Optimistic comments from CBA Analysts favors AUD

Australian dollar inched higher against the American dollar during Tuesday Asian session. Optimistic comments from CBA Analysts and diminishing fears on Omicron variant favored the Aussie.

Analysts at Commonwealth Bank of Australia (CBA) offered an optimistic outlook for AUD/USD. “The Aussie dollar is expected to rise over 2022 to reach US78-80 cents by the December quarter on the expectation that the Reserve Bank starts to ‘normalize’ interest rates.”

“A key uncertainty could be the outcome of the Federal election due in May. While the opposition Labor Party is currently well ahead in most opinion polls, a tight result or even a ‘hung’ parliament could potentially impact investor sentiment. But a center-left government, as evidenced in the US, could see a big boost to government spending.”

Elsewhere, Recent studies from South Africa and the UK showing fewer odds of hospitalization due to the Omicron covid variant helped in diminishing market fears from the South African covid variant and in turn allowed the traders to turn towards the riskier asset – AUD.

Further, Ongoing talks over Iran’s denuclearization and a global push for peace between Russia and Ukraine also seem to have favorable impact on the trader’s sentiment. Moreover, news that the US Centers for Disease Control and Prevention (CDC) reduced the isolation and quarantine period for the general population added to the bullish bias for the AUD/USD quote.

Aussie was also favored by an uptick in Evergrande stocks on weekend news saying, the troubled China real-estate company resumed construction on nearly all of its projects with eyes on completing thousands of apartments before 2022 arrives. The stock jumped 10% initially before easing to $1.57, up 6.08% at the latest. The recent pullback in the quote could be linked to cautious sentiment ahead of two dollar-bond-coupon payments, due on Tuesday.

AUD/USD 4 Hour Chart:

Support: 0.7213 (S1), 0.7189 (S2), 0.7174 (S3).

Resistance: 0.7253 (R1), 0.7268 (R2), 0.7292 (R3).

Amidst all the catalysts favoring the Australian dollar against the American dollar, we expect a bullish trend for AUD/USD.

Slightly weaker U.S. T yields favors Gold

Gold (XAU/USD) inched higher and is trading around $1,810 during the Monday Asian session. Yellow metal is trading high as slightly weaker U.S. Treasury yields offset an uptick in the dollar.

US Dollar Index (DXY) dropped to 96.10 whereas the US 10-year Treasury yields dropped 1.1 basis points (bps) to 1.482%, stepping back from a two-week high flashed the previous day.

Upbeat spending in US favors the yellow metal. Holiday sales rose at the fastest pace in 17 years, even as shoppers grappled with higher prices, product shortages and a raging new Covid-19 variant in the last few weeks of the season, according to one spending measure. Mastercard Spending Pulse, which tracks all kinds of payments including cash and debit cards, reported Sunday that holiday sales had risen 8.5% from a year earlier. Mastercard Spending Pulse had expected a 7.4% increase.

Elsewhere, US VP Harris response optimistic on getting President Joe Biden’s Build Back Better (BBB) plan although of the latest challenges raised by Senator Joe Manchin. Goldman Sachs says, “While Congress is likely to approve some new spending on manufacturing and supply chain-related incentives, we no longer expect the Senate to pass the Build Back Better bill and the near-term spending it includes on the extension of the expanded child tax credit”

On the other hand, The escalating fears over the South African COVID-19 variant dubbed as Omicron causes fear and in turn weighs on Gold. Coronavirus cases had jumped in the West and they have recalled major activity restrictions despite the holiday season. The average number of new US coronavirus cases has shown a rise of 45% to 179,000 per day over the past week whereas the UK and France had reported a fresh high of Covid-19 daily infections, respectively crossing 122,000 and 94,000 daily cases at the latest.

The increase of the covid cases also brings the travel restrictions and limited activity during an this heaving spending holiday period. Reuters noted “Commercial airlines around the world canceled more than 4,500 flights over the Christmas weekend, as a mounting wave of COVID-19 infections driven by the Omicron variant created greater uncertainty and misery for holiday travellers.”

However, Studies have shown fewer hospitalization is caused due to Omicron which in turn creates optimism among Gold buyers.

XAU/USD 4 Hour Chart:

Support: 1802.2 (S1), 1799.1 (S2), 1794.0 (S3).

Resistance: 1810.5 (R1), 1815.6 (R2), 1818.7 (R3).

Mixed concerns of Omicron along with the cautious optimism on US President Joe Biden’s Build Back Better (BBB) plan favors the yellow metal. We expect a bullish trend for XAU/USD.

BTC/USD Weekly Forecast (27th December 2021 – 31st December 2021)

Fundamental view:

Bitcoin rallied against the US dollar during the trading course of the week and ended trading above $50000 for the first time since Dec. 13. Positive economic data and calming fears about the new variant led to the increased demand for the riskier asset and fueled the bullish trend for BTC this week. For the past months, fears of the rapid spread of the Omicron variant, regulatory concerns and rising inflation worries have weighed on the industry which allowed bears to dominate the systemic, prominent trend.  But now the upbeat market sentiment shift favored the Bitcoin bulls.

Elsewhere, Microstrategy CEO Michael Saylor talked about his bitcoin strategy and BTC price prediction in a recent interview with the Information, published this week. Saylor revealed that he personally owns at least 17,732 bitcoins, which is the same amount he disclosed back in October last year. At the current BTC price, his bitcoin stash is worth almost $858 million. Saylor foresees bitcoin hitting $600,000 a coin, and eventually $6 million. This comment also turned to be favorable for the King Crypto – Bitcoin.

The major economic events deciding the movement of the pair in the next week are S&P/CS HPI Composite-20 yearly report at Dec 28, EIA Crude Oil Stocks Change, Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30 for US.

BTC/USD Weekly outlook:

Technical View:

Last week’s high was 2.9% higher than the previous week. Maintaining high at 51856.9 and low at 45569.6 showed a movement of 6287 pips.

In the upcoming week we expect BTC/USD to show a bullish trend. The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 53310.3 may open a clean path towards 55727.3 and may take a way up to 59597.6. Should 47023.0 prove to be unreliable support, the BTCUSD may sink downwards 43152.7 and 40735.7 respectively. In H4 chart W-Pattern breakout favors prospects of a bullish trend. Hammer pattern constructs a bullish outlook for the pair in the upcoming week.

Preference
Buy: 50893.3 target at 56964.7 and stop loss at 47017.8

 

Alternate Scenario
Sell: 47017.8 target at 40736.6 and stop loss at 50893.3

XAU/USD Weekly Forecast (27th December 2021 – 31st December 2021)

Fundamental view:

The yellow metal initially fell against the greenback but later rose for the last two consecutive days. The bullion traders portrayed risk-on mood due to the positive updates over the Omicron covid variant and the US stimulus, while also ignoring firmer US Treasury yield in the end of the week.  Elsewhere, Central banks are tightening monetary policy; along with the U.S. Federal Reserve adopting a hawkish tone at its latest policy meeting favors the market mood. Moreover, US President Joe Biden’s Build Back Better (BBB) stimulus plan also favors the market sentiment. Metal focus reported that Gold demand in India recovered sharply in the second half of 2021 as jewelry purchases and investment in physical metal surged following a downturn caused by COVID-19 restrictions and uncertainty. Looking first at gold, Metals Focus said that the strong recovery has been led by festive and wedding buying.

On the other hand, the continuous, rapid spread of the omicron COVID-19 variant remains a concern. China’s biggest-ever lockdown in Xi’an and the doubts of White House over the availability of Pfizer’s pill, joined by French rejection to Merck’s drug, pose a challenge in the market sentiment.

Amidst risk sentiment remaining firm and the US dollar is on the back foot gave the yellow metal to breath above water in the end of the week. Gold may trade high amidst a thin trading session ahead of the new year eve.

The major economic events deciding the movement of the pair in the next week are S&P/CS HPI Composite-20 yearly report at Dec 28, EIA Crude Oil Stocks Change, Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.09% higher than the previous week. Maintaining high at 1812.6 and low at 1784.7 showed a movement of 279 pips.

In the upcoming week we expect XAU/USD to show a bullish trend. The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1817.0 may open a clean path towards 1828.8 and may take a way up to 1844.9. Should 1789.1 prove to be unreliable support, the XAUUSD may sink downwards 1773.0 and 1761.2 respectively. In H4 chart rounding bottom pattern favors prospects of a bullish trend. Also to be noted Bullish harami formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1805.3 target at 1830.8 and stop loss at 1784.7

 

Alternate Scenario
Sell: 1784.7 target at 1762.2 and stop loss at 1805.3