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Intermarket:
- SP Futures 3551 (+1.43%)
- EUSTXX 3250 (+1.60%)
- Crude Oil 38.13 (+2.56%)
- US 10YR 0.82
- EurUsd 1.1888 (+0.13%)
- UsdJpy 103.54 (+0.19%)
- DAX 12673 (+1.60%)
Biden appears to be the president-elect, according to the major news networks over the weekend on his projected win in Pennsylvania, even though Trump has not conceded defeat and legal challenges and recounting are still ongoing in some states. As such, risk assets are rallying but the USD is under pressure as the market is pricing in that Republicans will maintain control of the Senate. It seems we shall know the definitive outcome in January 2021.
Looking ahead: in the UK, the Internal Market Bill will return to the Lords today with a vote expected in the early UK afternoon at which ministers are expected to face a rough ride. FT said PM Johnson faces heavy defeat. Despite reassurances from Johnson that the peace process with North Ireland will not be undermined, opponents have said the current WB risks violating the terms of the 1998 Good Friday Agreement that ended conflict on the island of Ireland — something Mr Biden has expressed deep concern about. As noted in our weekly call, our traders believe that with Biden as President, it is in the UK’s interests to get a deal done (which should be positive for GBP).
Finally, watch for comments from ECB’s Lagarde and BOE’s Bailey.
Matters that Matter:
• New Zealand Fin Min Robertson: Small business loan scheme extended for 3 years
• Japan PM Suga: Want to arrange call with Biden and visit at right time; want to congratulate Biden and Harris warmly,
• BoJ Summary of Opinion: Measures are having positive impact; appropriate to keep examining the policy impact; must take right policy time as needed; should avoid premature end of measures; wrong to think BoJ stance weaker than peers; desirable for steeper super-long yield curve; need to monitor risks of deflation
• Biden plans for White House as Trump plans rallies to protest his election loss
• Biden win opens door for improved predictability in China-U.S. relations
• Clouds gather over battered USD in aftermath of U.S. election
• China Oct exports surge, imports rise amid global recovery
• UK PM Johnson says EU trade deal is ‘there to be done’
• Turkish lira firms as finance minister resigns after c.bank chief’s ouster
Majors 1-Day View:
USDJPY
- Prices posted a bearish outside week into Friday’s close, keeping signals bearish but with caution as readings are now extended at the Daily level. As such, pullbacks are to be expected but they should be temporary.
- USD weakness a theme
- Bids reported around 103.00, stop loss selling below.
EURUSD
• Prices posted a bullish outside week into Friday’s close with gains of over 2 Big Figs. As such, signals remain bullish for this week.
• USD sentiment bearish as market prices in Biden win and Republican Senate
• However, ECB bias and lockdowns leave EUR vulnerable on the crosses.
AUDUSD
• Prices posted a bullish outside week into Friday’s close, which keeps signals bullish into this week but with caution as readings are extended at the Daily level. As such pullbacks are to be expected, but should be temporary.
• AUD higher on rally in risk assets.
• Risk friendly result on expectations of improved U.S.-China trade relations with Biden as president.
GBPUSD
• Prices posted a bullish outside week into Friday’s close, which keeps signals bullish into the week but with some caution as prices are negotiating the October top at 1.3177 and temporary pullbacks are to be expected.
• Strong possibility UK gets a Brexit deal done as Biden concerned about current WB.
• UK to give extra support to families amidst lockdowns.
FX Relative ATR Grid
Comment: Ranges were extended last week in USD, Aud and Cad pairs. Those are the primary candidates for continuation this week.