Overview

There is a marginal towards risk positive sentiment that is running through equity markets this morning. That comes despite the USD positive bias that resumed on Friday and is holding into the new trading week. It will be interesting to see how growing social unrest in Europe concerning renewing COVID restrictions will impact the EUR and European assets. Eurozone Consumer Confidence may indicate the impact later.

Today’s news

  • Main drivers: Sentiment is marginally risk positive; increasing COVID concern in Europe; no Fed speakers due; economic calendar: Eurozone Consumer Confidence and US Existing Home Sales.
  • Indices positive, USD finding support
  • Eurozone COVID concerns: Rising COVID infections and tightening restrictions, along with social unrest are generating market concerns. This is likely to weigh on EUR performance and played a part in Friday’s oil correction. [EUR underperform]
  • Biden is set to announce the next Fed chair: This is expected to be before Thanksgiving (which is Thursday) and is between Jerome Powell (current chair) and Lael Brainard. Powell is the most likely, Brainard would be more dovish [will increase USD volatility on the announcement]
  • Fed members set to discuss the speed of tapering: FOMC members are increasingly talking about how fast tapering of asset purchases are being made. Waller (leans hawkish) and more importantly vice Fed chair Clarida (centrist) mentioned this on Friday [USD reactive on the news]
  • German coalition: an agreement could be made as early as Monday or Tuesday this week [EUR supportive, but priced in]
  • Central bank speakers: there are no Fed speakers due today.
  • Economic Data:

        -Eurozone Consumer Confidence at 1500GMT, expected to deteriorate to -5.5 in November (from -4.8 in October)

        -US Existing Home Sales at 1500GMT, expected to decrease slightly to 6.20m in October (from 6.29m in September)

Markets Outlook

Broad outlook: indices are ticking back higher but the USD still performing well.

  • Forex: USD strength is dominating once more.

        -EUR/USD has turned lower once more and is again under downside pressure this morning. Bias towards a retest of Friday’s low at 1.1250 and below. Resistance at 1.1375 is now a notable lower high.

        -GBP/USD the recovery has been put on ice for now but whilst support around 1.3395 is intact there is still hope. Resistance is now at 1.3475.

        -AUD/USD still trending lower, seeing intraday rallies as a chance to sell. The next support is at 1.7170. Resistance is at 0.7290.

  • Commodities: precious metals have slipped back towards support, oil is again lower.

        -Gold Friday’s breach of $1848 support leaves a near-term negative bias. An unwind back towards the $1834 breakout would be a chance to buy. Resistance is strengthening at $1870/$1877.

        -Silver ticking higher this morning but there is still a near-term corrective bias of lower daily highs in each of the past four sessions. We are still looking to use supported weakness within the uptrend channel as an opportunity to buy but need more confirmation that $24.50 can hold. Resistance is strengthening at around $25.40.

        -Brent Crude oil an early rebound after sharp downside move on Friday. Lower highs and lower lows now come with intraday rallies being sold into. A move towards $74/$76 is likely.

  • Indices: Wall Street looking towards all-time highs again, European markets look less strong.

        -S&P 500 futures are still with a run of higher lows within the uptrend. Eyeing the resistance 4711/4723. A breakout opens a target of 4795 again. We look to use intraday pullbacks as a chance to buy, with support initially 4685/4695.

        -DAX has a threat of correction following Friday’s “bearish engulfing” candle. Support at 16,095 protects 16,000.

        -FTSE 100 a pullback below 7250 needs to hold on to support at 7180 otherwise a deeper correction develops. We retain our medium-term upside target of 7700 whilst the key support at 7180 is intact.