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Intermarket:
- SP Futures 3804 (+1.48%)
- EUSTXX 3641 (+0.72%)
- Crude Oil 51.14 (+0.61%)
- US 10YR 1.100 (+2.69%)
- EurUsd 1.2266 (-0.04%)
- UsdJpy 103.88 (+0.07%)
- DAX 14088 (+0.75%)
Equities remain supported by risk-on into Friday on the “Blue Wave” implications: reflation and most fiscal stimulus. Treasury yields continue to rise amid recent curve steepening, driving strength into the USD. Bitcoin broke $40K threshold for first time, then pulled back.
Attention remains on US politics. Trump conceded to Biden and condemned rioters at Capitol. Now the focus is on Trump’s removal from office via 25th Amendment or impeachment. Another positive for markets is news of US suspending French tariffs over digital tax services.
The market remains short USD so there will be some heavy repositioning if USD strength continues. Short-term players are already looking lower on AudUsd, with sellers reported near .7800 looking for a break of .7650.
Looking ahead: we get Non-Farm Payrolls today and consensus is for +50k from +245k prior, AHE +0.2%. Some analysts suggest this print could change the trend if it were to come out softer.
Matters that Matter:
- Trump: Still believe election laws must be reformed; outraged by violence by mob at Capitol; those who broke the law shall pay; fighting to defend democracy; focussed on smooth transition of power
- Raging COVID-19 cases are expected to have restrained U.S. labor market in December
- Fed sees rising bond yields, inflation expectations as a possible win
- Trump faces calls for removal, possible impeachment after Capitol chaos
- MSCI, FTSE Russell cut Chinese telecom firms from global indexes
- China’s internet regulator weighs tighter curbs on payment, shopping platforms
- England to require travellers to show negative COVID tests
- Australia sets COVID test for travellers as Brisbane locks down
- Bitcoin slides more than 5% after topping $40,000 for first time
Majors 1-Day View:
USDJPY
- Thursday’s ¾ Big Fig rally interrupted the sequence of lower weekly highs and switches the outlook to cautiously bullish for Friday.
- US yields driving prices, strengthening USD.
- Risk on as US stimulus now expected.
- Price performance this week has left 102.59 as major support.
EURUSD
• Prices interrupted the sequence of higher daily lows on Thursday, with losses of almost 1 Big Fig. As such, signals for Friday are cautiously bearish.
• US Yields driving strength into USD
• Offers reported at 2345/50 where a barrier option has also been reported.
AUDUSD
• Selling dominated sentiment on Thursday, with prices briefly interrupting the sequence of higher daily lows. As such, signals are more mixed for Friday and we prefer to sell rallies towards .7800.
• AUD caught between rising US yields and broad Risk On sentiment.
• NFP key to direction today.
GBPUSD
• Trend signals have flattened out in the past 3 days, with little movement overall. As such, the call is still neutral between 1.3500 and 1.3672.
• USD strengthening on US yields.
• NFP remains key for direction today.
FX Relative ATR Grid
Comment: Ranges declined on Friday, with the exception of USD & CAD. Being selective seems more appropriate today ahead of NFP.
FX Relative Strength Grid
Comment: the main signals going into Friday are JPY and GBP weakness vs. CAD strength.