For instant updates, follow FCI Markets on Twitter
Intermarket:
- SP Futures 3534 (+0.06%)
- EUSTXX 3409 (-0.67%)
- Crude Oil 40.53 (-1.48%)
- US 10YR 0.89
- EurUsd 1.1805 (+0.02%)
- UsdJpy 104.96 (-0.17%)
- DAX 12999 (-0.52%)
Risk sentiment turned more cautious yesterday after Powell, Lagarde and Bailey sounded reserved about vaccine prospects for a quick global recovery. The USD also slipped as the 10-year yield declined 10bps to 0.88%. Realistically, a vaccine won’t be seen until 2021 and many countries will have to choose between tougher restrictions or risking a collapse of healthcare systems, amidst increasing Covid-19 cases.
Meanwhile, the Trump administration is leaving stimulus negotiations to Congress, suggesting a package will not be quickly forthcoming. This is also a concern for markets. In FX, comm-dolls are taking on water potentially on the escalating China-Australia trade tensions, while the Loonie in particular is highly influenced by Crude Oil swings.
Oil fell yesterday after data showed an unexpected increase in US crude oil inventories of 4.3mn barrels. The median expectation on Bloomberg was for stockpiles to have declined 1.9mn barrels.
Looking ahead: we get a few Fed speakers today but we do not expect much news. ECB’s Weidman speaks at the Bundesbank.
Matters that Matter:
• Biden takes Arizona, cementing presidential win despite Trump’s refusal to concede
• Congressional COVID-19 impasse drags on, Pelosi warns ‘house is burning down’
• Fed, ECB heads cautious on economy despite COVID-19 vaccine hopes
• BoC Wilkins – Canada must set sights higher to boost growth, beat pandemic, downside risks very large
Majors 1-Day View:
USDJPY
- Prices have posted little changed closes in each of the past 3 sessions. As such, trend signals are weak. However, sellers returned to the market in Asia trade interrupting the trend of higher daily lows. As such, there is a slight bearish bias into Friday.
- Stops reported below 104.80s.
- Risk off, yields lower, crosses also heavy.
- Opex not influential today.
EURUSD
• Prices posted an inside day on Thursday, with buyers defending the 50 & 13 DMAs. As such, trend signals are weak, and we prefer to remain neutral in between 1.1822-1.1763.
• Prices supported on lower US Yields.
• Offers reported around 1.1850.
• Fundamental bias remains bearish on the Euro despite resilience in prices.
AUDUSD
• Prices interrupted the trend of higher daily lows yesterday, after 4 consecutive little-changed closes. As such, signals remain bearish into Friday.
• Prices trading lower on slight risk-off, but also on AU/China trade tensions.
• Resistance at .7340s, support seen at .7200.
GBPUSD
• Prices interrupted the trend of higher daily lows yesterday, with losses of over 1 ½ Big Fig. As such, signals remain bearish into Friday.
• Support falling away from PM Johnson: Cummings to resign.
• Brexit stalemate & rising Covid cases (despite lockdown) also a consideration.
FX Relative ATR Grid
Comment: Ranges are rather uneven into Friday. Expansions seen in selected Eur, GBP, Nzd pairs. Less activity elsewhere. Being more selective would seem ideal into Friday.
FX Relative Strength Grid
Comment: the main signals into Friday are Aud & GBP weakness vs. CHF and USD strength.