Markets to watch: US dollar gains traction amid tariff talks
Explore the latest market trends as the US dollar gains traction amid tariff talks, gold faces resistance, and global indices like the Hang Seng and Singapore Blue Chip show potential volatility.
US dollar: US non-farm payrolls in focus this week
Following a corrective move lower, fresh tariff talks by US President-Elect Donald Trump have reignited traction for the US dollar to start the new week. Its daily relative strength index (RSI) is now back at its mid-line, which may call for some defending from buyers to maintain the broader upward bias.
The US non-farm payrolls data will be on watch this week. With market expectations leaning towards a December Federal Reserve (Fed) cut, it may take a significant upside surprise in the job data to alter such views. A less-dovish Fed and tariff talks will have to be balanced with weaker US dollar seasonality and uncertainty of any real follow-through.
Key levels:
- R2: 107.80
- R1: 105.91
- S1: 104.75
- S2: 103.81
US dollar daily chart
Spot gold: potential room to retrace further?
A firmer US dollar to start the week has kept gold prices on the back foot, with a short-lived bounce last week reflecting feeble upward momentum. Its daily RSI is finding resistance at its mid-line currently, while the recent formation of a lower high in late November does not offer much reassurance for buyers. Fading geopolitical risks, along with potentially less dovish Fed rhetoric ahead, may lean towards further profit-taking for now, following its stellar performance this year.
Key levels:
- R2: 2791
- R1: 2685
- S1: 2564
- S2: 2475
Spot gold daily chart
Hang Seng (HSI): Path of least resistance remains down
The uncertainties around US tariffs and the lack of a stronger net fiscal injection have remained a key overhang for risk sentiments. Despite stronger-than-expected manufacturing Purchasing Managers' Index (PMI) data to start this week, gains continue to be sold into, as reservations over geopolitical risks and the sustainability of economic recovery remain.
Trading within the current falling wedge may suggest a continued drift lower as the path of least resistance, with the 2016 Trump presidency suggesting that things may get worse before they get better for China.
Key levels:
- R2: 20,000
- R1: 19,760
- S1: 19,063
- S2: 18,500
Hang Seng daily chart
USD/SGD: Rising channel to support more upside
Fresh threats of tariffs have kept emerging market currencies under pressure, as any trade restrictions tend to impact these trade-oriented economies more significantly. We may expect a cautious lead-up till Donald Trump’s inauguration in January next year, as markets await more clarity over any concrete follow-through of tariffs.
On the technical front, the USD/SGD has been trading within a rising channel pattern since October this year, with a recent bounce off its lower trendline support pointing to a higher low in continuation of its prevailing upward trend. Its daily RSI has also found support off its mid-line for now, with buyers likely to set their sights on retesting the 1.351 level.
Key levels:
- R2: 1.367
- R1: 1.351
- S1: 1.336
- S2: 1.327
USD/SGD daily chart
Singapore Blue Chip: Any dips to leave higher low on watch
The Singapore Blue Chip index has surged more than 33% since August this year, with economic resilience and strong corporate earnings growth aiding as tailwinds. While the current quiet period saw upward momentum fizzle out somewhat, any dip towards the 360.40 level may offer a buy-the-dip opportunity. This is considering a broad rising channel pattern in place, while its daily RSI may offer a technical reset from the previous overbought level.
Key levels
- R2: 394.96
- R1: 376.33
- S1: 360.40
- S2: 345.80
Singapore Blue Chip daily chart
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