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Intermarket:
- SP Futures 3563 (-0.47%)
- EUSTXX 3449 (+0.03%)
- Crude Oil 41.80 (-0.31%)
- US 10YR 0.83 (-3.01%)
- EurUsd 1.1884 (+0.09%)
- UsdJpy 103.80 (+0.05%)
- DAX 13075 (-0.07%)
Risk appetite may stumble into the weekend on the back of the spat between US TSC Mnuchin and Fed’s Powell over the extension of the emergency pandemic lending programs. Also, the IMF and G-20 warned that “the economic recovery may be losing momentum and the crisis is likely to leave deep, unequal scars.” Basically, the Fed is being pressured to return the $455b whereas it prefers to retain all the emergency facilities “as a backstop for our still-strained and vulnerable economy”, whilst Mnuchin is seeking a 90-day extension for four programs but prefers to allow the others to mature on 31 December.
The lack of any immediate fiscal stimulus has put pressure back on the FED to keep the economy on life support. And now, the White House is also impacting FED policy.
Beyond this, Covid-19 cases continue to rise while French president Macron and Belgian PM Alexander De Croo have called on EU leaders to make contingency plans for a no-deal Brexit. Pfizer may apply for an Emergency Use Authorisation for its vaccine candidate today. The approval process is expected to take less than a month.
Matters that Matter:
• Mnuchin pulls plug on pandemic lending programs Fed considers essential
• Fed Bostic – Flags risks from pulling emergency funding, surprised by Treasury decision
• Biden says Fed rate policy, approach to USD �?positive’, no national shutdown for COVID planned
• Georgia affirms Biden’s victory as Trump attempts to undermine election
• California orders nightly COVID-19 curfew on gatherings, non-essential activities
• UK consumer morale sinks to six-month low in November
• Pfizer is expected to file FDA application for coronavirus vaccine on Friday
Majors 1-Day View:
USDJPY
- Prices the 6th lower daily high in a sequence on Thursday but with prices closing little changed, trend signals are weak into Friday. However, a cautious bearish bias remains.
- UsdJpy and crosses still heavy on lower US yields and risk-off mood after TSC Mnuchin dismantles FED loan programs.
- Offers from 104.00, bids defending 103.50
EURUSD
• After breaching prior day lows intraday, buyers returned to the market, prices recovering losses to close slightly positive. As such, signals for Friday turn cautiously bullish.
• Prices supported by USD weakness after FED loan program news.
• Offers reported near 1.1900.
AUDUSD
• Prices posted the 2nd lower daily high & low in a row on Thursday, but buyers returned and prices closed once again little changed. As such, trend signals remain weak and we prefer to sell rallies towards .7220.
• AUD weaker alongside risk appetite post-FED news.
• Offers reported around .7340s, bids .7200/20.
GBPUSD
• Prices interrupted the sequence of higher daily lows on Thursday, but buyers returned to the market, prices recovering losses to closed little changed. As such, signals for Friday have improved and the outlook is just cautiously bullish.
• Prices not discounting Brexit outcome, expect volatility expansion,
• Prices softer on lack of positive news.
FX Relative ATR Grid
Comment: Ranges continue to decline, with contractions becoming evident on EUR crosses. Volatility is dissipating and being selective remains key.
FX Relative Strength Grid
Comment: Signals remain weak into Friday, although the main strength/weakness relationships still stand: NZD leads, CAD & USD lag.