More markets and currencies set to enter a post-pandemic stage
A new round of vaccine news has returned to the markets the rotation of energy, financial and defence stocks. Dow Jones was the growth leader among the three leading Wall Street indices, adding 1.6%, against 1.2% in the S&P500 and 0.8% in the Nasdaq100.
Interestingly, the small-cap stock indices on Monday soared even stronger with the S&P600 Smallcap having added 2.9% and Russell2000 jumped 2.4%, adding to more than 6% growth last week and rewriting its all-time highs.
The dynamics of cyclical stocks, small capitalisation companies and several currencies note that markets are now on the verge of entering a new phase, and in some places have already crossed this line.
Such a breakthrough is likely to be the first reliable signal that life is on its way back to normal, even if it is not apparent right now. Failure to reach a new level could be a signal for another sell-off in the stock and currency markets in the coming weeks.
A new round of vaccine news has returned to the markets the rotation of energy, financial and defence stocks. Dow Jones was the growth leader among the three leading Wall Street indices, adding 1.6%, against 1.2% in the S&P500 and 0.8% in the Nasdaq100.
Interestingly, the small-cap stock indices on Monday soared even stronger with the S&P600 Smallcap having added 2.9% and Russell2000 jumped 2.4%, adding to more than 6% growth last week and rewriting its all-time highs.
The dynamics of cyclical stocks, small capitalisation companies and several currencies note that markets are now on the verge of entering a new phase, and in some places have already crossed this line.
Such a breakthrough is likely to be the first reliable signal that life is on its way back to normal, even if it is not apparent right now. Failure to reach a new level could be a signal for another sell-off in the stock and currency markets in the coming weeks.
This fundamental change in index dynamics promises to have an impact on currency markets as well. Investor interest in commodity assets has been pushed up by the Mexican peso, the South African rand and the Russian rouble. All have added over 5% to the US dollar so far this month. As oil is undergoing an important test near September highs of around $42 for WTI, ZAR and MXN have already been at their peaks since early March. This is due to the expectation of a recovery in export demand, which is coupled with a tighter monetary policy. For example, USDMXN at current levels is much closer to returning to the trading range the pair was in before the pandemic (18.50-20.20).
The Chinese yuan is now a correspondent to small-cap stocks, as business in China is based on millions of small companies servicing large factories and corporations. At present, USDCNH has been developing its decline since May, falling into the 6.56 area, where it last traded at the beginning of the 2018 trade wars.
The Chinese yuan is now a correspondent to small-cap stocks, as business in China is based on millions of small companies servicing large factories and corporations. At present, USDCNH has been developing its decline since May, falling into the 6.56 area, where it last traded at the beginning of the 2018 trade wars.
US retail sales in October fell short of expectations, adding 0.3% vs forecasted +0.5% and +1.6% a month earlier. Separately, the import price index declined by 0.1% m/m against expected growth of 0.2%.
Weaker US economic data increased pressure on the dollar, sending EURUSD close to 1.1900 and USDJPY to 104.0, as a sluggish economic recovery increases the chances of an expansion of the Fed's QE program in December.
Seven FOMC members are scheduled to speak later today, which could increase market volatility. If we hear a coordinated signal from the Fed members, the dollar and markets will be able to take a big step.
For EURUSD, this step could be a move beyond 1.1900 or to receive another downside impulse. For the stock market, a continuation of the rally or a reversal to decline is on the cards. The Fed is often on the side of a weak dollar and strong markets, but now that the markets have gone too far in this direction, won't the Fed want to cool them down?
Weaker US economic data increased pressure on the dollar, sending EURUSD close to 1.1900 and USDJPY to 104.0, as a sluggish economic recovery increases the chances of an expansion of the Fed's QE program in December.
Seven FOMC members are scheduled to speak later today, which could increase market volatility. If we hear a coordinated signal from the Fed members, the dollar and markets will be able to take a big step.
For EURUSD, this step could be a move beyond 1.1900 or to receive another downside impulse. For the stock market, a continuation of the rally or a reversal to decline is on the cards. The Fed is often on the side of a weak dollar and strong markets, but now that the markets have gone too far in this direction, won't the Fed want to cool them down?
#WaveAnalysis
#USDJPY reversed from resistance area
• Likely to fall to 103.25
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-17-november-2020-20201117/
#USDJPY reversed from resistance area
• Likely to fall to 103.25
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-17-november-2020-20201117/
World markets step back from peaks
Global markets are retreating from their recent highs due to signs of a weakening recovery. In recent days, we saw a decline in the US consumer sentiment and a slowdown in retail sales growth.
We observed earlier that stock indices have skyrocketed, and further dynamics will be very indicative. Yesterday and this morning, investors are inclined to sell stocks after the recent rally, allowing them to touch areas above 3,600 on the S&P 500 and 30,000 on the Dow Jones.
It is also worth paying attention to USDJPY as an important indicator of risk demand. Earlier this month it was down to 103.25 and then rushed upwards to 105.60 in the expansion of the Bank of Japan QE and the post-election rally. But since last Thursday it has been systematically down, falling again below 104.0 this morning.
Global markets are retreating from their recent highs due to signs of a weakening recovery. In recent days, we saw a decline in the US consumer sentiment and a slowdown in retail sales growth.
We observed earlier that stock indices have skyrocketed, and further dynamics will be very indicative. Yesterday and this morning, investors are inclined to sell stocks after the recent rally, allowing them to touch areas above 3,600 on the S&P 500 and 30,000 on the Dow Jones.
It is also worth paying attention to USDJPY as an important indicator of risk demand. Earlier this month it was down to 103.25 and then rushed upwards to 105.60 in the expansion of the Bank of Japan QE and the post-election rally. But since last Thursday it has been systematically down, falling again below 104.0 this morning.
Euro's changing role
The weakening of the dollar feeds interest in equities and commodities. However, it may be the case today that the decline of the dollar is driven by cautions that it will save its purchasing power rather than a desire to invest in risk-related assets.
Several times we have seen evidence that a steady strengthening of the yen often goes hand in hand with or precedes a weakening of the markets.
At the same time, the euro, replicating the yen, is also moving to its local highs, having settled at 1.1900. These dynamics make us wonder whether the euro has changed from risky to protective status. In this case, the rise of the euro is bad news for markets and especially for European markets, where EURO50 has only recently managed to break through to its highs since March, and the DAX30 is stuck above 13000.
The weakening of the dollar feeds interest in equities and commodities. However, it may be the case today that the decline of the dollar is driven by cautions that it will save its purchasing power rather than a desire to invest in risk-related assets.
Several times we have seen evidence that a steady strengthening of the yen often goes hand in hand with or precedes a weakening of the markets.
At the same time, the euro, replicating the yen, is also moving to its local highs, having settled at 1.1900. These dynamics make us wonder whether the euro has changed from risky to protective status. In this case, the rise of the euro is bad news for markets and especially for European markets, where EURO50 has only recently managed to break through to its highs since March, and the DAX30 is stuck above 13000.
#WaveAnalysis
#Platinum reversed from support level 917.00
• Likely to rise to 987.00
https://fxpro.news/market-snapshots/platinum-wave-analysis-18-november-2020-20201118/
#Platinum reversed from support level 917.00
• Likely to rise to 987.00
https://fxpro.news/market-snapshots/platinum-wave-analysis-18-november-2020-20201118/
#WaveAnalysis
#3M reversed from resistance level 173.00
• Likely to fall to 165.00
https://fxpro.news/market-snapshots/3m-wave-analysis-18-november-2020-20201118/
#3M reversed from resistance level 173.00
• Likely to fall to 165.00
https://fxpro.news/market-snapshots/3m-wave-analysis-18-november-2020-20201118/
The American S&P500 and Dow Jones 30 closed on Wednesday with a 1.2% decline and Asian markets are also developing a retreat from their recent highs.
Despite the news of advances in vaccine development, markets are again paying increasing attention to new pandemic records. Daily deaths in the last two days have exceeded 10K, and the number of new cases was also above 600K. A couple of days ago, there were hopes that the peak would soon be passed, but the recent acceleration renews worries about new lockdowns in the economy. Individual states in the USA and countries in Europe are again considering the option of introducing lockdown.
In theory, this should encourage the growth of the so-called “work from home” firms but this doesn’t seem to be happening. Nasdaq100 lost 0.7% on Wednesday, slightly better than the decline in industrial Dow.
https://fxpro.news/daily-forex-outlook/holding-onto-1850-gold-can-clear-the-path-to-2500-20201119/
Despite the news of advances in vaccine development, markets are again paying increasing attention to new pandemic records. Daily deaths in the last two days have exceeded 10K, and the number of new cases was also above 600K. A couple of days ago, there were hopes that the peak would soon be passed, but the recent acceleration renews worries about new lockdowns in the economy. Individual states in the USA and countries in Europe are again considering the option of introducing lockdown.
In theory, this should encourage the growth of the so-called “work from home” firms but this doesn’t seem to be happening. Nasdaq100 lost 0.7% on Wednesday, slightly better than the decline in industrial Dow.
https://fxpro.news/daily-forex-outlook/holding-onto-1850-gold-can-clear-the-path-to-2500-20201119/
Holding onto $1850, Gold can clear the path to $2500
The weakening of the markets has not benefited Gold, which has remained at the bottom of the trading range for the last four months at $1850. Gold was declining in November on both good news and bad news for stocks.
Gold is now dominated by a pattern of ‘buying the deep’ on a decline to $1850, which is close to the 61.8% Fibonacci correction level from the March-August rally. So far, this level has saved Gold from a deeper correction. Within this pattern, the next significant growth target could be $2500 per ounce, followed by 161.8% of March-August growth.
An alternative scenario assumes a support failure at $1850 to be a strong bearish signal, or even more correctly at $1800, where the 200-day average runs. In this case, buyer surrender could quickly take Gold below $1700 before the end of the year.
https://fxpro.news/daily-forex-outlook/holding-onto-1850-gold-can-clear-the-path-to-2500-20201119/
The weakening of the markets has not benefited Gold, which has remained at the bottom of the trading range for the last four months at $1850. Gold was declining in November on both good news and bad news for stocks.
Gold is now dominated by a pattern of ‘buying the deep’ on a decline to $1850, which is close to the 61.8% Fibonacci correction level from the March-August rally. So far, this level has saved Gold from a deeper correction. Within this pattern, the next significant growth target could be $2500 per ounce, followed by 161.8% of March-August growth.
An alternative scenario assumes a support failure at $1850 to be a strong bearish signal, or even more correctly at $1800, where the 200-day average runs. In this case, buyer surrender could quickly take Gold below $1700 before the end of the year.
https://fxpro.news/daily-forex-outlook/holding-onto-1850-gold-can-clear-the-path-to-2500-20201119/
The Australian dollar is under some pressure on Thursday, retreating in the wake of reduced demand for risk in global markets. However, labour market data from the country was one of the few bright spots this morning.
According to the latest data, in October, employment jumped by 178.8K vs expected -26.7K. The jobs market in Australia is recovering with an almost V-shaped trajectory.
The recovery in other countries, and especially in the USA, is unlike this shape, so no wonder AUDUSD is now higher than it was before the pandemic. The pair is now at levels where it last traded steadily in late 2018.
The general cautious sentiment has constrained growth in the Aussie over the past three days. One should not forget about the recent QE expansion and lowering of rates. However, strong job data is reminiscent of how AUD behaved after the global financial crisis, surpassing its 2008-peak by 15% in just two years, unlike the euro, pound and many commodity currencies.
According to the latest data, in October, employment jumped by 178.8K vs expected -26.7K. The jobs market in Australia is recovering with an almost V-shaped trajectory.
The recovery in other countries, and especially in the USA, is unlike this shape, so no wonder AUDUSD is now higher than it was before the pandemic. The pair is now at levels where it last traded steadily in late 2018.
The general cautious sentiment has constrained growth in the Aussie over the past three days. One should not forget about the recent QE expansion and lowering of rates. However, strong job data is reminiscent of how AUD behaved after the global financial crisis, surpassing its 2008-peak by 15% in just two years, unlike the euro, pound and many commodity currencies.
#WaveAnalysis
#NaturalGas broke pivotal support level 2.655
• Likely to fall to 2.4000
https://fxpro.news/market-snapshots/natural-gas-wave-analysis-19-november-2020-20201119/
#NaturalGas broke pivotal support level 2.655
• Likely to fall to 2.4000
https://fxpro.news/market-snapshots/natural-gas-wave-analysis-19-november-2020-20201119/
US Treasury Secretary Mnuchin has asked the Fed to return the unused $455 billion allocated to the business lending programme to Congress to be reallocated. The winding down of this programme is causing markets nervousness on signs of a divided Fed and US Treasury.
The Fed does its part by continuing to buy assets on its balance sheet. Published data showed a weekly increase of $67.7 billion, the second most significant weekly increase since May. Probably related to this is that the US indices were able to stay in line with the level of a week ago.
But only Fed-driven market growth is raising questions about the sustainability of the dollar. The dollar index fell for the second time this month to 92 and it was briefly below this at the end of August. The dollar index has not been steady below this level since April 2018.
https://fxpro.news/daily-forex-outlook/the-dollars-slow-melting-is-a-positive-sign-20201120/
The Fed does its part by continuing to buy assets on its balance sheet. Published data showed a weekly increase of $67.7 billion, the second most significant weekly increase since May. Probably related to this is that the US indices were able to stay in line with the level of a week ago.
But only Fed-driven market growth is raising questions about the sustainability of the dollar. The dollar index fell for the second time this month to 92 and it was briefly below this at the end of August. The dollar index has not been steady below this level since April 2018.
https://fxpro.news/daily-forex-outlook/the-dollars-slow-melting-is-a-positive-sign-20201120/
Interestingly, the volatility of the currency market remains moderate or is even slightly declining. Approaching the boundaries of established trading ranges is so far accompanied by gentle attempts to push the dollar back and nothing more.
The global retreat of the dollar is broken down into a series of local battles in individual currency pairs. EURUSD is once again getting closer to 1.1900. It looks like the last stronghold before 1.2000 and attempts of the pair to enter the next trading range of 1.2000-1.2400.
GBPUSD is close to 1.33, above which it has not consolidated since July 2018. Overcoming this resistance will open the path to the range of 1.33-1.43.
USDJPY is now slightly below 104, but as with the pound and the Euro, the pair is on the verge of breaking out of the trading range of recent years.
https://fxpro.news/daily-forex-outlook/the-dollars-slow-melting-is-a-positive-sign-20201120/
The global retreat of the dollar is broken down into a series of local battles in individual currency pairs. EURUSD is once again getting closer to 1.1900. It looks like the last stronghold before 1.2000 and attempts of the pair to enter the next trading range of 1.2000-1.2400.
GBPUSD is close to 1.33, above which it has not consolidated since July 2018. Overcoming this resistance will open the path to the range of 1.33-1.43.
USDJPY is now slightly below 104, but as with the pound and the Euro, the pair is on the verge of breaking out of the trading range of recent years.
https://fxpro.news/daily-forex-outlook/the-dollars-slow-melting-is-a-positive-sign-20201120/
Pound didn't dare to test 1.33, despite strong sales data
The British pound failed yet another attempt today to break above 1.3300, despite help from macroeconomic data. However, regardless of the fail in this local battle, the strong growth in retail sales allows us to look at the pound with some optimism.
The latest report showed retail sales grew by 1.2% in October and 5.8% from the same month last year. This is distinctly better than the forecasted drop by 0.3% m/m and a slowdown to 4.2% YoY from 4.6%. Sales ex-fuel added 7.8% YoY in October.
Post-publication pressure on GBPUSD could prove to be a temporary tug on the dollar on Friday and a reluctance to cross the psychologically important 1.33 by the end of the week.
It is interesting to see whether GBPUSD will be the first to go beyond the established range of recent years or if it will confirm its resilience.
The British pound failed yet another attempt today to break above 1.3300, despite help from macroeconomic data. However, regardless of the fail in this local battle, the strong growth in retail sales allows us to look at the pound with some optimism.
The latest report showed retail sales grew by 1.2% in October and 5.8% from the same month last year. This is distinctly better than the forecasted drop by 0.3% m/m and a slowdown to 4.2% YoY from 4.6%. Sales ex-fuel added 7.8% YoY in October.
Post-publication pressure on GBPUSD could prove to be a temporary tug on the dollar on Friday and a reluctance to cross the psychologically important 1.33 by the end of the week.
It is interesting to see whether GBPUSD will be the first to go beyond the established range of recent years or if it will confirm its resilience.
#WaveAnalysis
#NZDUSD broke resistance area
• Likely to rise to 0,7000
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-20-november-2020-20201120/
#NZDUSD broke resistance area
• Likely to rise to 0,7000
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-20-november-2020-20201120/