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Daily Market Outlook, November 12, 2020
Following the vaccine-related euphoria earlier in the week, markets have turned more introspective as global Covid-19 cases continue to rise. The heads of the US, Eurozone and UK central banks yesterday gave a cautious thumbs-up to the vaccine news, but warned significant challenges lay ahead. Asian equity indices were lower overnight, while futures point to a weaker start to European stocks.
The key UK news was that PM Johnson’s senior adviser Dominic Cummings is expected to leave his position by the end of the year. That follows the departure of Lee Cain, Johnson’s Director of Communications and an ally of Cummings, earlier in the week.
We will see whether the Eurozone Q3 GDP is revised this morning. The first estimate showed a massive quarter-on quarter rebound of 12.7%, following the easing of lockdown measures. That was considerably stronger than had been expected, but it still left output more than 4% lower than the same period a year ago. Attention, moreover, has turned to the fourth quarter, where the reintroduction of containment measures across Europe is expected to stall the recovery. Policymakers will want to maintain support for the economy amid rising Covid-19 cases during the winter and despite this week’s encouraging vaccine news.
The most notable US release today is the preliminary reading of the University of Michigan’s November consumer sentiment report. Look for a slight decline, the first in four months, to 81.0 from 81.8 in October. The consensus forecast, though, is for a small rise to 82.0. Regardless, sentiment remains well below pre-pandemic levels (see chart). Central bank speakers ahead today include Bank of England Governor Andrew Bailey who will be ‘in conversation’ with UBS Chairman and former ECB Executive Board member Axel Weber. Other speakers include the BoE’s Jon Cunliffe (talking about digital currencies) and Silvana Tenreyro who will explore US dollar dominance and the impact on monetary policy. The US Fed’s Bullard will also discuss economic and monetary policy
Today’s Options Expiries for 10AM New York Cut
- EURUSD: 1.1770 (462M), 1.1795-1.1800 (1.4BLN), 1.1840-50 (1.4BLN)
- USDJPY: 104.75 (390M), 105.50 (560M)
- AUDUSD: 0.7300 (600M), 0.7325-35 (700M), 0.7400 (567M)
- GBPUSD: 1.3100 (319M), 1.3195-1.3200 (312M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.1750 bearish below
EURUSD From a technical and trading perspective, as 1.1750 acts a support look for a retest of cycle highs at 1.20, failure below 1.1750 opens a retest of range support at 1.16
Flow reports suggest topside offers through to the 1.1920 level, even there where you’re likely to see weak stops you will find the same type of congestion continuing to the 1.1950 before weakening a little and increasing for any move to the 1.2000 level. Downside bids light through the 1.1800 area with weak stops on a dip through the 1.1780 area and opens the market for a renewed challenge of the 1.1700 area with light support from there.
GBPUSD Bias: Bearish below 1.33 bullish above
GBPUSD From a technical and trading perspective, while 1.2950 attracts sufficient bids, look for a test of primary equality objective at 1.3264 UPDATE target achieved. As 1.3312 caps the current cycle look for a pullback to test support to 1.3050
Flow reports suggest topside offers increasing through to the 1.3200 level with weak stops likely on a move through the level and becoming weaker on a break through to the 1.3260 area with limited offers once through the 1.3300 area, Downside bids light through the 1.3100 level before stronger bids start to appear and increase through to the 1.3050 area and likely to increase on any approach of the 1.3000 level with weak stops through the level opening a test to the 1.2950/00 areas
USDJPY Bias: Bearish below 104.30 bullish above
USDJPY From a technical and trading perspective, as 104.30 supports look for a test of descending trendline resistance at 105.50 UPDATE as 104.30 continues to attract buyers look for a breach of 105.50 to open a test of 106 next
Flow reports suggest downside bids light through the 104.50 level before beginning to thicken on any dip below the 104.00 level increasing on move through the 103.50 level with weak stops likely on a dip through the 103.00 area with the stops likely to increase through 102.80, topside offers likely to increase through to the 106.00 area with weak stops through the 106.20 area and increasing congestion on a push above the 106.50 level and into the 107.00.
AUDUSD Bias: Bearish below .7243 bullish above
AUDUSD From a technical and trading perspective, as .7240/20 now acts as support look for a retest of offers and stops above .7400
Flow reports suggest topside congestion through the 0.7300 area and likely to continue through to the 0.7320 area before a little less resistance through to 0.7350, however a push through this level is likely to see increasing offers into the 0.7380 level and continuing through to the 0.7420 and the highs since September, strong breakout stops likely on a move through the level and opening a larger move higher against the rub of the economics for the moment. Downside bids light through to the 0.7140 level before finding some light congestion with stronger bids into the 71 cents level to some extent however weak stops and then better bids through the 0.7050 area and increasing into the 70 cents level with short term profit taking likely.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!