Categories
Morning Call

Morning Call 23 Nov 20

For instant updates, follow FCI Markets on Twitter

Intermarket:

  • SP Futures 3565  (+0.32%)
  • EUSTXX  3480  (+0.49%)
  • Crude Oil 42.73 (+0.30%)
  • US 10YR 0.83 (-3.01%)
  • EurUsd 1.1876 (+0.18%)
  • UsdJpy  103.74 (-0.08%)
  • DAX 13190  (+0.50%)

Risk appetite was supported overnight on positive developments on the vaccine front: UK authorities may approve the Pfizer-BioNtech Covid-19 vaccine this week, with the NHS apparently preparing to administer it by December 1st.  Also, the US FDA has given the Regeneron treatment Emergency Use Authorisation.  Equities are slightly higher on these developments, although we must highlight that Tokyo was on holiday and as such, don’t look too closely into the price action from Asia.

GBP remained bid on positive newsflow from the weekend suggesting a Brexit deal is 95% done. NZD is also buoyant today after a stellar Retail Sales (highest on record) and investment banks are raising forecasts for NZD due to the resilience of the NZ economy and the fact that RBNZ is not expected to take the OCR into negative territory.

Looking ahead: today we get Flash EU PMIs. For the Weekly Themes and sentiment drivers, please refer to our Weekly Call.

Matters that Matter:

• COVID-19 vaccine could reach first Americans by mid-December

• Britain wants to agree an EU free-trade deal - finance minister Sunak

• ECB emergency bond purchases to last while disruptions persist: Lane

• Speculators cut net short dollar bets in latest week -CFTC

• China Vice Premier Liu He vows zero tolerance for misconduct after recent bond defaults

• Biggest Australian states reopen borders as coronavirus cases ease

• NZ Q3 Retail Sales Volumes QQ, 28.0%, -14.6% prev

Majors Weekly View:

USDJPY

  • Prices posted an inside week into Friday’s close, with trending signals weakening. As such we prefer to remain square within 103.60-104.70.
  • UsdJpy caught between vaccine optimism, virus toll and US political instability.
  • Japan holiday dampened liquidity.

EURUSD

  • Prices posted an inside week into Friday’s close, with trending signals weakening. As such we prefer to remain square within 1.1813-1.1920.
  • Prices firmer as risk assets led the way in Asia trade.
  • Offers reported ahead of 1.1900.

AUDUSD

• Prices posted the 2nd higher weekly low in a row last week, but sellers returned at .7340, prices closing little changed. As such, trend signals are not strong but the bullish bias remains intact.

•  AUD in demand as key commodities rise and PM Andrews lifts further restrictions in Victoria.

• Surge in NZD also aiding.

GBPUSD

• Prices posted the 2nd higher weekly low in a row last week, with prices closing near prior week highs. As such, the bullish bias remains intact.

• PM Johnson to speak with EU’s von Der Leyen this week on Brexit.

• UK to substitute Covid lockdowns with tiered system.

Weekly FX Relative ATR Grid

Comment: Prices posted volatility contractions basically across the board last week, which suggests a volatility expansion is in the cards.

Read more