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Intermarket:
- SP Futures 3737 (-1.12%)
- EUSTXX 3496 (-1.47%)
- Crude Oil 52.18 (-0.33%)
- US 10YR 1.05 (-0.62%)
- EurUsd 1.2101 (-0.16%)
- UsdJpy 104.48 (+0.28%)
- DAX 13446 (-1.50%)
Risk appetite has been swayed by the recent main street vs. wall street battle: retail traders were left outraged after Robinhood, Interactive Brokers and E*Trade all restricted trading in GameStop and AMC. Robinhood customers promptly sued the platform, with politicians such as AOC and Ted Cruz calling the restriction “unacceptable”. As such, the gang of Redditors started hunting for their next prey, with their focus turning to silver and other related financial securities. The precious metal rose as much as 6.7% higher on the day during intraday trade yesterday.
Risk appetite is softer going into Friday, with USD a tad stronger. JPY and CAD are the weaker ccys.
It seems that the r/Wallstreetbets crowd hunts down the instruments with the highest short interest. Nokia, American Airlines were two other retail squeezes that happened yesterday.
Looking ahead: EMA meeting on the AstraZeneca vaccine. French and German Q4 GDP are released today. Q4 saw tightening of restrictions and even before that neither economy was doing particularly well.
Matters that Matter:
• Novavax vaccine may be less effective than stated
• Month-end flows in focus today.
• Citron Research to make major announcement on Friday at 9AM NY Time (GME-related?)
• BOJ debated merits of bigger yield moves ahead of March review
• China’s o/n repo highest since March 2015, busts PBOC corridor ceiling
• Asia’s ‘ant’ and ‘moth’ investors test broker nerves
• Biden reopens online health insurance marketplaces, citing ‘damage’ from Trump
• Losses on short positions in U.S. firms top $70 bln – Ortex data
• UK’s Johnson says lots of Brexit teething problems, employers fear worse to come
• EZ governments must keep spending to avoid fresh recession - ECB
Majors 1-Day View:
USDJPY
- Prices posted the 2nd higher daily high & low in a row yesterday, with gains of almost ½ Big Fig. As such, signals for Friday remain bullish.
- Risk mood softer on month-end flows. 104.50 stops tripped.
- Resistance now 104.75 and 105.00
EURUSD
• Prices posted an “inside day” on Thursday, signalling indecision. However, the trend of lower daily highs remains intact and ass such, the outlook for Friday remains cautiously bearish.
• USD strength seen on higher yields, month end flows.
• Covid vaccine issues, Italy political drama, ECB talk weigh on Eur.
AUDUSD
• A decline of almost ¾ Big Fig yesterday attracted buyers, prices closing little changed. However, sellers have returned in Asia trade and signals are more mixed for Friday. Selling rallies towards .7670s is our preferred play.
• Risk appetite weighing alongside USD strength.
• Break of .7565 may see further stop loss selling.
GBPUSD
• Signals have been switching direction on a daily basis for the past 4 sessions, indicating indecision. As such, a trading range has formed between 1.3608 and 1.3740. We suggest remaining square inside the range.
• Pound remains resilient despite Covid impact.
• Month end flows to impact the Pound.
FX Relative ATR Grid
Comment: Volatility remains decent into Friday, especially on Comm-Dolls. Trading conditions have improved.
FX Relative Strength Grid
Comment: The main signals going into Friday are JPY and CAD weakness vs, GBP and CHF strength