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Please note the below upcoming USA Thanksgiving Holiday trading schedule for Instruments on our feed on 26th and 27th of November, 2020
*all times are server time (GMT+2)
Don't forget to ALWAYS BE GRATEFUL.
Please note the below upcoming USA Thanksgiving Holiday trading scheduleREAD MORE
Here is what you need to know on Tuesday, November 24:
Markets are advancing and the US dollar is retreating as the transition to Biden administration begins and former Federal Reserve Chair Janet Yellen is nominated as Treasury Secretary. US data is closely watched after Markit's PMI triggered a dollar rally on Tuesday. Vaccine news is also on the radar.
Transition: President Donald Trump finally authorized his administration to allow a transition to his successor Joe Biden. While Trump continues fighting in courts, the certification of his loss in Michigan and pressure from fellow Republicans pushed him to allow the General Services Administration to work with the President-elect's team. Markets responded positively to the news and the safe-haven dollar retreated.
Janet Yellen will probably become the next Treasury Secretary. The highly regarded central banker is set to push for expansive policies while refraining from going too far to the left, as a supporter of free trade. Her candidacy will probably easily pass muster in the Senate.
US data: Markit's Purchasing Managers' Indexes for November beat estimates with 56.7 in the manufacturing sector and 57.7 in the services one. The figures had an outsized impact, boosting the dollar and reversing its losses. House price and the Conference Board's Consumer Confidence are eyed later in the day.
Gold is licking its wounds at around $1,830 after tumbling down in response to upbeat economic figures. The precious metal is changing hands at the lowest in July.
Cryptocurrencies: Ripple's XRP has been leading the charge with a leap to $0.70. Ethereum hit the $600 mark while Bitcoin has been consolidating its gains above $18,000.
Vaccine: Doubts about the efficacy of the Astra/Zeneca/University of Oxford immunization candidate cooled market enthusiasm. The project reported an average of 70% efficiency but 90% using a lower dosage regimen. The third vaccine report in as many weeks had a limited impact on markets. Full data is expected later in the week.
The German IFO Business Climate figures for November are set to show a decline amid lockdowns. The final read showed Europe's largest economy growing by 8.5% against 8.2% originally published.
Europe's coronavirus cases are beginning to decline and governments are making plans for Christmas. Christine Lagarde, President of the European Central Bank, is due to speak later in the day.
GBP/USD is holding onto gains above 1.33 as markets await a breakthrough on Brexit. Officials conveyed a message that an accord is close, yet both sides have yet to agree on the thorny issues of fisheries and governance. Reports of an "interim deal" surfaced on Monday.
NZD/USD jumped after the Reserve Bank of New Zealand considered adding house prices to its mandate. Including rising house prices in calculating inflation would imply tighter monetary policy.
Oil prices have been extending their uptrend, with WTI trading above $43.
Markets are advancing and the US dollar is retreating as the transition to Biden administration begins and former Federal Reserve Chair Janet Yellen is nominated as Treasury Secretary. US data is closely watched after Markit's PMI triggered a dollar rally on Tuesday. Vaccine news is also on the radar...READ MORE
Focus back on fiscal response
It appears we’re moving seemlessly from one major risk to another at the moment in the markets. The election is still technically live, Covid is spreading like wild fire and battles are commencing in Washington and Brussels as households and businesses line up for support to help them navigate through another brutal wave of Covid. A fitting end to a ridiculous 2020.
The focus in the US is all about the coronavirus and the release of the FOMC minutes. The White House coronavirus task force is back and that is a sign the Trump administration realizes the current virus spread is expected to continue to rise. Many states are seeing record new cases and their ICU’s are at risk of running out of capacity.
The Fed’s minutes could provide further indications that policy-makers are ready to increase their asset purchases and possibly target purchases at the onger-end of the curve. The virus spread has worsened and given the growing long-term risks to the labor market, investors will expect the December meeting to be a live one.
Many states are expected to certify their election results and Republican pressure should build for President Trump to concede the election. President Trump’s refusal to concede the election is creating problems for Biden’s team to hit the ground running when they take over. The peaceful transfer of power was supposed to provide the Biden administration access to federal funding, office space, and all types of stockpile and vaccine information that will allow them to outline their COVID strategy.
The EU 2021-27 budget and pandemic relief talks earlier this year were quite straightforward. Far too straightforward, in fact, if you’ve been following the EU for years. Nothing ever happens that easily. Yes, there was a battle over whether the funds should be given as grants or loans but in the grand scheme of things, that’s nothing and was easily resolved. Nothing is ever that easy when it comes to the EU and now we’re seeing what we’ve become accustomed to. A dispute over the “rule of law” condition for accessing the funds, a stipulation clearly targeted at Hungary and Poland, forcing vetoes from, obviously, Hungary and Poland. Let the battle commence.
Although, like with Brexit, time is short.
The only thing that’s changed since last week is that one official has been struck down with Covid forcing the negotiations to go virtual at a critical stage. Talks were perhaps heading for the “face-to-face” stage between the two leaders – Boris Johnson and Ursula Von Der Leyen – but unfortunately the British Prime Minister is self-isolating after coming into contact with someone that tested positive so even that may have to be conducted over video link. What a shambles. It should not change the outcome, rather bring a fitting end to a shambolic four years.
The UK remains in lockdown and R has reportedly fallen to between 1 and 1.1, meaning some progress has been made these last two weeks. Whether that will be enough to significantly ease restrictions ahead of the holiday period is yet to be seen. Cases are steadying although fatalities continue to rise. The government and central bank have already undertaken major stimulus measures which means Brexit remains the only other major uncertainty. The pound has been a little sensitive to developments and while we may see a relief rally once a deal is announced, the major risk remains to the downside with an agreement now expected. Rishi Sunak’s spending review next week will be another closely followed event but I don’t expect an enormous amount of currently reaction to it.
The lira is more than 12% off its lows, after paring some gains, after the CBRT more than lived up to expectations on Thursday, raising rates by 4.5% and setting itself on a course for a “permanent” fall in inflation. The move was in stark contrast to previous efforts to tighten via the back door and the currency is reaping the rewards. Under the past Governor, the central bank appeared to be crumbling under political pressure but this change suggests a return to a more sustainable approach. Whether that continues is another thing, given President Erdogan’s well-known views on the link between inflation and interest rates.
China’s data calendar is quiet with just Industrial Profits on Friday which are expected to improve to minus 0.60% for October. The first week of December’s data releases will give more insight into whether China’s economic expansion is slowing due to slowdowns internationally.
China’s currency and stock markets should continue to remain firm with the Federal Reserve expected to ease in December and US stimulus talks resuming. Investors will be watching for signs of increased stress in the financial system after a number of corporate bond defaults this week. I do not believe though, that it is symptomatic of a deeper problem at this stage.
No significant data this week. Hong Kong markets may be weighed down by a fresh outbreak of Covid-19 in multiple locations across the territory. That also jeopardises the new Singapore/Hong Kong travel bubble and may see leisure sector equities get marked down along with consumer discretionary.
Markets are ignoring the ongoing erosion of Hong Kong’s democracy.
India is in the grip of stagflation as it wrestles with the Covid-19 pandemic/recession. INR gained little benefit from Dollar weakness and remains the regional underperformer. Credit quality concerns and banks persist.The newly installed monetary policy team at the RBI may be seeing light at the end of the tunnel though, with WPI data easing. That may give the RBI room to cut rates in the coming quarter.
Covid-19 continues to torpedo the domestic economy and India is best avoided altogether at the moment from an investor standpoint.
The New Zealand Dollar continues to outperform after the RBNZ left rates unchanged. With a weaker US Dollar in prospect, the Kiwi could move through 0.7000 this week.
Q3 Retail Sales is old news and will be ignored by markets.
Australia Retail Sales and Employment massively outperformed this week underpinning both the currency and the stock market. The resilience of the Australian data is showing zero effects from China’s export embargo, and suggests that the domestic economy is rapidly recovering to pre-Covid-19 levels. Resource prices continue to be high, strengthening the export sector.
PMI’s on Monday should reinforce the recovery outlook in an otherwise quiet week. Australian stock markets have been content to follow Wall Street slavishly and with US fiscal talks restarting, should remain supported on expectations of a positive outcome.
Australia remains vulnerable to further export boycotts from China, especially if the previously sacrosanct iron ore sector is targeted.
A quiet week for data releases before the start of December, with Tokyo CPI on Friday expected to show Japan is grappling with deepening deflation. That should be positive for the Yen which could test 103.00 next week.
Japan equities continue to outperform as part of the vaccine rotation recovery play.
Covid-19 cases are spiralling in Japan, but the government is refusing to initiate lockdowns. That could erode and already deeply recessive domestic market, and could see Yen repatriation increase. The government keeps talking (a Japan speciality) about extra budgets and fiscal stimulus. We are yet to see any signs of concrete policy though.
Oil prices are once again pushing against major resistance but, as yet, failing to gather any momentum at the right time. WTI is sitting around $42 and Brent $44.50, right at the upper end of the range but once again they’ve failed to hold on slightly above here and pulled back. A breakout still looks more likely than not but it’s not giving way easily.
The vaccine news has been a gamechanger for the outlook. No longer is OPEC+ the only major upside risk and, in fact, the group may decide that further modifications are no longer warranted if prices manage to break to the upside ahead of the meeting on 17 December. If WTI could even break $45 before then, it may be hard to get the whole group on board with any significant tweaks unless they see an opportunity to push prices above $50 and provide a buffer.
Gold continues to languish around its lows, piling pressure on the $1,850-1,860 support region that’s been so reliable over the last few months. It’s looking very vulnerable all of a sudden, with positive vaccine news having become a major downside risk for the yellow metal.
This is despite yields having given up the vaccine gains to trade back around pre-election levels and the dollar slumping around its lows as a result. It should be an interesting few weeks for gold which for much of this year has been driven by the greenback and aligned itself with positive risk appetite. Both of those relationships look fractured suddenly and instead it exists in a perennial state of fear of the vaccine.
Should $1,850 fall, we could see a rapid move back towards $1,800, with any stops below current support likely accelerating any downside initially.
New highs in bitcoin looks basically inevitable at this point. In fact, I’m a little surprised they haven’t hit them already. It’s been two days since it came close to $1,850. Dragging its feet a little, by its own standards. Given how the last month has gone and the hype that’s back with a bang, you can only imagine where it will go next if new highs are made. $25,000? Maybe $30,000 by year-end? The euphoria is back and while the ride to the top may be fun, the bit that follows has historically shown to be quite the opposite. No doubt it will be an interest end to the year for the crypto community.
Key Economic Events
Saturday, November 21st
– The Group of 20 Leaders’ 2-day Summit begins
– Brexit trade deal negotiations in focus
Sunday, November 22nd
– Hong Kong and Singapore test travel bubble that could allow reciprocal quarantine-free travel for anyone from either side.
Monday, November 23rd
– This week the U.K. and French governments reveal their coronavirus strategies
– San Francisco Fed President Daly speaks on pandemic impact and the future of cities. Chicago Fed President Evans takes part in a moderated Q&A, hosted by the Iowa Bankers Association.
– ECB Executive Board member Schnabel speaks at a money market conference.
– Bank of England chief economist Haldane participates in Charity Finance Week.
– Bank of Canada Deputy Governor Gravelle gives a speech
– The EU’s monthly MARS bulletin on weather and crop conditions is published.
U.S. Nov Markit Manufacturing: 52.5e v 53.4 prior
New Zealand retail sales ex inflation
Australia Markit PMIs
Singapore CPI, GDP
Taiwan unemployment, industrial production
PMIs: Euro-area, U.K.
Tuesday, November 24th
– St. Louis Fed President Bullard takes part in a Bank of Finland monetary policy webinar hosted by Governor Rehn. ECB Executive Board member Isabel Schnabel also speaks.
– ECB Chief Economist Lane speaks at an IMF event.
– BOE policy maker Haskel speaks on a panel
U.S. FHFA house price index, Conf. Board consumer confidence
Germany GDP components, Ifo business climate Nov 90.9e v 92.7 prior
France manufacturing confidence
Turkey capacity utilization
Hong Kong trade
Macau visitor arrivals
Wednesday, November 25th
– Hong Kong Chief Executive Carrie Lam delivers a long-awaited policy address that she postponed last month to consult China
– U.K. Chancellor of the Exchequer Sunak reveals the government’s spending plans for the next year.
– Austria Central Bank Governor Holzmann presents Austria’s financial stability report.
– The ECB publishes its Financial Stability Review.
– The Federal Reserve releases the minutes from its last meeting. Investors will look to see if they provide any hints to increasing their asset purchases or if they are closer to adopting yield curve control.
– EIA crude oil inventory report
US wholesale inventories, GDP, initial jobless claims, durable goods, personal spending/income, University of Michigan sentiment, FOMC meeting minutes, new home sales
Mexico retail sales, Central Bank inflation report
Brazil current account balance
South Korea business survey
Japan PPI services
Australia construction work done
CPI: Malaysia, South Africa
Thursday, November 26th
– The US stock and bond markets are closed in observance of the Thanksgiving holiday.
– ECB Chief Economist Philip Lane speaks at Trinity College Dublin.
– Bank of Korea Governor Lee Ju-yeol post-rate decision press conference
– The ECB publishes the account of its October monetary policy meeting.
Mexico GDP, Banxico meeting minutes
New Zealand trade
Australia private capital expenditure
Sweden rate decision: Expected to keep repo rate and asset purchases unchanged
Japan machine tool orders, leading index
Singapore industrial production
South Korea rate decision: Expected to keep rates steady at record low level
Friday, November 27th
– SIFMA recommends an early market close at 2 p.m. EST for U.S. dollar-denominated fixed-income securities.
– In the US, Black Friday kickoffs the holiday buying season for many Americans.
– ECB Executive Board member Panetta speaks at a Bundesbank conference.
– ECB Executive Board member Schnabel speaks at the Destatis conference.
– BOE policy maker Silvana Tenreyro speaks at a Bank of France event.
Colombia rate decision: Expected to keep Overnight Lending Rate unchanged at 1.75%
Japan Tokyo CPI
China industrial profits
GDP: Taiwan, India, France, Finland, Sweden
Euro-area economic confidence
Italy consumer, manufacturing confidence
Retail sales: Spain, Sweden
Sovereign Rating Updates
– Ireland (S&P),
– Belgium (Moody’s),
– Switzerland (Moody’s)
It appears we’re moving seemlessly from one major risk to another at the moment in the markets. The election is still technically live, Covid is spreading like wild fire and battles are commencing in Washington and Brussels as households and businesses line up for support to help them navigate through another brutal wave of Covid. A fitting end to a ridiculous 2020...READ MORE
Here is what you need to know on Friday, November 20:
The US dollar is marginally lower amid a clash between the US Treasury and the Federal Reserve over stimulus funds. Coronavirus fears and vaccine news are moving markets as well. Brexit developments are eyed.
The safe-haven dollar has pared some of its gains triggered by a rare public spat between America's top economic institutions. Treasury Secretary Steven Mnuchin demand $580 billion in unused funds to be returned from the Federal Reserve. The bank's response was that the money is used as an emergency lending facility. It is unclear what the Treasury wants to do with the funds, but the out-in-the-open fight weighed on markets.
Raphael Bostic, President of the Atlanta branch of the Federal Reserve, pushed back against the Fed. Robert Kaplan, his colleague from the Dallas Fed, speaks later in the day. Speculation about the Fed's next moves is also rife.
Coronavirus: The US hit a new daily high of 185,000 infections on Thursday, with hospitalizations and mortalities also hitting peak levels. Cases remain elevated in Germany and are edging lower in France.
Vaccine: Pfitzer and BioNTech are set to apply for emergency authorization for their immunization candidate as early as Friday. The EU secured additional vaccines from both Pfizer and CureVac.
Brexit: Contradicting headlines are rocking the pound. France and Belgium have reportedly asked the EU to step up preparations for a no-deal Brexit. On the other hand, others expect a deal to come to fruition. Face-to-face talks have been suspended after one team member tested positive for coronavirus. Brussels' chief negotiator Michel Barnier is set to brief EU ambassadors.
UK Retail Sales beat estimates with an increase of 1.2% in October, showing the resilience of the British consumer ahead of the second nationwide lockdown.
US politics: President-elect Joe Biden remains the winner in Georgia after the state completed a manual recount. The Peach State and additional battelground ones are set to certify the results. President Donald Trump summoned Michigan Republicans to the White House to try to influence the results. So far, his legal attempts have failed.
USD/CAD is trading below 1.31 amid modestly rising oil prices and ahead of Canada's Retail Sales report. Minor increases are on the cards for September.
Bitcoin has recaptured the $18,000 level after a short consolidation period. Ethereum has been edging up toward $500.
The US dollar is marginally lower amid a clash between the US Treasury and the Federal Reserve over stimulus funds. Coronavirus fears and vaccine news are moving markets as well. Brexit developments are eyed...READ MORE
The yellow metal extends the weekly leg lower and navigates at shouting distance from the key support area near $1,850 per ounce troy.
The better note around the greenback puts the metal under pressure and forces it to grind lower for the fourth consecutive session on Thursday in spite of the corrective downside in yields of the US 10-year reference.
The dollar manages to regain the smile after recent bearish sessions and despite the US calendar showed Initial Claims rising by 742K WoW and the Philly Fed index easing to 26.3 in November (from 32.2). The reading, however, came in above estimates.
Gold key levels
As of writing Gold is retreating 0.65% at $1,859.87 and faces the next support at $1,850.62 (monthly low Nov.9) seconded by $1,848.66 (monthly low Sep.26) and then $1,792.53 (200-day SMA). On the upside, a surpass of $1,899.05 (weekly high Nov.16) would expose $1,933.28 (monthly high Oct.12) and finally $1965,55 (monthly high Nov.9).
The yellow metal extends the weekly leg lower and navigates at shouting distance from the key support area near $1,850 per ounce troy....READ MORE
Here is what you need to know on Thursday, November 19:
The market mood is mixed as rising US coronavirus figures counter hopes for a quick via a vaccine. Brexit talks have yet to yield a breakthrough and the Australian dollar falls to rise on upbeat labor figures. US jobless claims and another speech by the ECB's Lagarde are eyed.
US coronavirus deaths have hit the grim milestone of 250,000 and hospitalizations have hit a new high above 79,000. While there are some tentative signs of flattening of the case curve, additional states are imposing restrictions. New York's schools will close in the most high-profile development.
In the old continent, German coronavirus infections and deaths remain elevated but France is beginning to bend the case curve. Japan is also suffering an increase in cases.
Pfizer and BioNTech reported efficacy of 95% in their updated vaccine candidate figures, ahead of asking for emergency use authorization. The latest report also shows immunization is sustained in high-risk patients. Further information from Moderna and other companies is awaited.
AstraZeneca and the University of Oxford reported significant immune response among adults in its Phase 2 trial and said that Phase 3 figures are likely within several weeks.
Brexit: London and Brussels have yet to reach an agreement on future relations ahead of an EU leaders' videoconference later in the day. Apart from talks with the UK, the 27 leaders in the bloc will try to unleash a long-term budget, after objections from Poland and Hungary over rule-of-law clauses.
Britain and Canada are nearing a free trade agreement, according to Bloomberg. The pound has been on the back foot after rising on Wednesday. An official update on negotiations is due early on Friday.
Australia reported a leap of 178,800 jobs in October and an unemployment rate of 7%. While both figures beat estimates, AUD/USD eventually retreated from the highs.
US Unemployment Claims are set to remain around 700,000, indicating stabilization after a gradual decline. Existing Home Sales and the Philly Fed Manufacturing Index are also eyed.
Bitcoin has dropped below the $18,000 mark after surging above that level on Wednesday. High volatility continues in cryptocurrencies.
Oil prices are stable around $41 amid reports that the United Arab Emirates could leave OPEC amid a rift with Saudi Arabia.
he market mood is mixed as rising US coronavirus figures counter hopes for a quick via a vaccine. Brexit talks have yet to yield a breakthrough and the Australian dollar falls to rise on upbeat labor figures. US jobless claims and another speech by the ECB's Lagarde are eyed...READ MORE
EUR/USD pushes higher and approaches the key up barrier at 1.19 the figure on Wednesday.
On the upside, the immediate hurdle is located in the 1.19 neighbourhood. If the bullish impetus gathers extra impulse the investors should shift the focus to the monthly top around 1.1920 (November 9). Once cleared, the pair is then forecast to attempt a move to August’s high at 1.1965 (August 18).
Looking at the broader scenario, extra gains in EUR/USD are likely while above the critical 200-day SMA, today at 1.1366.
EUR/USD pushes higher and approaches the key up barrier at 1.19 the figure on Wednesday...READ MORE
Here is what you need to know on Wednesday, November 18:
Markets are edging lower and the safe-haven yen is in demand as the increase in coronavirus cases outweighs vaccine optimism again. Central bankers also expressed caution. Bitcoin surges above $18,000 while optimism about Brexit is keeping the pound bid.
COVID-19 figures continue rising all over the world. US hospitalizations hit a new record above 76,000, Germany reported 305 deaths, the highest since April, and infections have hit the two million mark in France. Cases are rising in Japan and Southern Australia imposed restrictions following an increase there.
Christine Lagarde, President of the European Central Bank, said that the recent vaccine news is "not a game-changer" – at least not in the short term. The ECB needs to be aware of the full situation. Jerome Powell, Chairman of the Federal Reserve, welcomed the immunization developments, yet also expressed caution on the current situation.
Vaccine: Pfizer has announced it has passed a key safety milestone on the course to apply for emergency use authorization of its immunization candidate.
Bitcoin briefly topped $18,000, the highest since late 2017, before the cryptocurrency dropped back down. BTC/USD is on an upward trajectory as the pandemic causes investors to explore new assets.
Brexit: The Telegraph reported that France may have compromised on the sensitive topic of fisheries, opening the door to striking a Brexit deal next week. GBP/USD is holding onto the high ground around 1.3250.
US Retail Sales disappointed with a modest increase in October. Raphael Bostic, President of the Atlanta branch of the Federal Reserve, said that some people may be running out of money.
US Building Permits and Housing Starts stand are eyed on Wednesday, alongside a speech by the Federal Reserve's John Williams.
US elections fallout: President Donald Trump fired a top cybersecurity adviser who said that the elections were secure, in his attempt to overturn the results. In the meantime, the certification process continues and President-elect Joe Biden continues announcing appointments to his incoming administration.
Final eurozone inflation figures are set to confirm a drop of 0.3% in the headline Consumer Price Index of 0.3% in October. Canada's CPI figures are set to show modest increases.
arkets are edging lower and the safe-haven yen is in demand as the increase in coronavirus cases outweighs vaccine optimism again. Central bankers also expressed caution. Bitcoin surges above $18,000 while optimism about Brexit is keeping the pound bid...READ MORE
Both COVID and the process of setting the future relationship with the EU have increased uncertainty, Bank of England (BoE) Governor Andrew Bailey notes in a speech prepared for delivery at TheCityUK National Conference.
Additional takeaways as summarised by Reuters
"In my view, quantitative easing at a time like this can prevent an unwarranted tightening in financial conditions."
"We have had encouraging news on the vaccine front."
"Vaccine news will play a major role in lowering the level of uncertainty."
"More financing will be needed to ensure viable businesses survive and to finance the need for investment."
"We need to ensure that this is done without excessive leverage."
"If COVID changes to economy persist, they could require a reallocation of labour and capital, and this reallocation could be more or less costly."
"My best guess is that there will be lasting changes."
"We can now see some light at the end of the tunnel."
"We need to focus more on important questions about how our economies will look in the future."
The GBP/USD pair edged higher after these comments and was last seen gaining 0.45% on the day at 1.3252.
Both COVID and the process of setting the future relationship with the EU have increased uncertainty, Bank of England (BoE) Governor Andrew Bailey notes in a speech prepared for delivery at TheCityUK National Conference...READ MORE
There is nothing like the first time – Moderna's encouraging vaccine news only had a short-lived impact on markets. Concerns about the current spread of coronavirus have taken over. However, optimism may return.
The pharmaceutical firm reported a whopping 94.5% efficacy rate in its COVID-19 immunization candidate, and also a higher storage temperature that would facilitate its distribution. Stocks jumped and the euro advanced, but not for long.
Perhaps one of the reasons for the lack of a significant impact on the euro is that the EU is relying on other efforts and has a limited agreement with Moderna. On the other hand, European Commission President Ursula von der Leyen announced a deal with CureVac, another company using the same mRNA approach applied by Pfizer, Moderna and others.
The markets' fresh mellow mood stems mostly from new restrictions imposed in the US. Calfornia, the largest state, hit the brakes on its reopening program, while Iowa, New Jersey and others also announced limitations. The seven-day rolling average of infections is at around 150,000 per day, and hospitalizations hit a new high of 73,000.
The old continent is also struggling. While the caseload in France has sharply fallen off the highs, Intensive Care Units remain under pressure. In Germany, Chancellor Angela Merkel continues seeking tougher restrictions after an initial meeting with regional leaders failed to yield an agreement.
Nevertheless, the question is not how will the world emerge from the covid crisis, but when. AstraZeneca, Johnson & Johnson, and others are set to provide preliminary results in the next few weeks, paving the way out.
In the shorter term, a speech from Jerome Powell, Chairman of the Federal Reserve, could provide a boost for EUR/USD. The world's most powerful central banker opened the door to more bond-buying in early November and may reiterate his call in a speech later in the day. That could weigh on the dollar.
Powell will also have the chance to respond to Retail Sales figures for October. Economists expect an increase of 0.5% in headline consumption, a more moderate pace than the jump of 1.9% reported in September. The lack of fiscal stimulus may have weighed on expenditure last month.
Another minor factor that could boost the common currency is Brexit. According to The Sun, Chief UK Negotiator David Frost said an agreement could come early next week. Both sides are trying to make progress ahead of an EU leaders' videoconference on Thursday. While the pound is the primary mover, the common currency would also benefit from calm. The election of Joe Biden as US President could push Britain to strike a deal.
All in all, fundamentals are pointing higher.
Euro/dollar is trading with an upwards parallel channel in the past week and benefits from upside momentum on the four-hour chart. It is also holding above the 50, 100 and 200 Simple Moving Averages, another bullish sign.
Resistance awaits at the weekly high of 1.1860, followed by 1.19, a round number that capped EUR/USD in recent weeks. Further up, 1.1920 is the next level to watch.
The first line of support is 1.1915, the weekly bottom, followed by 1.1780, a swing low last week. The November 11 trough of 1.1740 is next down the line.
There is nothing like the first time – Moderna's encouraging vaccine news only had a short-lived impact on markets. Concerns about the current spread of coronavirus have taken over. However, optimism may return...READ MORE
Here is what you need to know on Tuesday, November 17:
Markets are off the highs and the US dollar is finding its feet as fresh restrictions in various US states counter optimism from the second coronavirus vaccine breakthrough. Optimism on Brexit is boosting the pound and the all-important retail sales are eyed.
US coronavirus restrictions: California "hit the emergency brake" on its reopening while Iowa and New Jersey slapped new restrictions to curb the spread of coronavirus. Around 148,000 COVID-19 cases were recorded on Monday and hospitalizations topped 73,000, the latter being a new record.
The US dollar is finding its feet after coming under some pressure and S&P 500 futures are down. On Monday, stocks surged after Moderna reported 94.5% efficacy in its covid vaccine candidate. Moreover, the firm's immunization doses can withstand higher temperatures for longer, contrary to the Pfizer/BioNTech vaccine. Both pharmaceuticals apply the novel mRNA approach, used also by other immunization efforts in the pipeline.
Brexit: Ireland's Prime Minister Micheal Martin said that the "contours of a deal are there" but he is unsure if his British counterpart Boris Johnson is ready to go for one. The Sun, a tabloid, reported that an accord may come shortly. GBP/USD temporarily advanced in response to the headline. Talks continue in Brussels ahead of an EU leader videoconference on Thursday.
US Retail Sales are set to rise by around 0.5% in October, a relatively moderate pace in comparison to September's 1.9% leap. Consumption is central to America's economy.
Jerome Powell, Chairman of the Federal Reserve, will speak later in the day and may provide hints if the bank is set to expand its bond-buying scheme. The Fed opened the door to more action in its recent rate decision. Powell is likely to call on lawmakers to act.
President-elect Joe Biden addressed the nation amid rising covid infections and called for an economic relief package. However, officials are busy in the Senate runoff due in January, which determines control of the upper chamber.
German Chancellor Angela Merkel has failed to reach an agreement with regional leaders on tougher restrictions to curb the disease. Austria announced a three-week national lockdown and also Sweden imposed new restrictions.
Bitcoin is rising, trading closer to $17,000. Citibank's technical analysts set a target of $318,000.
Markets are off the highs and the US dollar is finding its feet as fresh restrictions in various US states counter optimism from the second coronavirus vaccine breakthrough. Optimism on Brexit is boosting the pound and the all-important retail sales are eyed...READ MORE
Risk flows started to dominate financial markets on Monday after Moderna announced that the latest trial showed that its coronavirus vaccine candidate if 94.5% effective. Additionally, the company said that the vaccine is expected to remain stable at standard refrigerator temperatures of 2° to 8°c for 30 days, per Reuters.
The company further noted that the vaccine is expected to last for 6 months in shipping and long-term storage conditions at standard freezer temperatures of -20°c (-4°f).
According to the statement, Moderna will be seeking authorization for emergency use of the vaccine in the US in the coming weeks. Moreover, the company added that it already has millions of dozes ready to ship pending FDA authorization.
With the initial market reaction, gold came under strong selling pressure and the XAU/USD pair was last seen losing more than 1% on a daily basis at $1,865.
Additionally, the S&P 500 futures are now up 1.05% on the day, confirming the positive shift in market sentiment.
Risk flows started to dominate financial markets on Monday after Moderna announced that the latest trial showed that its coronavirus vaccine candidate if 94.5% effective. Additionally, the company said that the vaccine is expected to remain stable at...READ MORE
OPEC Secretary-General Mohammad Barkindo noted on Monday the resurgence of infections from COVID-19 and new lockdown measures in Europe continue to hamper the global economic and oil market recovery.
"On the positive side, he said, there is progress on developing vaccines, with hopes that these could be available soon," OPEC tweeted out. "Barkindo stressed the need to remain vigilant and ready to respond to shifts in market conditions and continue to work towards sustainable oil market stability."
Crude oil prices largely ignored those comments and the barrel of West Texas Intermediate was last seen gaining 2.45% on the day at $41.10.
OPEC Secretary-General Mohammad Barkindo noted on Monday the resurgence of infections from COVID-19 and new lockdown measures in Europe continue to hamper the global economic and oil market recovery...READ MORE
Here is what you need to know on Monday, November 16:
The market mood is upbeat ahead of Moderna's vaccine news and the US seems to be moving forward from the elections. A broad Asian trade deal and upbeat Chinse data are also boosting the moment. Brexit talks are reaching another crunch moment while the prime minister is in isolation again.
Coronavirus: Markets are focusing on hopes that Moderna joins Pfizer and announces upbeat results in its COVID-19 vaccine. Optimism is boosting stocks while the dollar is down across the board. AstraZeneca and Johnson&Johnson are also conducting late-stage tests.
Investors seem to be shrugging off concerns about the spread of the disease in the northern hemisphere, and especially in the US. Hospitals in several states have hit capacity.
US politics: President-elect Joe Biden clarified that he does not intend to impose a nationwide lockdown as he prepares to take office. The Democrat is set to announce additional roles in his administration, including Treasury Secretary.
President Donald Trump seemed to recognize Biden's victory before retracting. The recount in Georgia is set to end in the next few days and is unlikely to change the result. Additional senior Republicans have urged him to allow a smoother transition and markets are focused on the runoff races which will determine control of the Senate.
Chinese industrial output beat estimates with an annual increase of 6.9% in October, while Retail Sales disappointed with 4.3%. China, Japan, and 13 other Asia-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP) which gradually removes trade barriers.
UK: Prime Minister Boris Johnson is isolating after coming in contact with an MP who tested positive for coronavirus. The PM has reported no symptoms and continues working.
Brexit negotiations continue and both sides aim to reach an agreement by Thursday when EU leaders convene. Some expect progress after Biden's election and the departure of Dominic Cummings, a senior adviser to Johnson who was the architect of the Vote Leave campaign.
Christine Lagarde, President of the European Central Bank, and Richard Clarida, Vice-Chair of the Federal Reserve, will speak late in the day.
Gold has been edging higher, but XAU/USD still trades below the $1,900 level. Bitcoin is trading above $16,000 again, resuming its gains after consolidating beforehand.
The market mood is upbeat ahead of Moderna's vaccine news and the US seems to be moving forward from the elections. A broad Asian trade deal and upbeat Chinse data are also boosting the moment. Brexit talks are reaching another crunch moment while the prime minister is in isolation again...READ MORE
Virus rages on, a wrath of Fed speak, US retail sales slower pace,
Next week is filled with lots of Fed speak, an expected sixth consecutive increase with US retail sales, and possible COVID-1 vaccine results from Moderna. Financial markets remain fixated on the coronavirus, with much attention falling on the US, which is consistently having fresh records with both daily new cases and hospitalizations, while averaging over 1,000 American daily deaths. Economic activity in the short-term will certainly take a hit as lockdowns return and as parents prepare for schools to close, but financial markets are trying to look beyond the winter wave of the virus.
The focus in the US is all about the coronavirus. All the COVID data points are heading in the wrong direction. New coronavirus cases are rising exponentially, with many health experts fearing cases to reach the 200,000-daily level within the week and over 300,000 new infections by December. Hospitalizations are already at the peak levels during the first and second waves, and the current trajectory could see it double in a month. The harsh reality of lockdowns and school closures will cripple economic activity for possibly much of the winter and raise the need for fresh fiscal stimulus.
Risk appetite will likely take a strong queue from Moderna’s phase 3 vaccine results which are due any day. Expectations are high for Moderna’s vaccine, which uses mRNA technology just like Pfizer’s vaccine, to post a similar effective rate around 90%.
The Biden administration begins the process of announcing key appointments. President-elect Biden named Ron Klain as Chief of Staff. Klain was the Ebola Czar in 2014 and signals Biden is making appointees that can hit the ground running. Health officials embraced Biden’s decision to select Klain as he was successful in getting agencies to work together.
Wall Street will pay close attention to Biden’s Treasury Secretary pick as they will have the difficult task of supporting a labor market that is at risk of having permanent damage, bridging the wealth inequality gap, and pushing along climate change initiatives. Current Fed Governor Brainard and former-Fed Chair Yellen are likely to be at the top of Biden’s list.
Not much has changed from the EU side. More stimulus is still expected in December as the lockdowns in Europe wipe out the economic recovery they had been enjoying. Vaccine news is a big positive but won’t help over the next few months.
While frustrations are starting to re-emerge as officials from both sides lock horns on the thorniest issues around a new deal, there is still clearly a desire on both sides to get something done. One thing has not changed, it would be a catastrophic error on both sides if talks were to fail now. Not only has enormous amounts of time and effort gone into this process but we’re in the midst of an economically ruinous pandemic and the two sides should be using this opportunity to emerge stronger as partners. I still think that is what will happen but maybe we have one more twist in this ridiculous soap opera to endure before we reach a happy ending.
The UK bounced back strongly in the third quarter but failed to make up fully for lost output in the second, with the economy still 8.6% smaller than in January. The fourth quarter isn’t going to get any easier which is why the BoE added £150 billion to its quantitative easing program. Not much is likely to change for the foreseeable future, with this aiming to see the central bank through to the end of 2021.
The Turkish lira has bounced back strongly after the central bank head was sacked and finance minister resigned. A new economic agenda sounds good on the face of it but the currency will quickly reverse course if this proves to be nothing more than talk.
China Industrial Production and Retail Sales Monday. October holidays will soften Industrial Production but not by much. Those holidays will lift the Retail Sales. Should be market positive.
China PBOC rate decision Friday. 1 & 5-year loan prime rates to remain unchanged. Will maintain the strength of the Yuan with China having a significant yield advantage for international investors.
The regulations on how China’s big-tech conducts business will be finalised. Nearly $300 billion of market cap shed this week across Alibaba, JD.Com, Baidu etc. The significance of moves by the central government cannot be underestimated. The decision will weigh on China equity markets next week.
Hong Kong CPI Friday expected to rise slightly into positive territory, but highlight the domestic economy remains in deep recession.
Hong Kong equities well placed to benefit from further cyclical rotation if new vaccine announcements appear.
Markets are ignoring the ongoing erosion of Hong Kong’s democracy.
WPI on Monday to hold steady at 1.50%. No other data.
In other words India is in the grip of stagflation as it wrestles with the Covid-19 pandemic/recession. INR gained little benefit from Dollar weakness and will remain a regional underperformer. Credit quality concerns and banks persist.
New Zealand Dollar the week’s outperformer after RBNZ left rates unchanged. Very little chance of negative rates now.
No significant data, but new community cases of Covid-19 in Auckland could potentially signal a new lockdown there and be NZ equity and NZD negative.
Employment Wednesday is expected to ease as initial post-lockdown gains in the domestic economy start to wane. Potentially equity and currency negative if the number misses badly.
AUD/USD eases versus the US Dollar and the Kiwi on China exports fears and after the RBA cut rates to 0.10%.
China appears to be waging a silent trade war with Australia. Effectively blocking all key exports except Iron Ore and Gas, but verbally telling importers to source elsewhere. If officially confirmed, strong negative for Australia equities and AUD, as Australia has let itself become a one trick pony.The story is finally gaining more traction in the press and appears to be weighing on sentiment at last.
Japan data releases this week expected to be mostly market positive, reinforcing an acceleration of the modest recovery. GDP will rebound 19% for Q3 as will Sep Industrial Production. October Inflation YoY to rise to 0.20%, an excellent job when you are Japan. PMI’s to rise above 49.0 on Friday, close to neutral from contracting.
The Yen has fallen heavily on vaccine hopes this week, delivering a positive boost to the Nikkei which has outperformed. That should continue with a long-term top on Yen appreciation probably in place.
Government said to be planning an extra budget, markets positive.
Crude prices will likely remain rangebound until the crude demand outlook can have better certainty as to how many vaccines will get the greenlight and when they will be readily available for mass distribution. In the short-term, oil won’t be able to shake lockdown fears as coronavirus continue to skyrocket across the US. The US situation is very bleak as cases, hospitalizations, and deaths continue to rise sharply, likely raising expectations that they will follow the path of Europe and see regional lockdowns.
Yesterday, the US had 163,402 new cases, 1,172 deaths, and over 67,000 hospitalized. Oil prices are finishing the week on a down note but are still holding onto Pfizer’s positive vaccine news from earlier in the week. All eyes remain on Moderna’s vaccine results which should happen any day now.
The crude demand outlook will be terrible for the next few months, but very optimistic for the second half of 2021. OPEC+ continues to do their part to try to bring the oil market to balance after reportedly having 101% compliance with October’s production cuts. WTI crude has been through worse this year and will likely remain trapped around the $40 level until Europe is on the other side of their current COVID wave. The US is a few weeks behind Europe, but regional lockdowns in America will not completely be devastating to the demand as Asia leads the way and Europe nears the easing of restrictions.
Gold prices are surging on safe-haven flows as coronavirus cases grow exponentially across the US. The economic challenges are growing as US states and cities tighten restrictions, which should continue to put pressure on Congress to provide more aid. Russia’s sovereign fund reportedly is considering investing into precious metals, a sign they see it as a more sustainable investment in the long-term.
Gold has steadied following the ‘right hook’ it took after the surprisingly positive data from Pfizer’s experimental vaccine. The vaccine news triggered the biggest weekly outflow for gold ETFs since March. Yesterday, three of the world’s top central bankers welcomed the vaccine news but highlighted the short-term risks to the global outlook should force them to provide more support. The virus spread across the US will force Congress to provide more accommodation, but right now it doesn’t seem House speaker Pelosi and Senate Majority Leader McConnell are anywhere close to breaking the impasse.
If gold can hold onto the $1,890 level in the short-term, prices should continue to consolidate higher. The path to record high territory will be a bumpy one for gold, but it is still there because the reflation trade is not going away anytime soon.
Saturday, November 14th
– US Secretary of State Michael Pompeo begins a 10-day trip to France, Turkey, Georgia, and the Mideast.
Sunday, November 15th
Turkish President Recep Tayyip Erdogan visits northern-Cyprus
Brazilians vote over 5,500 mayors and 57,000 city council members in an election that is viewed as a referendum on President Bolsonaro’s government.
Monday, November 16th
China October Industrial Production Y/Y: 6.7%e v 6.9% prior; Retail Sales Y/Y: 5.0%e v 3.3% prior
Hedge funds disclose Q3 investments in 13F filings
Brexit talks continue in Brussels
Fed Vice Chair Richard Clarida will take part in an online discussion hosted by the Brookings Institution.
Rapid testing schemes are being rolled out across over 60 local authorities across England
United Airlines starts program that offers rapid COVID-19 testing on flights to London from Newark, New Jersey. Program runs until December 11th.
US Nov Empire manufacturing: 13.8e v 10.5 prior
Canada manufacturing sales
Japan GDP, industrial production, capacity utilization
Turkey budget balance
Tuesday, November 17th
Fed presidents Bostic of Atlanta, Daly of San Francisco, Kashkari of Minneapolis and Rosengren of Boston take part in a virtual conference on racism and the economy
Facebook CEO Zuckerburg and Twitter CEO Dorsey will testify before a Senate panel about their decision to restrict an article about the son of President-elect Joe Biden.
OPEC+ Joint Ministerial Monitoring Committee meeting
US retail sales to post sixth straight monthly increase in October. Total retail sales are now well above pre-pandemic levels.
US Oct retail sales advance M/M: 0.5%e v 1.9% prior, industrial production M/M: 1.0%e v -0.6% prior, Net TIC flows
Canada housing starts
Singapore non-oil domestic exports, electronic exports
New Zealand non-resident bond holdings
Hungary rate decision: Expected to keep rate unchanged at 0.60%
Norway Q3 GDP Mainland Q/Q: 5.2%e v -6.3% prior
Hong Kong composite interest rate, unemployment
Wednesday, November 18th
New York Fed President John Williams takes part in a webinar hosted by the Society for Advancing Business Editing and Writing.
Dallas Fed Kaplan moderates a virtual discussion hosted by his bank.
St. Louis Fed President Bullard speaks to the Rotary Club of Hot Springs National Park.
Atlanta Fed President Bostic takes part in a Fed-hosted webinar about how diverse perspectives improve economics.
U.S. housing starts, building permits
EIA crude oil inventory report
New Zealand PPI
Australia Westpac leading index, wage price index
South Africa retail sales
Singapore GDP Final Q3 GDP readings
Thursday, November 19th
European Union leaders hold a summit to discuss the current strategy being used to contain the coronavirus.
US initial jobless claims, leading index, existing home sales
Australia unemployment, RBA FX transactions, participation rate
Japan metropolitan condominium sales
South Africa rate decision: Expected to keep interest rate unchanged at 3.50%
Turkey rate decision: Expected to raise One-Week Repo Rate 400 basis points to 14.25%
Friday, November 20th
The US and Taiwan hold economic dialogue in Washington.
Kansas City Fed President George gives a speech on energy and the economy.
Dallas Fed President Kaplan also speaks.
Canada retail sales
Japan CPI, Jibun Bank PMI
New Zealand credit card spending
Taiwan export orders
Hong Kong CPI
Sovereign Rating Updates
South Africa (S&P & Moody’s)
Next week is filled with lots of Fed speak, an expected sixth consecutive increase with US retail sales, and possible COVID-1 vaccine results from Moderna. Financial markets remain fixated on the coronavirus, with much attention falling on the...READ MORE