Both the FX and stock markets ended the week on a mostly quiet note, generally within their familiar ranges as traders struggle to find clarity over the contradicting headlines regarding the ongoing lockdowns and the possibility of a vaccine for the Covid-virus. The major stock indices did see a minor selloff in the last hour of trade as book squaring in thin markets caused a minor dip lower. On top of the pandemic uncertainty, we have a split between US Treasury and Fed after Treasury Secretary Mnuchin said that the emergency lending programs which have steadied the US economy during the pandemic will not be renewed, the opposite of the Fed’s view, causing traders to worry about the pace of any economic progress. In Europe, the slow progresses of Brexit talks, and a coronavirus infection within the EU Brexit negotiation team, were not assisting traders to find any clear direction although some upbeat headlines from the EU on Friday suggested that significant progress had been made in recent days. We shall see.
As far as the markets are concerned, the DXY ended Friday up by 0.1% (92.38), with the US$/majors all stuck within a tight 50 point range, with the Aud$ being the only currency to find any direction at all as it managed to find the legs to end the week back above 0.7300.
Commodities were generally positive, with Gold up by 0.4% and Silver by 0.8%; and note that copper, a barometer of global demand, rose by 2.65% to a new 27 month high. WTI gained 1.8% as traders looked on the bright side in hoping that a Covid vaccine would see an increase in demand, while also appearing to grow increasingly confident that OPEC+ will postpone its scheduled output increase when it meets at the end of the month.
Looking ahead, the calendar is rather thin for the coming week, with the US on holiday from Thursday for Thanksgiving, and it will be politics, Covid, Brexit and various central bank speakers which will dominate the agenda.
Monday may enjoy a bit of action with the release of the flash PMIs for November, while Tuesday will see the latest IFO forecasts. Wednesday will have a decent amount of US data to be released ahead of the holiday, featuring the Q3 GDP and US Personal Consumption/Expenditure figures, the October Durable Goods Orders and Wholesale Inventories, the November Michigan Consumer Sentiment Index and the weekly Jobless Claims. Friday will be a non-event, aside from the release of the EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, for November. Have a good week.
Economic data highlights will include:
Mon: Japan holiday, NZ Retail Sales, Global flash Mfg/Services/Composite PMIs (Australia, China Japan EU, UK, US), Chicago Fed National Activity Index
Tue: Australian Trade Balance, RBA’s Debelle Speech, German GDP, German IFO; Business Climate/Current Assessment/Expectations , BOJ’s Kuroda Speech, BOE’s Haskell Speech, US Case Shiller House Price Index, House Price Index, Consumer Confidence, Richmond Fed Mfg Index, Fed Speaker; Williams, API Weekly Crude Oil Stock Inventory
Wed: RBNZ Financial Stability Report, Governor Orr Speech, Australian Construction Work Done, EU Financial Stability Report, UK Autumn Forecast Statement, US Durable Goods Orders, Wholesale Inventories, US Personal Consumption/Expenditure, GDP, FOMC Minutes, Michigan Consumer Sentiment Index, New Home Sales, weekly jobless claims, EIA Weekly Crude Stocks Change
Thur: US Thanksgiving Day Holiday, NZ Trade Balance, Australian Capex, Japan Coincident Index, Leading Economic Index, EBC Minutes
Fri: NZ Consumer Confidence, Japan Tokyo CPI, EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate.
Market moves, in brief:
FX: DXY 92.38 (+0.10%)
Bonds: US10Y; 0.829% (+0.19%), German 10Y; -0.584% (-2.44%), UK 10Y; 0.300% (-10.62%), Australian 10Y; 0.875% (-2.52%), NZ 10Y; 0.817% (-3.59 %), China 10Y; 3.289% (-1.83%)
Stock Indices: DJI; -0.75%, S+P; -0.67%, NASDAQ; -0.26%, EUStoxx50; +0.45%, FTSE100; +0.27%, Shanghai Composite; +0.44%, ASX200SPI: +0.10%
Metals: Gold $1872 oz (+0.36%), Silver $24.22 oz (+0.75%), Copper $3.2865 lb (+2.65%), Iron Ore $124.17 per tonne (NYMEX) (+0.08%),
Oil: WTI $42.50 pb (+1.85%)
Trend Table: November 23, 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.
See video at:https://www.youtube.com/watch?v=Mo3IdPRtsR4
|1 Hour||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Neutral – Turning Higher?||Possible Topping Formation|
|4 Hour||Turning Neutral||Possible Basing Formation||Turning Neutral||Turning Neutral||Turning Neutral||Bullish 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||Neutral – Turning Higher?||Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral|
|4 Hour||Turning Neutral||Turning Neutral||Turning Neutral||Neutral – Turning Higher?||Turning Neutral||Turning Neutral|
|1 Day||Neutral – Turning Lower?||Turning Neutral||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||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Lower?||Neutral – Turning Higher?|
|4 Hour||Neutral – Turning Higher?||Turning Neutral||Turning Neutral||Neutral – Turning Higher?||Turning Neutral||Bullish Divergence|
|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|