For instant updates, follow FCI Markets on Twitter
Intermarket:
- SP Futures 3601 (+0.71%)
- EUSTXX 3488 (+0.52%)
- Crude Oil 43.63 (+1.32%)
- US 10YR 0.86 (+0.34%)
- EurUsd 1.1856 (+0.13%)
- UsdJpy 104.38 (-0.06%)
- DAX 13243 (+0.60%)
Risk sentiment remains buoyant after AstraZeneca reported two trials with 70% and 90% efficacy rates and the General Service Administration has given Biden the formal transition authority. Biden plans to nominate former Fed chair Yellen as his Treasury Secretary, which may be cheered upon by markets as Yellen recently said the US needs to “continue extraordinary fiscal support”.
In FX, the main protagonist overnight was the Kiwi. NZD was bid up after FinMin Robertson said the Government would like the RBNZ to add a house-price ‘remit’ (which, translated into common language means the NZ Government is concerned about rising property prices and wants to curb them). Essentially, this would mean that further rate cuts are off the table and the RBNZ will likely tighten monetary policy to some extent (but not by hiking just yet).
Looking ahead: we get GER IFO business climate (expected to come in weaker), US’ Conference Board consumer confidence (potentially weaker despite yesterday’s surprising Markit PMI). RBA’s Debelle, BOE’s Haskel, ECB’s Rehn, Schnabel, Lagarde and Lane, as well as Fed’s Bullard, Williams and Clarida are also speaking.
Matters that Matter:
• Trump administration gives green light to proceed with Biden transition, despite Trump’s reluctance to concede.
• Chicago Fed Evans – Long way to go on U.S. recovery, fiscal support would help, no rate hike till late ’23, maybe ‘24
• RBNZ requested to include house prices, which would remove any rate cuts from the table.
• BOJ’s Kuroda says no immediate need to overhaul policy framework, pace of recovery abroad likely moderate, Japan economy picking up partially
• BoC DepGov Gravelle – No signs of broad stress across financial system
Majors 1-Day View:
USDJPY
- Prices posted a bullish outside day on Monday, interrupting the sequence of lower daily highs and switching signals to temporarily bullish.
- Risk on during Asia with positive vaccine news and US political transition getting under way.
- Opex today: 105.00-10 1.2 Bln, 104.00-25 550 Mln
EURUSD
• Sellers returned to the market Monday ahead of the November high at 1.1920, prices declining by over ¾ Big Fig, but recovering into the close. This volatile performance signals indecision and trend signals are weak as a result. However, selling any retracement to 1.1880 remains a favoured play into Tuesday.
• Rangebound price action to continue through Thanksgiving?
• Offers still active near 1.1900.
AUDUSD
• Prices posted 5 little changed closes in a row and as such, trend signals are weak. However, buyers have returned to the market during Tuesday’s Asia trade, keeping signals cautiously positive.
• AUD stronger on US transition process as well as NZD rise.
• Offers reported around .7340s, bids .7200/20.
GBPUSD
• Initial gains of over 1 Big Fig on Monday were given up, prices declining over 1 ½ Big Figs and closing little changed. Despite posting the 2nd higher daily low in a row, the volatile price action suggests caution and the call is to sell on a rally to 1.3380 or sell down through 1.3263.
• Prices still discounting Brexit deal despite lack of positive news.
• Brexit headlines the key focus for Pound.
FX Relative ATR Grid
Comment: Coming into the week we were expecting a volatility expansion and ranges have already started to expand on selected pairs.
FX Relative Strength Grid
Comment: The strongest signals going into Tuesday are JPY weakness vs GBP strength. NZD was also an outperformer during Asia trade.