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Intermarket:
- SP Futures 3545 (-0.63%)
- EUSTXX 3445 (-0.67%)
- Crude Oil 41.35 (-0.24%)
- US 10YR 0.96
- EurUsd 1.1768 (-0.08%)
- UsdJpy 105.17 (-0.24%)
- DAX 13153 (-0.55%)
The New Zealand dollar was a mover again during Asia trade with RBNZ Assistant Governor Hawkesby reiterating the Bank is not ruling out negative rates; less stimulus appears to be required than was thought necessary just a few months ago. NZD remains strong across the board.
USD is rather bid into London and risk assets seem weaker today although newsflow wasn’t exactly negative: Covid-19 cases continue to rise, but at the same time positive developments on the vaccine front continue, with Moderna also expecting data from it’s late stage trial of it’s vaccine in the coming days.
Looking ahead: today we get German CPI, UK’s prelim 3Q GDP and US’ initial jobless claims and CPI. BOE’s Bailey and Cunliffe, ECB’s Lagarde and de Guindos, and Fed chair Powell are also speaking.
Matters that Matter:
• Biden moves forward, names longtime adviser Ron Klain as chief of staff
• Investors dive into emerging markets after U.S. election, vaccine breakthrough
• Ireland sees EU-UK trade talks going past mid-November deadline
• RBNZ’s Hawkesby – To stick with guidance on interest rates, working to get negative OCR tool operational by year-end
• HK opposition lawmakers to formally tender resignations in protest over oustings
• China has indefinitely suspended imports of all Victorian timber logs
Majors 1-Day View:
USDJPY
- Prices posted the 2nd little changed close in a sequence on Wednesday, showing weak bullish momentum. However, with the sequence of higher daily lows still intact, the bias remains just slightly bullish and we prefer to buy dips today around 105.00.
- Bids reported at 105.00 and below, offers 105.70-106.00, stops above.
- Opex today: 1.5 Bln between 105.40-50
- US Yields supportive, risk on, while market focuses on US election transition and Covid-19
EURUSD
• Prices posted the 2nd lower daily high & low yesterday with losses of ¾ Big Fig. As such, momentum remains negative and the outlook for today is modestly bearish.
• ECB’s Lagarde reiterates “more easing is on the way”, also talks down Euro.
• Market sentiment remains bearish on Eur.
AUDUSD
• Despite the sequence of higher daily lows remaining intact, prices have posted 4 little changed closes in a row around the .7300 handle, signalling a lack of momentum. A bearish Shooting Star on Monday and topside rejection yesterday suggest slight bearish intent. As such, the outlook for today switched to cautiously bearish.
• Prices guided by risk assets.
• Resistance at .7340s, support seen at .7200.
GBPUSD
• Sellers have returned to the market from 9 week highs, prices declining by 1 Big Fig. While the trend of higher daily lows remains intact, the pullback has room to extend. As such, the call for Thursday is cautiously bearish.
• Prices lower after BOE’s Tenreyro suggested NIRP might be in the cards.
• Markets also digesting tough Brexit negotiations.
FX Relative ATR Grid
Comment: Ranges remained uninspiring yesterday, with the exception of NZD post-RBNZ. AUD in particular is poised for a volatility expansion today.
FX Relative Strength Grid
Comment: the main signal into Thursday are NZD strength, Eur and GBP weakness.