federal Open Market Committee meeting held earlier in the month (2nd -3rd November). Progress had been made towards the Committee’s goals since last December therefore it began reducing the pace of its asset purchases by $15 billion per month ($10 billion for Treasury securities and $5 billion for agency mortgage-backed securities) starting November 2021. On the release of this information the markets rallied, eventually closing for the day at 96.88 (96.875) +0.4%.

DAILY TREND: UP

INDEX WEIGHTING:
EUR 57.6% | JPY 13.6% | GBP 11.9% | CAD 9.1% | SEK 4.2% | CHF 3.6%

The U.S. Dollar Index ® started November with a slightly bearish tone after the market tested the highs of the last trading day of October where the market had just fallen short of an area of resistance at 94.33–94.74 (shown on a weekly chart).

As the market approached the area selling pressure came in and even positive PMI data published on 1st November was not enough to drive the market higher. The market closed at 93.88 for the first day of trading in November -0.26% for the day.

The following few trading days in November were inside days as the U.S. Dollar Index ® failed to break the high or low set by the first trading day of the month. The market traded sideways with an area of resistance just above and support from the Daily 10 SMA below. It took until 4th November for the market to finally break through with a bullish move, but this again faltered at the resistance area of 94.33–94.74 pulling back slightly towards the end of the day printing a 0.51% gain.

Nonfarm Payrolls released on 5th November reported an increase of 531,000 jobs created in October beating expectations along with additional news that September data was revised higher. This positive news led to a surge in buying after the data was released pushing the U.S. Dollar Index ® to a new high for 2021 at 94.62, although again the resistance area proved to be a challenge and excess selling pressure eventually came in. The U.S. Dollar Index ® posted a slight loss of 0.03% for the day.

The U.S. Dollar Index ® continued to show weakness during the following days falling 0.79% from the highs before finding a small pocket of support 93.93–93.82 seen on a 4-hour chart that also coincided with a 4-hour 100 SMA and Daily 20 SMA giving the U.S. Dollar Index ® the strength it needed to take a bounce upwards.

Consumer Price Index data out on 10th November showed the all-items index increased by 6.2% posting the largest 12-month increase in 21 years (since the period ending November 1990). The index for all-items less food and energy rose 4.6% over the last 12-months continuing to highlight the inflationary pressures and concerns of further price rises. On this news, the U.S. Dollar Index ® had the biggest daily gain at 0.95% of the year so far, blasting through the resistance area 94.33–94.74 that had been challenged on multiple occasions during the past 3-months.

The U.S. Dollar Index ® continued to show strength the following day making new year highs and this was further extended a few days later with positive Retail Sales data (for October) released on 16th November. Figures released showed a rise of 1.7% (Month on Month), the strongest gain seen since March this year surpassing the forecast of 1.4%. Early holiday shopping and an increase in gasoline prices have driven much of the gains. This news was welcomed by the markets and the U.S. Dollar Index ® posted a 0.53% gain for the day.

Early trading on the 17th November saw the U.S. Dollar Index ® drop from a newly tested area of resistance at 96.00–96.20 formed on a Daily chart from July 2020. The market failed to close above the upper price range and the bears regained control sending the U.S. Dollar Index ® lower to close down for the day at 95.82 -0.09%.

After two consecutive bearish days, the bulls managed to regain control and the U.S. Dollar Index ® continued its bullish move helped by the FOMC statement release on 24th November providing an insight into the meeting held earlier in the month whereby the Fed announced the decision to reduce tapering effective November 2021. The four-day rally saw an increase of 1.49% in the U.S. Dollar Index ® and a new 16-month high at 96.94. The four-day bullish run ended as the U.S. Dollar Index ® reached another area of resistance at 96.65–97.81 evident on a weekly chart formed in July 2020.

The 26th November saw the biggest down day for the U.S. Dollar Index ® (as a percentage of price) since May 2021 as the bears stepped into the markets at this weekly resistance area, combined with potential profit taking from the prior day’s rally and falls in treasury yields. The U.S. Dollar Index ® posted a loss of 0.76% for the day.

On the last trading day of the month, the U.S. Dollar Index ® retested this resistance area and the bears returned. The U.S. Dollar Index ® dropped significantly from this area but was propped up by buyers willing to get into the U.S. Dollar from the 20 SMA and the market bounced upwards closing the day at 96.00 down 0.36%.

The U.S. Dollar Index ® ended November positive closing at 96.00 +1.99% (2% rounded). Overall, the weekly and daily uptrend remain, with a fresh 16-month high posted at 96.94.

UPCOMING HIGH IMPACT EVENTS

• Wed 1 Dec ADP Employment Change (Nov)
• Wed 1 Dec ISM Manufacturing PMI (Nov)
• Fri 3 Dec Nonfarm Payrolls (Nov)
• Fri 3 Dec ISM Services PMI (Nov)
• Fri 10 Dec CPI (Nov)
• Fri 10 Dec Michigan Consumer Sentiment (Nov)
• Thr 16 Dec Fed Interest Rate Decision
• Thr 16 Dec Fed Monetary Policy Statement
• Thr 16 Dec FOMC Economic Projections
• Thr 16 Dec FOMC Press Conference
• Thr 16 Dec Retail Sales (Nov)
• Wed 22 Dec GDP Annualized (Q3)
• Tue 28 Dec Durable Goods Order (Nov)

South Korean Won –

The South Korean Won closed the month at 1,183 KRW against the U.S. Dollar as the Won retraced after it reached a high of 1,202 continuing its weakness against the U.S. Dollar.

• Consumer Price Index (CPI) data released on 1st November showed inflation reached 3.2% in October (year on year) with the likelihood inflation will continue to increase.
• The Bank of Korea (BOK) raised its benchmark base rate by 25 bps to 1.00%, the second increase this year driven by inflationary concerns with Governor Lee Ju-yeol not ruling out a possible hike in Q1 2022.

DAILY TREND: UP

Early November the USDKRW moved higher showing continued weakness in the South Korean Won (Quote currency in the pairing) until on 9th November the pair pushed into an area of resistance observed on a daily chart from July 2020 with a range of 1,199–1,205. The pair reacted from the selling pressure and dropped from a high of 1,202 to close the day at 1,178 down 0.21%.

Even after significant weakness showed for the day the pair still failed to reach October lows of 1,165 and moved upwards.

During the following two weeks the U.S. Dollar steadily fought to gain ground and closed higher week on week, however after the U.S. Dollar Index ® reached an area of resistance on 26th November the U.S. Dollar began to sell off and this was translated into this pair. The last few days of the month the USDKRW dropped as the Korean Won started to claw back some of the losses from earlier in the month.

Overall, the USDKRW continues the uptrend in the weekly and daily charts, which we have seen throughout 2021. From a January low of 1,080 to November’s high a gain of 11% in the USDKRW showing how much weakness the Won has seen this year.

The USDKRW pulled back slightly the last few trading days of November to close at 1,183 with a +0.7% change for the month.

UPCOMING HIGH IMPACT EVENTS

• No major events listed

Singapore Dollar –

The Singapore Dollar closed the month at $1.3642 against the U.S. Dollar after the USDSGD reached a high at 1.3749 to end the month +1.13%.

• Singapore Purchasing Manger’s Index (PMI) data published on 2nd November held steady at 50.8, coming in slightly above expectations of 50.6. This is an important measure of the health of Singapore’s economy as the Manufacturing sector whilst not the largest sector, is still seen as a leading indicator when predicting economic growth or recession. The latest data is showing continuing expansion albeit slight.
• The Ministry of Trade and Industry on 24th November announced that GDP is expected to come in at ‘around 7.0%’ for 2021. This is within the growth outlook policy makers set for 2021. The latest figures announced in November showed GDP continues to expand, posting a growth of 7.1% Year on Year, beating expectations of 6.5%.
• Industrial Production data released on 26th November by the Singapore Department for Statistics showed an increase in manufacturing output surpassing expectations and beating the negative data previously recorded in September. Reports published an increase of 16.9% Year on Year (October data) and seasonally adjusted Month on Month data with an increase of 2.4% (October data).

DAILY TREND: UP

The USDSGD throughout November has seen a week on week increase from the opening price of 1.3478. This signifies continued U.S. Dollar strength and Singapore Dollar weakness (Quote currency in the pairing).

Looking at a daily chart the pair started the month within a sideways consolidation (1.3454–1.3545) followed by an attempted breakout to the upside on 11th November, although it failed to find enough strength to close above. After a retest, back into this range on 15th November the USDSGD took a bounce from the convergence of the Daily 10 and Daily 50 SMA and strength started to flow into the pair as the bulls took control. The U.S. Dollar began to gain strength leading to further Singapore Dollar weakness.

On 24th November the USDSGD convincingly broke through an area of resistance on a Daily chart at 1.3615–1.3656 after a series of earlier reports coming out in the U.S. increasing the demand for the U.S. Dollar.

The USDSGD reached a new 14-month high at 1.3744 before bears stepped in and the market pulled back enabling the Singapore Dollar to regain some strength. This was short lived as the USDSGD found the Daily 10 SMA act as support once again.

The USDSGD closed at 1.3642 with a +1.2% change.

UPCOMING HIGH IMPACT EVENTS

• No major events listed

Chinese Yuan –

The Chinese Yuan Renminbi continued to gain strength against the U.S. Dollar for the fifth consecutive month and closed the month at 6.3640 CNY against the U.S. Dollar.

• October’s Caixin Purchasing Manger’s Index (PMI) data released on 1st November showed better than expected results for Manufacturing PMI and Service PMI printing at 50.6 and 53.8 respectively, both improvements on the prior month.
• China’s trade surplus continues to grow as China posted a record monthly trade surplus in October at $84.54 billion according to reports published on 7th November. Exports rose by 27.1% compared to October 2020 data beating expectations (but slightly down on the prior month). Exports to the U.S. and the European Union have grown the fastest this year out of the major trade partners. The U.S. trade surplus remains high although slightly down to $40.7 billion compared to $42 billion posted in September.
• Retail Sales data released on 15th November saw an increase at 4.9% (October Year on Year) which exceeded expectations and was up on prior months release of 4.4%.

DAILY TREND: DOWN

The USDCNH started the month with the Yuan (Quote currency in the pairing) steadily gaining strength against the U.S. Dollar, continuing the momentum we had seen in October.

The high printed on the last trading day in October of 6.4103 was challenged on multiple occasions in the early part of November trading but the USDCNH failed to break this and ultimately moved lower. At the same time, the Daily 20 SMA appeared to act as resistance, although by 10th November the pair managed to close above.

The bears continued the selling pressure and the pair slowly moved downwards printing a fresh low for the month on 16th November at 6.3616. With the Yuan being the quote in the pair, this signified the strongest the Yuan had traded against the U.S. Dollar since June 2021.

The USDCNH bounced off a pocket of support on a Daily chart at 6.3714–6.3526 which had been tested previously on 17th June and 19th October where buyers stepped in and this held again on 16th November. Again, this area was challenged on 30th November although the move away this time did not have the same degree of support.

The USDCNH closed at 6.3640 down by -0.6%.

UPCOMING HIGH IMPACT EVENTS

• Thr 9 Dec CPI (Nov)
• Thr 16 Dec Retail Sales (Nov)
• Tue 21 Dec PBOC Interest Rate Decision
• Fri 31 Nov Non–Manufacturing PMI & NBS–Manufacturing PMI (Nov)

Asia Tech –

Technology stocks in Asia represented in the ICE Asia Tech 30 Index managed to move higher in the first two weeks of November before faltering to end the month lower as Covid-19 variant Omicron fears hit the financial markets.

• Chinese stocks faced selling pressure in November with Alibaba Group Holding Ltd ending 22% lower from the prior month. Bilibili Inc and Baidu Inc also closed weak 12.1% and 10.5% respectively. Strong stocks included JD.com which ended 9.5% higher in November and Netease Inc 9.7% higher.
• Taiwan components of the index remained resilient as financial institutions focused their attention on buying industrial-related stocks in the petrochemical, shipping and steel industries.
• Interest in Korean technology stocks continue as fears abate around semiconductor chip shortages especially from foreign investors.

DAILY TREND: DOWN

ATI made a higher high and two higher lows in November and could indicate a change in trend to up if price clears $4,800 and is able to maintain momentum above that level.

ATI had traded within a range between $4,900 and $4,200 since mid-August.

ATI closed the month at $4,463 with a -2.4% change.

UPCOMING HIGH IMPACT EVENTS

• Thr 9 Dec China CPI (Oct)
• Thr 21 Dec PBOC Interest Rate Decision
• Fri 31 Dec China Non-Manufacturing PMI

Oil –

Brent crude oil retested the range below the three-year high of $85.77 to end the month 16.0% lower versus October’s close at $69.23. Prices are lower from fears of potential reduced demand which could result from the new Covid-19 variant Omicron and from the release of oil reserves by countries around the world to dampen the impact of rising prices at the pump hitting consumers.

• Brent crude oil retraced from the high set in October as countries addressed inflation concerns by announcing their intention to release oil from their strategic reserves as OPEC+ producers ignored calls for more crude. The United States plans to release 50 million barrels of oil and coordinated with China, India, South Korea, Japan and the United Kingdom to release oil from their national reserves to meet domestic demand and cool price rises.
• Iran’s oil ministry announced plans to raise its crude oil capacity to 4 million barrels per day by March 2022, returning to levels not seen since before the United States withdrew from the nuclear deal and re-imposed sanctions on the country’s crude sales in 2018. Iran is negotiating for all sanctions imposed by the Trump administration to be removed in return for scaling back their nuclear activities.

DAILY TREND: DOWN

Brent price traded down sharply from the high of $85.77 set on 25th October. Brent remained positively correlated to the U.S. Dollar during November.

A break of the prior low at $63.00 would indicate further weakness in Brent could be expected.

Brent closed the month at $69.23 with a -16.0% change.

UPCOMING HIGH IMPACT EVENTS

• Thr 2 Dec OPEC+ policy meeting expected to maintain its outlook to increase supply of oil in August by 400,000 barrels per day through to December

Key Figures –

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TRADDICTIV · Research Team