Overview

There is a mixed feeling to market sentiment today. Equity markets have ticked higher in early moves, but they look slightly tentative (aside from the gaining DAX). This is coming with the rebounding of the US dollar which had suffered on Friday in the wake of in-line US inflation but is now looking to claw back some losses. Oil was looking positive earlier but is easing back too. The development of a more cautious positioning would be understandable, given the significant number of high-risk events later in the week, with central banks and tier-one data jam-packed in the coming days. There is, however, nothing of note on the economic calendar today.

Today’s news

  • Main drivers: Markets look mixed early today; US updates on Omicron data; UK ramps up COVID alert level; Economic calendar: no major data.
  • Sentiment mixed: European indices mixed, US futures higher; USD rebounding; oil positive but off earlier highs.
  • US CDC reports no Omicron deaths: the Centres for Disease Control and Prevention says that of its data, Omicron causes mild illness, with hospitalisations low and no deaths [risk supportive]  
  • UK ramps up COVID alert level: as Omicron infections rise sharply in London, the UK Government has raised its alert level to 4 (from 3) which is one level below the reintroduction of lockdown measures. It is also increasing its vaccine booster programme. [GBP negative]
  • Central bank speakers: the FOMC is in its Blackout Period. There will be no FOMC speakers until after the next FOMC meeting on Wednesday 15th December.
  • Economic Data:

No major data due

Markets Outlook

Broad outlook: a mixed outlook to kick off a hectic week. USD recovering some of Friday’s losses. Indices higher but looking cautious. Commodities are slightly higher.

Forex: USD is higher early in the week, but several major pairs look to be ranging ahead of a raft of central banks.

  • EUR/USD lacking any decisive direction around the middle of the range between 1.1185/1.1385. Initial support at 1.1265 today and then 1.1227. Initial resistance 1.1325 and then 1.1355.
  • GBP/USD Friday’s rally has broken the 6-week downtrend but until 1.3290 resistance is decisively broken, the outlook remains under negative pressure for further tests of 1.3160/1.3195.
  • AUD/USD the recovery is consolidating between 0.7132/0.7186. The outlook weakens below the 0.7090/0.7115 support band.

Commodities: there are hints of support forming for precious metals, but more needs to be seen for any decisive recovery. Oil rebound has stalled but still looks solid in its recovery momentum.

  • Gold ticking higher from $1770 is again looking to test resistance around $1790/$1800. Although the selling pressure has eased, it still looks to be a struggle for sustainable recovery. Technical signals continue to favour selling into strength for a retest of $1758. The bulls need a break above $1815.
  • Silver Ticking higher to break the sharp downtrend, but old support is still acting as resistance around $22.20/$22.30. Above $22.60 needed to engage a serious recovery.
  • Brent Crude oil picking up from above the near term breakout support around $73.20/$73.50 is encouraging to build a higher low for the next leg higher. Key resistance overhead remains at $77.80.

Indices: The drift back lower found buyers on Friday and indices are looking to build for the next leg higher.   

  •  S&P 500 futures have broken above 4711 resistance to open the all-time high of 4740. Leaving 4662 to build support around the pivot band 4650/4669, the bulls are looking in control again. We look for a retest of the highs again at 4740.
  • DAX has formed support at 15,532 and moving decisively positive this morning, the bulls will look to build momentum now. Holding a break above initial resistance at 15,760 would be positive for a test of 15,868.

  • FTSE 100 has looked to build from support at 7297 but traction is difficult to sustain. A move above resistance at 7347 re-opens the reaction high of 7401.