The major US stock indices have soared to reach record highs on Monday as the first successful data from a large scale, late-stage Covid vaccine trial being developed by Pfizer delivered hopes that the economy will recover quickly from the pandemic crisis.  The Pfizer announcement that their trials have been 90% successful, sent the DJI up by 4.5% and the S+P by 2.5% and comes about despite US cases of Covid reaching 10 million. The Nasdaq ended Monday down by 1% with a late selloff, but risk sentiment remains positive, and oil in particular had a strong session, up 8% on the day, with WTI now back above 40.00pb. The metals went the other way, with the precious metals falling off a cliff; Gold down by over $100 oz on the day, or 4.5% and with Silver doing even worse, down by almost 6% as safe haven demand disappeared .

On top of the hopeful pandemic news driving the markets, traders are also taking the positives out of Joe Biden’s victory in the US election, although Donald Trump has yet to concede so we could yet see more fireworks before Biden finally settles in the White House.

The FX markets have seen early US$ weakness turn around sharply, ending the day with the DXY up by around 0.60%, with weakness in the JPY being particularly notable as safe-haven demand seemed to disappear altogether. US$Jpy is up by 2 big figures, currently at 105.40, having reached a high of 105.65. Elsewhere, the Euro reached 1.1920 before reversing by 100bp as traders grew confident of increased demand for the US$ on the back of the vaccine news, and also because the markets view the incoming Biden regime being “business-friendly”  despite the fact that  political gridlock in the US Senate could stall the prospect of any fresh stimulus package in the US. The Australian dollar is roughly where it was yesterday, after having reversed an earlier rally to 0.7340, while the Kiwi is not too far from its high of 0.6852, with both currencies underpinned by the buoyant risk mood.

Of other interest, bond yields have soared, with the US 10Y up by 17% on the day, now trading back at 0.956%, while in the domestic Australian stock market, note that the ASX SPI is up by around 2.5% in the overnight session, on top of Monday’s 1.5% rally, and the market will see a strong start on Tuesday. Earlier in the day, the EuroStoxx50 ended up by 6.5%, while the FTSE put on 4.7%.

Tuesday will start off with the NZ Electronic Card Retail Sales and the Australian NAB Business Conditions/Confidence for October, the Japan Current Account & Trade Balance and the China CPI/PPI figures, also for October (CPI, exp +0.2%mm, +0.8%yy; PPI, exp -2.0%yy). Later on, the UK Unemployment figures (exp; Claimant Count Change; +78.8K, Headline Rate; 4.8%) and the German/EU ZEW Economic Sentiment Survey for November. The US will have an empty calendar but will most likely see plenty of noise coming from the Trump household. Have a good day.

Economic data highlights will include:

Tue: NZ Electronic Card Retail Sales, Japan Current Account, Trade Balance, Australian NAB Business Conditions/Confidence, China CPI, PPI, UK Unemployment, German/EU ZEW Economic Sentiment Survey, US NFIB Business Optimism Index

Market moves, in brief:

FX: DXY 92.70 (+0.50%)

Bonds: US10Y; 0.956% (+17.05%), German 10Y; -0.508% (+17.6%), UK 10Y; 0.376% (+35%), Australian 10Y; 0.784% (+2.1%), NZ 10Y; 0.602% (+3.67 %), China 10Y; 3.248% (+2.41%)

Stock Indices: DJI; 4.55%, S+P; +2.83%, NASDAQ; +0.10%, EUStoxx50; +6.36%, FTSE100; +4.67%, Shanghai Composite; +1.86%, ASX200SPI: +4.68%

Metals: Gold $1843 oz (-4.25%), Silver $24.26 oz (-5.27%), Copper $3.1545 lb (+0.02%), Iron Ore $121.00 per tonne (NYMEX) (+0.62%),

Oil: WTI $40.20 pb (+7.55%)

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Trend Table: November 9, 2020                                                    

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In the trend table below, when looking at the charts for a particular FX pair, index or commodity, we are we searching for 2 or 3 consecutive boxes of the same colour which might indicate a trend – and a possible trading opportunity. Consecutive (1 & 4 hour, 4 hour/daily, daily/weekly) green boxes indicate a possible uptrend; red, a possible downtrend, while blue signifies a neutral bias (range trade possibility).  The boxes on the trend table merely replicate the look of the charts for the specific time-frame in MT4/5. Assets with a mixture of colours are ignored for the coming session.

For instance, if we see consecutive green boxes in the  1 hour and 4 hour time-frames for the FX pair “EURUSD”, that would signify the chance of a move higher in that pair over the next 24 hours. If the dailies were also green that would add to the bullish conviction from a slightly longer term perspective, and if the weeklies are also green then it would give added credence to the longer term bullish view, albeit that it might take longer for the trend to play out, so patience will almost certainly be required.   The opposite would be true of red boxes, which could signify downward momentum. The strength of any possible trend depends on the time-frame, with the longer term (daily, weekly charts) obviously having a greater overall weighting than the short-term charts.

In the near term though, the 1 and 4 hour charts are what are likely to combine to indicate the possibility of a trading idea for the next few, possibly up to 24, hours.

Note that a longer term bullish view (green daily/weekly boxes) does not discount the possibility of near term dips (i.e. Red 1 & 4 hour boxes), which may indicate near term weakness and suggesting that we should be looking to buy dips for a longer term rally – and vice versa if the near term boxes are green and the longer term; red.

EURUSDUSDJPYGBPUSDUSDCHFAUDUSDNZDUSD
1 HourTurning Lower?Up – OverboughtTurning NeutralUpTurning Lower?Bearish Divergence
4 HourOverbought – Turning Lower?Turning HigherPossible Topping FormationTurning HigherPossible Topping FormationTurning Higher?
1 DayTurning NeutralTurning Higher?Neutral – Turning Higher?Turning NeutralTurning NeutralNeutral – Turning Higher?
1 WeekTurning Lower?Turning NeutralTurning NeutralPossible Basing FormationTurning LowerPossible Topping Formation
DXYS+PASX200GOLDSILVEROIL_WTI
1 HourTurning HigherOverbought – Turning Lower?Overbought – Turning Lower?DownOversold – Turning higher?Overbought – Turning Lower?
4 HourOversold – Turning higher?Up – OverboughtUpTurning Lower?Turning LowerUp
1 DayTurning NeutralTurning NeutralNeutral – Turning Higher?Turning NeutralTurning NeutralTurning Neutral
1 WeekPossible Basing FormationNeutral – Turning Higher?Turning NeutralTurning LowerTurning LowerNeutral
EURJPYEURGBPGBPAUDAUDJPYEURAUDAUDNZD
1 HourOverbought – Turning Lower?Turning Lower?Neutral – Turning Higher?Up – OverboughtBullish DivergenceTurning Lower?
4 HourUpTurning NeutralTurning NeutralUpTurning Lower?Turning Lower
1 DayNeutral – Turning Higher?NeutralNeutral – Turning Lower?Turning NeutralTurning NeutralTurning Higher?
1 WeekTurning NeutralTurning NeutralNeutral – Turning Higher?Turning LowerTurning NeutralTurning Lower

 

EurUsd daily

US$Jpy Daily

Gold daily

ASX SPI Daily

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