The US$ is mixed on Friday, with the Euro hanging in at 1.1800 where it has spent the last few sessions, while Sterling suffered some notable selling after slightly weaker than expected Q3 GDP data in the UK. The Aud and Nzd have seen slow but steady selling through the US session, largely in line with a steady decline in the stock markets, while the Jpy has seen some renewed safe haven demand, in line with the lower stock markets but also because of the move lower on Thursday in US yields, which saw the US10Y retreat back below 0.9%. The decline in yields came about after the release of the US CPI figures for October which were below expectations and questioned the pace of the economic recovery.
The major reason for the negative move in stocks on Thursday was because US coronavirus infections have continued to surge, causing investors to question the timeline of the mass roll-out of an effective vaccine. The US has recorded a new record-high 145,835 in the latest set of figures (for Wednesday) and parts of the country are re-imposing restrictions to curb the virus, raising the threat of a renewed lockdown, triggering jitters about the impact on the economic recovery.
Commodities were mixed, with Gold putting on 0.6%, as some safe haven demand emerged, while WTI reversed its recent rally by losing 1%, in line with the lower stockmarkets, as traders grew concerned about the ongoing levels of Covid infections.
In terms of data, the US CPI was flat, at 0.0%mm in October, below expectations of 0.2%, while the Core CPI was also flat at 0.0%mm, below expectation of 0.2%. Annual, headline CPI slowed to 1.2%yy, down from 1.4%yy and missed the expectation of 1.3%yy, while the Core figure slowed to 1.6%yy, down from 1.7%yy, also missing the expectation of 1.7%yy.
On a brighter note in the US, the weekly jobless claims were better than expected and dropped by -48k to 709k in the week ending November 7, better than expectation of 745k. The continuing claims dropped -436k to 6786k in the week ending October 31.
In the UK, the GDP grew 1.1%mm in September, in line with expectations, recording the 5th consecutive monthly increase but the Q3, GDP grew 15.5%qq which was below the expectation of 15.8%qq and did little to help Sterling.
Friday will be mostly a thin session although it will include the release of the Q3 EU Preliminary GDP (exp -4.3%qq, 12.7%yy), the US October PPI (exp +0.2%mm, +0.4%yy) and the Michigan Consumer Sentiment Index (exp 82; prior 81.8). Other points of interest will include the NZ Business PMI (exp 46.6; prior 54) and Food Price Index (exp -0.2%mm), and then later in the day, the German Wage Price Index (October; exp -0.2%mm) and the EU Trade Balance (September; exp €22bio). Central Bank Speakers will include the BOE’s Tenreyro, Buba’s Weidmann and the Fed’s Williams. Have a good weekend.
Economic data highlights will include:
Fri: NZ Business PMI, Food Price Index, EU EcoFin Meeting, EU Q3 GDP, Trade Balance, Employment change, US PPI, Michigan Consumer Sentiment Index, Fed’s Williams Speech, BOE’s Bailey Speech
Market moves, in brief:
FX: DXY 92.97 (-0.07%)
Bonds: US10Y; 0.891% (-9.25%), German 10Y; -0.534% (-5.66%), UK 10Y; 0.351% (-12.27%), Australian 10Y; 0.926% (-7.97%), NZ 10Y; 0.865% (-1.84 %), China 10Y; 3.265% (+0.47%)
Stock Indices: DJI; -1.28%, S+P; -1.17%, NASDAQ; -0.59%, EUStoxx50; -1.13%, FTSE100; -0.68%, Shanghai Composite; -0.11%, ASX200SPI: -1.18%
Metals: Gold $1877 oz (+0.62%), Silver $24.26oz (-0.02%), Copper $3.1390 lb (+0.16%), Iron Ore $121.00 per tonne (NYMEX) (-0.38%),
Oil: WTI $40.95 pb (-1.09%)
Trend Table: November 13, 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 short/medium/long term 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 pretty much ignored as choppy conditions seem likely to prevail.
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.
|1 Hour||Neutral – Turning Higher?||Turning Neutral||Neutral – Turning Lower?||Turning Neutral||Turning Lower?||Neutral – Turning Lower?|
|4 Hour||Turning Neutral||Turning Lower||Turning Lower||Neutral – Turning Lower?||Turning Lower||Turning Lower|
|1 Day||Turning Neutral||Turning Higher?||Turning Neutral||Turning Neutral||Neutral – Turning Higher?||Turning Higher|
|1 Week||Neutral – Turning Lower?||Turning Neutral||Neutral – Turning Higher?||Turning Higher?||Turning Neutral||Neutral – Turning Higher?|
|1 Hour||Turning Neutral||Neutral – Turning Lower?||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Neutral|
|4 Hour||Turning Neutral||Turning Lower||Turning Lower||Turning Higher||Turning Neutral||Turning Lower|
|1 Day||Turning Neutral||Neutral – Turning Higher?||Turning Higher||Turning Neutral||Turning Neutral||Turning Neutral|
|1 Week||Possible Basing Formation||Neutral – Turning Higher?||Turning Higher?||Turning Lower||Turning Lower||Neutral|
|1 Hour||Neutral||Up||Neutral – Turning Higher?||Neutral – Turning Lower?||Up||Turning Higher|
|4 Hour||Turning Lower||Turning Higher||Turning Neutral||Turning Lower||Turning Higher||Down – Oversold|
|1 Day||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Neutral – Turning Lower?|
|1 Week||Neutral – Turning Lower?||Neutral – Turning Lower?||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Lower|