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Intermarket:
- SP Futures 3603 (-0.53%)
- EUSTXX 3449 (-0.61%)
- Crude Oil 41.65 (+0.72%)
- US 10YR 0.91 (+0.13%)
- EurUsd 1.1856 (+0.05%)
- UsdJpy 104.53 (-0.04%)
- DAX 13083 (-0.57%)
Global risk sentiment seems less enthusiastic into Tuesday as the effects from Moderna’s vaccine news appears to be fading.
The Pound was boosted overnight by a story in The Sun that UK negotiator Frost informed PM Johnson to expect Brexit deal as soon as Tuesday. However, markets ignored the rest of the article, which stated talks could collapse over fishing and red tape.
While commenting on RCEP, NZ Trade Minister O’Connor said the strength of the NZD is always a concern. Little weakness in NZD on this, but nothing substantial. Market positioning remains long.
Euro remains resilient even as Poland and Hungary blocked the EU’s budget and EUR750b recovery fund and ECB’s Lane said economic restrictions are likely to continue through 2021.
Looking Ahead: we get US retail sales alongside speeches from RBA’s Lowe and Debelle, BOE’s Bailey and Ramsden, ECB’s Lagarde, Fed’s Powell and Barkin.
Matters that Matter:
• Fed’s Clarida signals possible changes to Fed bond-buying program – FT
• Biden says U.S., allies need to set global trade rules to counter China’s influence
• Strict new limits imposed coast to coast in U.S. as COVID-19 surge continues
• SNB ViceChair Zurbruegg – We want a weaker CHF, SNB spent CHF90 bln H1 ’20 to relieve pressure, COVID has limited policy leeway
• Brexit boss Frost tells Johnson to expect EU trade deal early next week - The Sun
• CSRC Vice Chair Fang: US-China cooperating well in finance sector; US needs more patience in dealing with China; Biden offers opportunity for better relations; US can do a lot for China in financial services
• RBA Nov Policy Meeting Minutes: Rates have been lowered as far as makes sense to do so; board is prepared to do more if necessary; RBA’s focus in period ahead will be government bond buying program
• New Zealand O’Connor: RCEP very timely, gives exporters confidence; would like to see US join trade deals; strong Kiwi dollar is always a concern; doing all we can to move up the value chain
Majors 1-Day View:
USDJPY
- Prices posted the 3rd lower daily high in a sequence on Monday, with the day closing little changed after a failed rally to 105.00. As such, trend signals remain weak and the outlook remains rather neutral between 104.00 and 105.70.
- Offers reported around 105.00, bids around 104.00
- Risk sentiment less bullish into Tuesday.
- Opex: 104.00 500 Mln, 105.00 630Mln
EURUSD
• Prices posted the 3rd higher daily low in a sequence on Monday, the day closed little changed highlighting a lack of trend strength. However, signals do remain marginally positive but with caution.
• Prices supported by weaker USD.
• Dovish FED expectations weigh on USD.
AUDUSD
• Prices interrupted a small sequence of lower daily highs on Monday, switching signals to a cautious bullish stance.
• AUD, NZD remain the leaders in FX on rather bullish risk appetite.
• No reaction to RBA minutes.
GBPUSD
• Prices interrupted a small sequence of lower daily highs on Monday, but buyers lacked conviction and the day closed little changed. As such, signals for Tuesday are more cautious and the outlook is neutral within Monday’s range.
• GBP boosted by rumour of trade deal coming early next week.
• GBP traders expect a breakout if/when Brexit is resolved.
FX Relative ATR Grid
Comment: Ranges are starting to decline, with only selected pairs meeting or exceeding their ATRs. Being selective remains the favoured play.
FX Relative Strength Grid
Comment: the main signals into Tuesday appear to be strength in CHF and JPY vs. weakness in NZD and GBP.