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Intermarket:
- SP Futures 3631 (+0.11%)
- EUSTXX 3511 (-0.06%)
- Crude Oil 45.03 (-1.50%)
- US 10YR 0.88 (-2.21%)
- EurUsd 1.1927 (+0.13%)
- UsdJpy 103.98 (-0.23%)
- DAX 13293 (-0.05%)
With the US markets closed on Thursday, newsflow focused on AstraZeneca’s plans to run another global. Covid-19 cases also continued to climb, especially in California, Texas and also South Korea, whilst German Chancellor Merkel has urged ski resorts to close this winter. Meanwhile, US President Trump has said he would leave the White House if the Electoral College votes for Biden in December.
The strongest signal into Friday remains USD weakness, especially against comm-dolls.
Watch out for Brexit headlines: EU Chief negotiator Barnier has called for an “urgent” meeting of fisheries ministers today, and will also brief EU country ambassadors. Bloomberg also reports that Brexit talks are likely to resume in London over the weekend.
Yesterday Hungary and Poland showed no willingness to compromise in the dispute with the EU over a proposed rule-of-law condition in the new EU budget and recovery fund. Alongside dovish ECB minutes (which suggest further easing is forthcoming at the 10 December amid the rising Covid cases and lockdowns), EUR may remain vulnerable on the crosses especially.
Looking ahead: focus continues to be vaccine news and COVID-19 developments in the US and Europe, as well as Brexit headlines.
Matters that Matter:
• Trump says he’ll leave WH if Biden wins Electoral College vote (Dec 14th)
• AstraZeneca CEO expects to run new global trial of COVID-19 vaccine - Bloomberg
• ECB flags more stimulus ahead as financial conditions tighten – FT
• EZ to move on bailout fund reform amid COVID worries
• BoC Gov Macklem – Vaccine news encouraging, economy still below potential into 2022, needs policy support
• China to impose temporary anti-dumping measures on Australian wine imports
Majors 1-Day View:
USDJPY
- Prices posted the 2nd inside day in a row on Thursday, but with sellers returning in Asia trade on Friday, signals have weakened and the call is bearish.
- Liquidity thin, little movement seen post-Thanksgiving.
- Opex not too influential today: 104.00 320Mln, 104.50-60 450Mln
EURUSD
• Prices posted the 3rd higher daily high & low on Thursday, but closed little changed. As such, signals for Friday have weakened, but remain cautiously bullish.
• Offers still reported ahead of 1.1950
• Positioning is long EURUSD, so USD short squeezes are a risk.
AUDUSD
• Prices posted and inside day on Thursday, but with the trend of higher daily lows still intact, and with buyers returning to the market in Asia trade, the outlook remains bullish for today.
• China anti-dumping measures on AU wine dismissed.
• Trend and bias remain positive on equity prices, commodities and vaccine hopes.
GBPUSD
• Prices have posted marginally higher daily lows each day this week, maintaining a slight upwards bias. However, sellers continue to defend 1.3400. As such, the call is to play a break of the 1.3400/1.3320 range.
• Prices still discounting Brexit deal despite lack of positive news.
• Offers still reported at 1.3400, also 370Mln for 1.3400 strike also cap
FX Relative ATR Grid
Comment: The US holiday failed to curtail volatility as much as expected. In fact, AUD, NZD and CHF actually posted volatility expansions yesterday amidst low participation. As such, there is scope for more movement today into the weekend.
FX Relative Strength Grid
Comment: The strongest signals going into Friday are CHF and NZD strength vs. GBP & USD weakness.