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Intermarket:
- SP Futures 3615 (+0.92%)
- EUSTXX 3472 (+0.98%)
- Crude Oil 40.73 (+1.47%)
- US 10YR 0.89 (-0.37%)
- EurUsd 1.1850 (+0.13%)
- UsdJpy 104.56 (-0.06%)
- DAX 13222 (+0.98%)
Risk sentiment was boosted during Asia trade after 15 countries (ex-US and India) signed the Regional Comprehensive Economic Partnership led by China, which will likely put an end to many trade disputes. This is China’s first nonbilateral Free Trade Agreement and the 15 countries account for 30% of the world’s GDP.
At the same time, NIH’s Fauci issued further positive remarks on Pfizer’s Covid-19 vaccine, adding that the US may begin offering the vaccine to priority groups at the end of December.
RBNZ is attracting negative attention. An article from Exante Data argued that the central bank activism is not a recipe for long term prosperity. It said that RBNZ economic forecasting has been dismal; RBNZ’s expectation of LSAP imparting downward pressure on the NZD via the portfolio balance channel is in doubt. Despite this, NZD remains bid.
Looing ahead: RBA’s Lowe, ECB’s Lagarde, de Guindos, Mersch are speaking today. Little in the way of data.
All themes for the week and best looking charts can be found here.
Matters that Matter:
• Trump briefly admits election defeat, clings to flailing legal strategy
• U.S. COVID cases cross 11 million as pandemic intensifies
• Michigan Governor: Imposes a three-week partial lockdown
• Asia forms world’s biggest trade bloc with RCEP, a China-backed group excluding U.S. and India
• Risk of German recession this winter rises, still low - IMK institute
• UK, Ireland say breakthrough needed in Brexit talks this week
• UK house prices dip as sellers eye end of tax break – Rightmove
• China: US should stop unreasonable suppression on restricting investments in Chinese firms linked to China’s military; firmly opposes US’ action
Majors Weekly View:
USDJPY
- After declining to a 7-Month low in November, prices rallied last week posting a higher weekly high although the rally stalled. As such, signals for this week are mixed unless we break 104.00 or 105.68
- Opex a factor: 104.45 400Mln, 104.70-75 800 Mln, 105.00 1.0 Bln approx.
- Risk on despite soggy yields.
EURUSD
• Prices posted a little changed close last week and alongside directional shifts in each of the last 6 weeks, suggests weak trend signals. Having posted a higher weekly high & low, there is a slight upwards bias and as such the outlook is just cautiously bullish this week.
• Prices supported on lower US Yields and risk-on sentiment.
• Opex today: 1.1820-50 900Mln to provide support.
• EurJpy sizeable expiries: 123.00 1.25Bln, 119.00 900 Mln
AUDUSD
• After posting a bullish outside week, signals were bullish into last week. However, prices closed little changed and trend signals are not strong. However, last week’s higher weekly high & low does leave a slight bullish bias on balance.
• Prices trading higher with risk-on as RCEP trade deal may improve relationship with China.
GBPUSD
• After posting a bullish outside week, signals were bullish into last week. However, prices closed little changed and trend signals are not strong. However, last week’s higher weekly high & low does leave a slight bullish bias on balance.
• Markets still betting on last-minute deal as Brexit hard-liner Cummings resigned.
• Prices higher on weaker USD.
FX Relative ATR Grid
Comment: Ranges remain healthy on a weekly basis, suggesting decent trading conditions this week.