The US$ remains rangebound, while stockmarkets, after an early jump on the news that the Pfizer Covid vaccine is being rolled out in the US, seem to have rather lost interest and the major indices have drifted back to trade flat on the day as the session nears its end. Also underpinning the stockmarkets on Monday was some M&A activity, notably the $39 billion buyout offer from AstraZeneca for Alexon Pharmaceuticals in one of the year’s biggest deals, which guaranteed that the S+P remained well underpinned. However the ongoing concerns over further lockdowns through the holiday period have ensured that gains were limited, and this seems likely to continue to provide headwinds for the markets in coming days.
In the FX markets, most pairs are pretty much where they were at the beginning of the week, with the US$ regaining some mild weakness seen early in the session, with the DXY more or less unchanged heading into Tuesday, at 90.70. Of interest, EurGbp has jumped around a little but is currently unchanged from Friday’s close after the EU and the UK announced yet another extension to the never-ending Brexit negotiations. There is not much time left though as the UK will cease to be a member of the EU on December 31st, so the MPs leading the divorce talks will need to put pull a rabbit out of the hat if they are going to find any agreement. There seems to be no chance of that happening, with little goodwill on either side to proceed, so expect plenty of volatility in Sterling, with a long EurGbp position looking likely to be the best trade on the board heading into the NY. Elsewhere, the Aud$ made it to a new 29 month high (0.7577) and the Kiwi to a 31 month high (0.7119), and both look good for further gains. Note that the RBA Minutes lie ahead today, along with some major China data which could propel both on their way. The short term momentum indicators look a little toppish, so buying dips is preferred.
In other markets, WTI fell sharply, to a low of 45.85 after OPEC cut its forecast for global demand in the first half next year, predicting only a slow and uneven recovery from the Covid-19 pandemic. It has since regained its lost ground and is hanging close to $47.00, just below last week’s 9 month high of 47.71.
Gold had a volatile ride, in squeezing up to 1839 before dropping sharply to a low of 1818 and then ending the day in the middle of the range, at 1828.
On the calendar, Tuesday will see the RBA Minutes and a host of China figures, including the November Retail Sales and Industrial Production, during the Asian session, to be followed by the UK Unemployment data (exp, Claimant Count; +50K, Headline Rate; 5.1% ) and then some secondary US figures (Industrial Production, Capacity Utilisation). That aside it will be rather thin as traders prepare themselves for the Fed Meeting tomorrow and then the BOE and the SNB which are due on Thursday. Have a good day.
Economic data highlights will include:
Tue: NZ Q4 WBC Consumer Survey, RBA Minutes, China Retail Sales, Industrial Production, Fixed Asset Investment, Press Conference, UK Unemployment, US Industrial Production, Import/Export Index, Capacity Utilisation, Global Dairy Trade Index, API Weekly Crude Oil Stock Inventory
Market moves, in brief:
FX: DXY 90.71 (-0.06%)
Bonds: US10Y; 0.895% (-1.27%), German 10Y; -0.619% (+2.66%), UK 10Y; +0.22% (+29.75%), Australian 10Y; 0.975% (-2.12%), NZ 10Y; 0.863% (-3.18 %), China 10Y; 3.301% (+0.11%)
Stock Indices: DJI; -0.14%, S+P; -0.03%, NASDAQ; +0.97%, EUStoxx50; +0.52%, FTSE100; -0.23%, Shanghai Composite; +0.66%, ASX200SPI: +0.45%
Metals: Gold $1828 oz (-0.60%), Silver $23.87 oz (-0.20%), Copper $3.525 lb (-0.09%), Iron Ore $148.18 per tonne (NYMEX) (-2.06%),
Oil: WTI $47.00 pb (+0.96%)
Trend Table: December 15, 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 Lower?||Turning Higher||Turning Lower||Turning Neutral||Down – Oversold||Turning Lower|
|4 Hour||Turning Neutral||Turning Neutral||Neutral – Turning Higher?||Turning Neutral||Possible Topping Formation||Turning Neutral|
|1 Day||Possible Topping Formation||Turning Neutral||Neutral – Turning Lower?||Down – Bullish Divergence||Turning Higher||Possible Topping Formation|
|1 Week||Neutral – Turning Higher?||Turning Neutral||Turning Higher?||Neutral – Turning Lower?||Turning Higher||Up|
|1 Hour||Turning Higher?||Turning Lower||Turning Neutral||Turning Neutral||Neutral||Turning Neutral|
|4 Hour||Turning Neutral||Neutral||Neutral – Turning Lower?||Neutral – Turning Lower?||Neutral||Turning Neutral|
|1 Day||Possible Basing Formation||Neutral – Turning Lower?||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Neutral|
|1 Week||Possible Basing Formation||Up – Overbought||Up||Down||Down||Neutral|
|1 Hour||Neutral – Turning Higher?||Turning Higher||Neutral – Turning Lower?||Turning Neutral||Neutral – Turning Higher?||Turning Neutral|
|4 Hour||Turning Neutral||Turning Lower?||Turning Higher||Neutral – Turning Lower?||Possible Basing Formation||Possible Topping Formation|
|1 Day||Neutral – Turning Higher?||Neutral – Turning Higher?||Turning Lower||Neutral – Turning Higher?||Turning Neutral||Turning Higher|
|1 Week||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Neutral – Turning Lower?|