The selloff in the US$ has intensified following the release of the weekly jobless claims figure, which came in a fair bit worse than expectations, while the Philadelphia Fed Mfg Survey also did nothing to help sentiment. It was not all bad news though as the S+P and the Nasdaq, both hit all time highs in shrugging off the surge in the jobless claims as traders grow increasingly confident of a stimulus rescue package for the economy before year-end. The number of US citizens filing for unemployed increased to a three-month high of 885K in the week ended Dec. 12, well above estimates for 780K. On the brighter side, the continuing claims dropped by 273k to 5,508k in the week ending December 5. The Philly Fed manufacturing index dropped sharply to 11.1, down from 26.3, missing expectations of 20.0, while the housing starts rose to 1.547mio, above expectations of 1.53 mio annualised, in November.
In the FX markets, all the major counterparts made solid gains against the US$, sending the DXY down by 0.7%, breaking through the important psychological support at 90.00 in the process. The DXY now sees little support until 88.50, roughly equivalent to EurUsd 1.2415.
With regards to commodities, while WTI chopped around near the strong resistance at 48.70 (100 WMA), Gold and Silver both accelerated higher, putting on another 1.0%/2.5% respectively, and both looking good for further gains ahead as long as the US$ remains under pressure.
Friday may be fairly quiet with not too much on the calendar although the BOJ Meeting will take place. No change is expected to Monetary Policy and the interest will lie in the Statement/Press Conference. The only other real interest will lie in the release of the German IFO; Business Climate/Current Assessment/Expectations, while the US has an empty agenda and the interest will lie in the prospect of any progress in the stimulus package negotiations. Coming up shortly is the November NZ Trade Balance and Business Confidence.
This is the last update until Monday 4th January, so we wish all readers a very happy and safe holiday and let’s hope 2021 is kinder year to us all than 2020 has been!!
Economic data highlights will include:
Fri: NZ Trade Balance, Japan National CPI, BOJ Meeting/Interest Rate Decision, UK Consumer Confidence, Retail Sales, German PPI, German IFO; Business Climate/Current Assessment/Expectations, EU Current Account, US Current Account
Market moves, in brief:
FX: DXY 89.80 (-0.71%)
Bonds: US10Y; 0.933% (+1.26%), German 10Y; -0.576% (-1.52%), UK 10Y; 0.280% (+3.09%), Australian 10Y; 1.00% (+3.36%), NZ 10Y; 0.950% (+6.28 %), China 10Y; 3.293% (-0.08%)
Stock Indices: DJI; +0.45%, S+P; +0.51%, NASDAQ; +0.40%, EUStoxx50; xxxx%, FTSE100; xxxx%, Shanghai Composite; +1.10%, ASX200SPI: +0.70%
Metals: Gold $1885 oz (+1.13%), Silver $26.00 oz (+2.70%), Copper $3.6055 lb (+1.31%), Iron Ore $153.75 per tonne (NYMEX) (+0.54%),
Oil: WTI $48.39 pb (+1.08%)
Trend Table: December 18, 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||Up – Overbought||Oversold – Turning higher?||Possible Topping Formation||Neutral – Turning Higher?||Overbought – Turning Lower?||Neutral – Turning Lower?|
|4 Hour||Up – Bearish Divergence||Down||Up||Turning Neutral||Turning Higher||Turning Higher|
|1 Day||Up||Neutral – Turning Lower?||Neutral – Turning Higher?||Down||Turning Higher||Neutral – Turning Higher?|
|1 Week||Neutral – Turning Higher?||Overbought – Turning Lower?||Turning Higher?||Neutral – Turning Lower?||Turning Higher||Up|
|1 Hour||Down – Oversold||Possible Topping Formation||Overbought – Turning Lower?||Overbought – Turning Lower?||Possible Topping Formation||Neutral – Turning Lower?|
|4 Hour||Turning Lower||Neutral – Turning Higher?||Turning Higher?||Up||Up||Turning Neutral|
|1 Day||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Higher||Neutral – Turning Higher?||Neutral – Turning Higher?|
|1 Week||Neutral – Turning Lower?||Up – Overbought||Up||Down||Down||Neutral|
|1 Hour||Neutral – Turning Higher?||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Higher||Turning Neutral|
|4 Hour||Turning Neutral||Possible Basing Formation||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral|
|1 Day||Possible Topping Formation||Turning Neutral||Possible Basing Formation||Neutral – Turning Higher?||Turning Neutral||Turning Higher|
|1 Week||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral|