Further good news on the pandemic was unable to help US stocks on Wednesday, with the major indices ending down by around 0.25%, apparently fully pricing in the chances of a vaccine being available next month after Pfizer announced that its final trial results had showed a 95% success rate without any serious side effects.
In the FX markets, the US$ has maintained its slow but steady downtrend, with the DXY falling by 0.15%, weighed down by signs that the surge in coronavirus cases in the US is not being helped by the uncertain political scene, with Donald Trump still unable to admit defeat and hand over to the Biden administration. While conditions in the FX majors generally remain choppy and sideways, the Yen, Aud and Kiwi all made gains on Wednesday although there is no clear sign of a breakout from the medium term range as the dollar sits just above long term technical support.
Commodities were mixed, with the metals down by around 0.3%, while oil settled higher on Wednesday, with WTI up by around 1.4%, after the latest vaccine news stoked hopes for an improvement in the economy and energy demand.
In terms of data, the Eurozone CPI was finalised at -0.3% yy in October, unchanged to September’s figure, with the Core CPI finalised at 0.2% yy. In the UK, the CPI accelerated to 0.7% yy in October, up from 0.5% yy, above expectation of 0.5% yy. The UK Core CPI also rose to 1.5% yy, up from 1.3% yy, beating expectations of 1.3% yy.
Looking ahead, Thursday will begin with the Australian Unemployment data for October (exp -30K, Headline Rate; 7.2%%, PR; 64.7%). Later in the day, there will be an EU Leaders Summit at which Brexit will be high on the agenda, while ECB President, Christine Lagarde will be busy, speaking 3 times during the 2nd half of the day. The EU Current Account and Construction Output figures for September are also due. From the US comes the Philadelphia Fed Mfg Survey (exp 22, prior 32.3) and the Kansas Fed Mfg Activity (exp? Prior 23), along with the weekly jobless claims (Initial 707K/Continuing 6.47 mio). Have a good day.
Economic data highlights will include:
Thur: Australian Unemployment, EU Leaders Summit, Current Account, US weekly jobless claims, Kansas Fed Mfg Activity
Market moves, in brief:
FX: DXY 92.30 (-0.14%)
Bonds: US10Y; 0.878% (+2.49%), German 10Y; -0.553% (+1.46%), UK 10Y; 0.332% (+2.40%), Australian 10Y; 0.899% (-0.70%), NZ 10Y; 0.867% (-6.06 %), China 10Y; +3.30% (+0.55%)
Stock Indices: DJI; -0.19%, S+P; -0.17%, NASDAQ; xxxx%, EUStoxx50; xxxx%, FTSE100; xxxx%, Shanghai Composite; +0.22%, ASX200SPI: +0.46%
Metals: Gold $1873 oz (-0.40%), Silver $24.39 oz (-0.35%), Copper $3.099 lb (+0.03%), Iron Ore $123.40 per tonne (NYMEX) (+0.40%),
Oil: WTI $41.95 pb (+1.34%)
Trend Table: November 19, 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 Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Turning Higher?|
|4 Hour||Neutral – Turning Lower?||Down||Turning Higher?||Turning Neutral||Turning Neutral||Bearish Divergence|
|1 Day||Neutral – Turning Higher?||Neutral – Turning Lower?||Neutral – Turning Higher?||Neutral||Neutral – Turning Higher?||Turning Higher|
|1 Week||Neutral – Turning Lower?||Turning Neutral||Neutral – Turning Higher?||Turning Higher?||Neutral – Turning Higher?||Neutral – Turning Higher?|
|1 Hour||Turning Neutral||Down||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Turning Neutral|
|4 Hour||Turning Neutral||Neutral – Turning Lower?||Turning Neutral||Neutral – Turning Lower?||Turning Neutral||Neutral – Turning Higher?|
|1 Day||Neutral – Turning Lower?||Turning Higher||Turning Higher||Turning Neutral||Turning Neutral||Neutral – Turning Higher?|
|1 Week||Possible Basing Formation||Up – Overbought||Turning Higher||Down||Turning Lower||Neutral|
|1 Hour||Turning Neutral||Turning Neutral||Neutral – Turning Lower?||Neutral – Turning Lower?||Neutral – Turning Lower?||Neutral – Turning Lower?|
|4 Hour||Turning Lower||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Lower?|
|1 Day||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Turning Lower?|
|1 Week||Neutral – Turning Lower?||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Lower|