Yen rally weakens the Nikkei

• Stocks in Europe were back in red on Friday to close the week. Utilities were the biggest losers and outweighed strength in media giants. Strength in the euro also helped stocks slide. Euro Stoxx 50 and FTSEMIB down 0.5%, while IBEX 35 slipped 0.78%.  Negative session also for US Indices. DJIA lost 100.12 points at 23,358.24 while S&P500 slid 6.79 points to 2,578.85.

• In the FX market the Japanese Yen rallied. USDJPY slid to 112.10, down 0.84% while CADJPY slid 0.87% to 87.85.  Both Kiwi and Aussie dollar dropped against the greenback (thus the loss against JPY was even more severe). NZDUSD slid 0.61% to 0.6809 and AUDUSD dropped 0.31% to 0.7564.

• Crude Oil WTI rallied +2.56% to 56.55 $/barrel while Brent rose to 62.72 $/barrel, up 2.22%; both contracts expire on January.  Gold rose to 1,292 $/oz, up +1.08% and XAGUSD outperformed the shiny metal and closed at 17.31 $/oz, up +1.28%.

Charts of the day: 

NIKKEI INDEX (daily timeframe)

The gauge started to make lower highs and lower lows since the 20 year peak 23,382.15 made on the 9^th of November. Only a breakout of the bearish dynamic resistance it may trigger another bullish leg. In case the retracement should continue the most relevant support should be near 21,000-20,860.

Economic Calendar

The week starts off slowly without any noteworthy releases on Monday. However, ECB President Draghi is speaking twice today with a potential market-moving speech at 15:00 CET. He will testify at the ECON hearing in Brussels to comment on economic and monetary developments. This is then followed by a discussion covering the following topic: “Design and sequencing of exit from nonstandard monetary policy measures: What should the ECB “new normal” look like?". In the second speech, at 17:00 CET, Draghi will deliver an introductory statement in his capacity as ESRB Chair at the ECON hearing.

Technical Analysis

EURUSD  (Daily timeframe)

EURUSD found resistance against its 55MA. Is possible a pullback in area 1.1670 and then it may test its recent low at 1.1553. Beneath this level selling pressure could increase. Above last week high 1.1865 EURUSD could rise to 1.20 and above this level it could test 1.2092.

USDJPY  (Daily timeframe)

USDJPY found support at 111.80, the 38.2% Fibonacci retracement of the bullish wave started in September that ended this month. Beneath 111.80 the pair could slide to 110 and then test 107.32. Above 113.5 USDJPY could rise to 114.7 and then test area 117.

FTSEMIB (Daily timeframe)

Weakness on the FTSEMIB resumed on Friday, with the index recording its lowest close since mid-September. It now sits on the key horizontal support from August highs. A break lower than 22158, last Wednesday’s high, should trigger a deeper sell-off to 21500 areas. Only a break above 22297, the gap between Tuesday’s close and Wednesday’s open, would relieve the bearish pressure at this point.

BUND (Daily timeframe)

The price of the Bund (December) future is in the middle of a rising wedge, as it continues to make higher lows and stretch higher. From here, the price is expected to test this month’s high at 163.63. 162 should keep the price supported.

EURO STOXX50 (Daily timeframe)

EURO STOXX 50 failed to break the previous day’s high and retreated to close below 3550. The index is testing the bottom of a rising trendline and just off the 50% Fibonacci retracement of the August low to November high move. A break below 3536 and last week’s low at 3519 would pave the way for a test of 3500. A move above 3578 is required to relieve the equity index from its bearish pressure in the near-term.