For instant updates, follow FCI Markets on Twitter
Intermarket:
- SP Futures 3788 (+0.61%)
- EUSTXX 3543 (+0.51%)
- Crude Oil 54.25 (+1.31%)
- US 10YR 1.08 (+0.68%)
- EurUsd 1.2074 (+0.12%)
- UsdJpy 104.97 (+0.04%)
- DAX 13681 (+0.39%)
Global risk sentiment has recovered on stimulus talks, and tech stock led the rebound. Robinhood Markets’ have also eased trading curbs on the Reddit-fuelled trading stocks as market attention has turned to silver. The precious metal has risen 15% in the past three sessions, which is approximately the time when the buy silver calls were starting to surface on Reddit. The gold/silver cross has now sunk to its lowest in 5 years at about 62. To note, Gamestop has declined towards $200 and short interest has declined to 39% from 140%. The game seems to be over.
There were concerns that investment firms might have to liquidate positions as a way of freeing up cash to cover margin requirements, but all it took was a bit of positive stimulus talk to boost sentiment. A number of hedge funds admitted they endured large losses in the recent Gamestop situation, but equities seem resilient still.
Looking ahead: Today, we get the advance release of the Euro area GDP figure for Q4. Given the lockdowns, consensus is for -1.5% q/q. COVID-19 vaccine news will continue to be in focus, as will US stimulus headlines.
Matters that Matter:
• Despite ‘productive’ Republican meeting, Biden will not accept a scaled-down COVID-19 bill -White House
• Fed policy makers, like lawmakers, split on need for more fiscal aid
• ‘Gamestonks’ or silver? Reddit investors worry about losing GameStop focus
• RBA expands QE by A$100 bln, leaves OCR on hold at 0.10%, as expected
• Top Chinese diplomat calls for China, U.S. to mend relations
• SNB Chair Jordan – SNB won’t be deterred by currency manipulator tag, FX interventions important
Majors 1-Day View:
USDJPY
- Prices posted the 4th higher daily high & low in a sequence on Monday, keeping the outlook bullish for today.
- Tops tripped above 105.00, bids rise to 104.80.
- Steady yields supportive.
EURUSD
• Prices posted fresh 9-day lows on Monday after a decline of over ¾ Big Fig. As such signals suggest a bearish stance for Tuesday.
• Prices steady after yesterday’s decline, but offers reported at 1.2100.
• Pairing of EUR longs not over yet – scope for further downside remains.
AUDUSD
• Prices declined only modestly on Monday, with trading still contained within last week’s range. However, sellers returned at Monday’s high in Asia trade, keeping the outlook bearish for Tuesday.
• RBA extends QE, no rate hikes before 2024.
• Break of .7565 may see further stop loss selling. While break of .7720 would attract more buyers.
GBPUSD
• Prices have been contained within the 1.3630/1.3760 zone for the past 8 sessions. As such, directional signals are not strong. However, on Monday sellers returned from close to last week’s high, prices declining by 1 Big Fig. As such, near-term signals have deteriorated and the call for today is cautiously bearish.
• Pound remains resilient.
• Vaccine rollout proceeds at fast pace vs slow pace in EU.
FX Relative ATR Grid
Comment: Volatility is gradually returning to FX markets, with CHF and AUD the stand-outs into Tuesday.
FX Relative Strength Grid
USD strength vs. JPY and CHF weakness are the stand-outs into the week. We should also note the weakening of AUD post-RBA.