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  • Weekly Summary: Ceasefire, U.S. PMIs and Delayed OPEC+ Meeting

Weekly Summary: Ceasefire, U.S. PMIs and Delayed OPEC+ Meeting

This short week is almost over. The U.S. is celebrating Thanksgiving Day, but traders will return for a short day to trade fresh PMI data in the United States.

PMIs in Eurozone and in the United Kingdom went up in November. British service sector climbed above 50 points barrier, which is a watershed between contraction and expansion, to 50.5 points. The U.S. data might be even better to push the U.S. Dollar up, although Wall Street analysts expect PMI to be worse than the previous data.

After a short return investors will go for a weekend to think about a four-day ceasefire between Israel and Hamas, and about the delay of the Organization of the Petroleum Exporting countries and its allies (OPEC+) meeting, which is moved to November 30. Are these two episodes connected? Rumours say that Nigeria and Angola are against another oil production cuts. But, there could be other reasons for a delay. Besides, the meeting is rescheduled to online format. Last time this happened was in March 2020 with prices plummeting by 54% within one month after the meeting.

This is particularly nervous due to a reversal opportunities of the stock market that would emerge next week. A decline of the stock market would not necessarily manifest the decline of crude prices, but such a coincidence of the S&P 500 broad market index return to 4580 points to close the gap is worrying. Technically, the fate of the Christmas rally would be decided next week. A positive scenario suggest that the index may climb to 4800-4900 points, while the negative scenario would suggest a reversal and a possible huge drop to the downside.

There should be an import reasons for both scenarios to come into reality. But, there are none. From the macroeconomic side there will be publications of Q3 GDP, PCE Price Index in the United Sates and a speech of the Federal Reserve’s (Fed) Chief Jerome Powell. GDP data is certainly not a reason for a move, PCE Index is likely to slow down following PCI data that was released earlier considering weak October data. Powell is unlikely to deliver something extraordinary to stumble stocks. Anyway, investors will have no time to react dramatically on his statements. Thus, investors are more worried about possible force majeure issues that may emerge over the weekend and next week. If there will be none the chances for a Christmas rally will rise significantly.

Brent crude prices are viciously consolidating below the resistance of $83.00-85.00 per barrel. The nearest support is at $74.00-76.00 per barrel. This is the downside target for prices in case they will fail to climb above the resistance. This week opened a period for a possible upside for crude prices.

Gold prices are moving inside the mid-term upside formation with targets at $2000-2100 per troy ounce that have already been met. Prices have not properly tested the support at $1910-1930 per ounce, and bounced towards the resistance at $1990-2010 per ounce. They hit the lower margin of this zone and are hovering just around it. A breakthrough of this resistance may push prices to $2100 per ounce. Otherwise, a war premium is seen deflating with prices slowly moving down towards the $1830 per ounce mark.

The Greenback reached its primary correction targets at 1.08500-1.09500 against the Euro. Any further correction is largely associated with a Christmas stock rally. Alternatively, the Greenback could resume is strengthening towards the parity with the single currency.