Article by: ETO Markets

As compared to October's 49.5 contraction, China's official Manufacturing Purchasing Managers' Index contracted more in November, with the most recent data released by the National Bureau of Statistics of the nation on Thursday showing 49.4 as the contraction. The reported month's reading of 49.7 was anticipated by the market.

For the fifth day in a row, the Japanese yen is stronger than the US dollar on Thursday due to predictions that the Bank of Japan would soon abandon its negative interest rate policy. The BoJ board member’s less aggressive comments on Wednesday, however, were mostly ignored by the JPY bulls, who said that the economy is not yet at a point where the central bank could discuss ending its extremely easy monetary policy. In terms of economic data, Japanese Retail Trade for October fell short of expectations, but the disappointment was somewhat mitigated by an improvement in the reading from the previous month and better-than-expected Industrial Production data.

The US Energy Information Administration reported data showing an increase in inventories of 1.6 million barrels, reaching 449.7 million. This was a significant departure from the average prediction of a 933,000-barrel reduction and indicated poor demand. However, significant pulls in other refined goods, such as leftover fuel oil, offset the effect. In the meantime, official statistics from China revealed that factory activity fell in November for a second consecutive month, adding to worries about the world's largest oil importer's economy slowing down.

The mixed underlying background stated earlier is preventing traders from making bold directional wagers on oil prices. Ahead of the US PCE Price Index's release later, market participants also choose to remain neutral. The Fed's preferred benchmark for assessing longer-term inflation trends is the core gauge, which ought to have an impact on the next policy decision. As a result, the US Dollar will rise, and oil prices will be somewhat boosted.

Bets on an early interest rate decrease in 2024 increased following Federal Reserve members' less aggressive remarks overnight. FED Governor alluded to a possible change in policy that might cause the yields on US Treasury bonds to drop even more. Thus, any significant upward movement in the value of the dollar and the USD/JPY pair should be contained, encouraging some prudence before making any additional gains in position. 

Technically speaking, a break below the critical support of the 100-DMA at the … level could serve as a new catalyst for bearish traders. Furthermore, oscillators on the daily chart are still distant from being in the oversold area and have been trending downward. Consequently, this implies that the USD/JPY pair's path of least resistance is downward, supporting the possibility of further losses. Therefore, it appears likely that there will be a following decline towards the intermediate support between … and …, leading to the round figure of ...

Conversely, it appears that any attempt at a rebound will now face strong opposition and be limited close to the … barrier. However, a persistent increase above that might set off a short-covering rally and allow the USD/JPY pair to recover the round number of ... However, the momentum could easily fade away in the vicinity of the now-resistance strong horizontal support breakpoint around ...

The monthly Consumer Price Index increased by 4.9% in the 12 months ending in October, according to a report released by the Australian Bureau of Statistics on Wednesday. This figure was lower than the 5.6% recorded in September and somewhat less than the 5.2% market expectation. For the first time since July, inflation slowed down, but it is still higher than the 2-3% goal range set by the Reserve Bank of Australia.

The AUD/USD pair has had a retracement, according to the daily chart, but the price is still above the critical SMA, indicating that the bias is still to the upside. But from 70, the Relative Strength Index is pointing south, indicating a potential consolidation or maybe an impending correction. A robust level of support materializes at approximately …, the 200-DMA.

The 4-hour chart exhibits a positive bias, and even with the drop, the price is still above the 20-SMA and a short-term rising trendline. It is anticipated to rise more as long as it stays over ... Resistance for the pair could be seen at the … region prior to recent highs.