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Intermarket:
- SP Futures 3646 (+0.18%)
- EUSTXX 3499 (-0.23%)
- Crude Oil 46.78 (-0.48%)
- US 10YR 0.89 (-0.33%)
- EurUsd 1.2150 (+0.05%)
- UsdJpy 104.10 (+0.08%)
- DAX 13216 (-0.18%)
Risk appetite is more off than on, with markets more in a “wait and see” mode than anything else. Joe Biden was confirmed the next US President by the Electoral College, but the outcome for the Senate is still uncertain. At the same time, a good part of the south east of England is being put into tier 3 restrictions due to a new strain of the coronavirus which apparently spreads at a faster rate and questions the efficacy of the vaccines. Lockdowns are being tightened once again across Europe, and New York is again making preparations.
Also, Brexit talks are being extended although the 2 sides still remain divided on fisheries and the level playing field. So while the markets await fresh news on the Brexit front, positions are perhaps being squared ahead of the FOMC meeting (Wed).
Consensus is for a change to an outcome-based guidance, but some analysts expect the FOMC could increase asset purchases and lengthen the maturity of bonds they are willing to buy.
Looking ahead: focus will remain on Brexit, lockdowns, US fiscal package.
Matters that Matter:
- US Senate leader McConnell says its time to find consensus on COVID-19 relief; Pelosi tells Mnuchin issues could be resolved easily.
- Australia PM Morrison says China’s coal ban “unacceptable”.
- RBA Minutes: prepared to ease further if necessary
- Singapore to receive Pfizer-BioNTech vaccine by the end of December 2020
- RBNZ says economic outlook remains highly uncertain, risks tilted to downside
- California’s Electoral College voting confirms win for Biden
- Bank of Japan may extend its corporate funding program at this week’s meeting
Majors 1-Day View:
USDJPY
- Mondays’ decline attracted buyers, prices closing little changed. The resulting downside rejection suggests short-term strength and as such, the call for today is temporarily bullish.
- USD bid on a slight risk-off move.
- BOJ may extend corporate funding measures by 6 months
EURUSD
• Monday posted the 3rd higher daily high & low in a row, maintaining the bullish bias. However, with sellers returning ahead of Dec highs, caution is warranted.
• EUR/GBP remains the focal point as Brexit talks continue
• Large OPEX today: 1.2000, 1.2100, 1.2175 all for 1 Bln
AUDUSD
• With prices at extended levels on multiple timeframes, alongside 2 consecutive shooting stars, signals in the short term have turned modestly bearish.
• Prices weighed by AU/China trade dispute
• Risk more off than on also a factor.
GBPUSD
• A dally of over 2 Big Figs on Monday attracted sellers, with prices declining to close just modestly positive. The failed rally suggests further weakness today.
• No breakthrough in Brexit – markets await fresh news.
• Market now pricing in negative BOE rates by May.
FX Relative ATR Grid
Comment: Ranges remain healthy in GBP, Jpy and CHF pairs. Hence, trading conditions are more favourable there.
FX Relative Strength Grid
Comment: Signals are not strong going into Tuesday, except AUD weakness and CHF strength.