US equities soared alongside with the dollar on Friday, backed by solid non-farm payroll, which showed some 228K new jobs added in the month of November.

This smashed market expectations of 200k and further strengthened the outlook of tightening monetary policy in the months to come. The unemployment rate remained unchanged at 4.1% but the wage gain growth at 2.5% failed to meet consensus forecast of 2.7% in Nov.

US dollar is gaining upward momentum against euro and yen, due to the strong US job data and an almost fully priced-in Dec rate hike. Technically, USD/JPY is moving upwards and it has broken out above 113.35 (61.8% Fibonacci Extension). Its next resistance levels could be found at the 113.73 and 114.21 area respectively.  EUR/USD is trending lower with its immediate support level at around 1.171 area.

China trade balance data on last Friday surprised the markets from the upside, with imports and exports rising by 17.7% and 12.3% in the month of November – beating consensus of 6.4% and 7.3% respectively. Strong trade data suggests that trading activity is gaining momentum in Asia’s largest economy amid strong external demand. This will help to cushion the downside of economic slowdown as a result of policy maker’s deleveraging campaign and property cooling measures.

Economic Calendar

Asian equity futures are positioned to open higher this morning. Hang Seng and Straits Times Index have both rebounded sharply last Friday as buyers are back to the market buying on dips. Technically, the Hang Seng Index still have room to climb up in order to catch-up with the rally seen in the US market recently. Momentum indicator RSI has rebounded to 41% after touching the oversold level of 30%, suggesting the near momentum is turning bullish.

Technical Analysis:

Hong Kong 50 - Cash

  • Support holds at 127.2% Fibonacci Extension level of 28,285 area
  • Trend indicator 10-Day Simple Moving Average and SuperTrend (10,3) remains downward-sloped, suggesting the near term trend remains bearish
  • Momentum indicator RSI has rebounded from oversold area of 30%, indicating that a technical rebound is likely in the days to come

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