#WaveAnalysis

#NZDUSD broke resistance level 0.6710

• Likely to rise to 0.6800

https://fxpro.news/market-snapshots/nzdusd-analysis-05-november-2020-20201105/

#WaveAnalysis

EURCAD reversed from support level 1.5395

• Likely to rise to 1.5660

https://fxpro.news/market-snapshots/eurcad-analysis-05-november-2020-20201105/

Can the post-election rally be sustained?
Close to its best week since April, Futures for the S&P500 are up 6.8%, staying close to 3500, regaining the fall of the previous three weeks.

First, the results of the presidential election are yet to be finalised and are likely to be disputed.

Second, there is a real risk that a divided Congress will argue for too long about a new relief package.

Third, as the Fed noted at yesterday’s meeting that the economic recovery is losing momentum and we received confirmation of this earlier in the week. The ADP report noted that the private sector created only 365K last month and the Service Employment Index fell close to the ‘waterline’ at 50.1.

These reports are a dire warning before today’s NFP publication.

https://fxpro.news/daily-forex-outlook/can-the-post-election-rally-be-sustained-20201106/

Markets cheer Biden’s victory with higher demand for risk

Futures on the S&P 500 remain moderately positive, returning to historical highs of around 3,600 and 12,500 respectively. At the same time, the dollar breaks through to lows in two and a half years.

The strength of the dollar is now in question for several reasons. Biden has promised to cancel most of Trump’s tax breaks. Primarily the Republican Congress is likely to block proposals for tax increases for corporations and wealthy Americans. However, there no new tax cuts in sight.

Another important issue is trade disputes. Markets are hopes for some de-escalation of international trade disputes, especially with China. And this reinforces the growth of the Chinese currency against the dollar. At the beginning of the new week, the dollar fell to 6.55 yuan, its lowest level since June 2018 after the steepest weekly growth since early 2019.

https://fxpro.news/daily-forex-outlook/markets-cheer-bidens-victory-with-higher-demand-for-risk-20201109/

#WaveAnalysis

WTI broke daily down channel

• Likely to rise to 41.90 and 43.80

https://fxpro.news/market-snapshots/wti-analysis-09-november-2020-20201109/

#WaveAnalysis

#USDCAD under bearish pressure

• Likely to fall to 1.2800

https://fxpro.news/market-snapshots/usdcad-analysis-09-november-2020-20201109/

Vaccine-based market optimism risks quickly losing ground

Global markets soared on Monday after news of the successful results of the third phase of the joint Pfizer and BioNTech vaccine development. Futures on the S&P 500 and Dow Jones soared to new historic highs, but could not sustain them. The Nasdaq100 had an even heavier correction, as the initial spike in stocks included in this index very quickly turned into a sale.

The caution of senior politicians, from Boris Johnson and Joe Biden to Jerome Powell, also fueled caution on the markets.

In other words, it may well turn out that a short-squeeze caused yesterday’s jump in stocks more near the index highs than by material improvements and forecasts. This means that profit-taking sentiment may soon dominate and this is a very fragile state in which bad news can quickly turn into a full-scale selloff.

https://fxpro.news/daily-forex-outlook/vaccine-based-market-optimism-risks-quickly-losing-ground-20201110/

The strengthening of GBP accelerated on Tuesday due to unexpectedly strong labour market data. GBPUSD rose to 1.3270, and EURGBP fell below 0.8900.

Claimant Counts fell by 29,800 in October compared to an average growth forecast of 20,300. Average earnings for the three months to September were 1.3% higher than a year earlier (+1.9% ex bonuses).

The fresh data eliminated fears that last month's rise in coronavirus cases and the approaching partial lockdown could cause a sharp contraction in the labour market. Since the release, GBPUSD has added about one cent, bringing the five-day rally to 2.5% and sending it into the peak area of early September. It is worth noting that the pair has been too unstable above 1.33 for the last 18-months.

EURGBP also found itself in the area of local extremums, having dropped to the lows of 2H20.

In both cases, the British pound will have to pass an important test as to whether investors are ready to let it enter a new level.

The crude oil price still has plenty of room for growth

Oil is growing steadily this month and since the beginning of the week, it has climbed by 12.5% for WTI and 11.5% for Brent. Both popular oils have returned to their 2-month highs, although they opened November with a drop to their lowest prices since late May. A combination of positive factors reversed the short-term trend.

On the technical side, oil has made a significant breakthrough with a sharp move above the 50- and 200-day moving averages.

The nearest targets for the bulls on oil may be the August highs of $44 for WTI and $46 for Brent.

https://fxpro.news/daily-forex-outlook/the-crude-oil-price-still-has-plenty-of-room-for-growth-20201111/

#WaveAnalysis

#NZDJPY broke key resistance level 72.00

• Likely to rise to 73.30

https://fxpro.news/market-snapshots/nzdjpy-wave-analysis-11-november-2020-20201111/

#WaveAnalysis

#Nikkei225 broke resistance level 25000

• Likely to rise to 26500

https://fxpro.news/market-snapshots/nikkei-225-wave-analysis-11-november-2020-20201111/

Markets’ altitude sickness returns the interest to the dollar

Dow Jones 30 and S&P 500, we see the same symptoms approaching the levels of 30,000 and 3600. Nasdaq 100 got its weakness near 12,000 and the German DAX30 at levels above 13,000, an important resistance area this year.

The foreign exchange market has been reacting all week to the risks of new restrictions, first by ignoring the optimism and now by the partial fixing of gains in stocks.

EURUSD fell from an area above 1.1900, where the pair was on Monday, to 1.1760.

The strengthening of the dollar yesterday shifted to the pound and the renminbi. However, today we see a much broader growth of the US dollar in the foreign exchange market, pulling down the New Zealand dollar from 19-month highs at 0.69 and the Australian dollar from levels above 0.73.

https://fxpro.news/daily-forex-outlook/markets-altitude-sickness-returns-the-interest-to-the-dollar-20201112/

Inflation data for Germany and the USA published today highlighting the general trend (slowing) and the significant differences in the current state of the European and US economies.

In October, prices in Germany were -0.2% YoY and in the USA, +1.2%. A 5% weakening of the dollar index over the past 12 months seems helped the US to maintain a higher inflation level.

The inflationary picture in the eurozone requires more work from the ECB than the situation in the US requires from the Fed. From this comparison, monetary policy in Europe should be considerably more eased, putting pressure on EURUSD.

However, this approach acts on the premise of "all things being equal". In life, things are never equal. The Fed often acts more proactively, both in the softening of policy and the consideration of tightening. On the other hand, the wheel of the ECB has traditionally been spinning longer and with slower stops. So investors and traders should look at the bigger picture, which is somewhat complicated.

#WaveAnalysis

EURGBP reversed from support zone

• Likely to rise to 0.9055

https://fxpro.news/market-snapshots/eurgbp-wave-analysis-12-november-2020-20201112/

#WaveAnalysis

#EURAUD reversed from long-term support level 1,6160

• Likely to rise to 1,6400

https://fxpro.news/market-snapshots/euraud-wave-analysis-12-november-2020-20201112/

Markets are retreating from extremes, not daring to enter a new phase

We pointed out previously that this week, key stock indices have lost their growth momentum near local highs. On Thursday, a similar performance was cemented for the currency market as pairs rolled back from local extremums without daring to break through trading ranges.

EURUSD this week made another unsuccessful attempt to climb solidly above 1.1900 and to repeat the test of the psychologically important level 1.2000. The pair quickly dropped to 1.1750 and then returned to 1.1800. The dynamics signalled that it was too early for markets to move to a new stage. EURUSD decreased to 1.1600 in the second half of September and during October, so we could now see a repeat of this move.

https://fxpro.news/daily-forex-outlook/markets-are-retreating-from-extremes-not-daring-to-enter-a-new-phase-20201113/

GBPUSD failed to grow above 1.3300, falling back to 1.3130 by Friday morning. For GBPUSD, the first line of support could be the area 1.29 (lows of early November), and a deeper correction could send the pair to 1.27. There is a support area in September, a 200-day average and a 61.8% Fibonacci correction line from the March-September rally.

Outside Europe, AUDUSD declined after briefly touching levels above 0.73, potentially targeting a return to 0.7000.

https://fxpro.news/daily-forex-outlook/markets-are-retreating-from-extremes-not-daring-to-enter-a-new-phase-20201113/

The USDCNH made a U-turn this week and became one of the early indicators of optimism soothing in the markets.

However, the yuan could also be negatively affected by the failure of Ant’s IPO, sending a signal of dissatisfaction from the authorities regarding the astronomical strengthening and expanding influences of the country’s IT companies.

An article in the WSJ states that the potentially largest IPO in history, with unprecedented investor excitement, was personally stopped by Xi Jinping. Merging and increasing in power high-tech, online commerce and finance companies have been a driver of growth in the US market, but have displeased Chinese leaders. This potentially casts a shadow over the growth of the entire market, where authorities can restrict online trading as they did five years ago.

https://fxpro.news/daily-forex-outlook/markets-are-retreating-from-extremes-not-daring-to-enter-a-new-phase-20201113/

For the second time this year, the Coronavirus impact is increasingly evident in macroeconomic reports. The University of Michigan consumer sentiment index has interrupted the recovery, falling from 81.8 to 77, according to a preliminary November estimate. The reversal came from 2014 levels, clearly indicating that consumers are still wary of spending.

It is clear to see that the recovery of the index has not kept pace with the growth of stock markets, retail sales and the housing market, where we have already seen peaks being exceeded. Weak consumer sentiment raises the issue of the need to further stimulate the economy, which has been delayed by politicians.

An additional worrying factor is an increase in long-term inflation expectations. 5-years inflation expectations have bottomed out in February and are gradually growing. Financial markets have seen a rise in the yields of 10 and 30-year bonds, which also reflects higher inflationary expectations.