Daily Market Outlook, November 24, 2020

Asian equity markets are mixed this morning but European and US futures prices point to opening gains. The White House signalled that it will cooperate in the US Presidential transition. President-elect Biden said that former Federal Reserve Chair Janet Yellen will be his Treasury Secretary.

UK Prime Minister Johnson confirmed yesterday that, following the end of the lockdown on 2nd December, England will move to a stricter version of the previous regional tier system. Meanwhile, AstraZeneca said that its Covid-19 vaccine offered as much as 90 percent protection without serious side effects.

Yesterday’s November PMIs for the Eurozone pointed to a drop in economic activity as the composite index slipped below 50 (the key level that distinguishes expansion from contraction) for the first time since June. The data also provided further evidence of a two-speed economy. The services measure signalled a sharp fall in activity in the sector that is more directly impacted by lockdown restrictions, while in contrast the manufacturing index still pointed to rising activity, although it was down from October.

Today’s German IFO survey will provide a further update on November trends. The current conditions reading is expected to have fallen for the first time since May reflecting the impact of the new lockdown, although the decline is expected to be much more modest than in the spring. The expectations component which fell last month for the first time since April is expected to decline again due to uncertainty over when restrictions in Germany will be lifted.

In the UK, the November CBI retail survey will provide one of the first indications of the strength of retail spending in the early part of the latest English lockdown. The official retail sales measure for October, which was released last week, surprised on the upside and suggested that the strong rebound in sales since the spring lockdown was continuing ahead of the latest rise in restrictions. However, it is expected that, with ‘non-essential’ stores closed in England, overall sales are likely to decline this month.

Other already released indicators of US consumer confidence suggest that the Conference Board measure is likely to have fallen in November. That may reflect concern about the rise in Covid-19 cases and possibly also political uncertainties.

There are a number of central bank speakers today from the Bank of England, European Central Bank and the US Fed. Markets will be watching for any reaction to recent developments including hopes for a vaccine.

Today’s Options Expiries for 10AM New York Cut

  • EURUSD: 1.1800 (302M), 1.1900 (217M)
  • GBPUSD: 1.3275 (215M)
  • USDJPY: 105.00-10 (1.1BLN)

Technical & Trade Views

EURUSD Bias: Bullish above 1.1750 targeting 1.20

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: Bullish above 1.3150 targeting 1.3480

GBPUSD From a technical and trading perspective, as 1.3150 supports look for a test of prior cycle highs at 1.3480

Flow reports suggest topside offer light through the 1.3350 area with stronger offers likely into the 1.3400 level and likely to continue through the 1.3450 area before break out stops are likely to appear through the area and into the 1.3500 level with weakness above, downside bids light through the 1.3250 level with stronger congestions on a dip to the 1.3200 areas, weak stops on a move through the level and downside weakness through to the 1.3100 level where some stronger congestion can be possibly found.

USDJPY Bias: Bearish below 104 bullish above

USDJPY From a technical and trading perspective, look for another tet of 103.20 projected ascending trendline support, another hold here could prompt near term short covering to challenge offers to 105 descending trendline resistance

Flow reports suggest congested through to the 104.80 level where offers are likely to be a little stronger with weak stops on a move through the 105.20 level before further offers into the 105.50 area and weakness through to the 106.00. downside Bids into the 103.50 level increasing on move 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 targeting .7400

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 downside bids cleared through to the 0.7260 level yesterday but reforming with stronger bids likely through to the 0.7240 area, a move through the level is likely to see limited bids into the 0.7200 area with weak stops appearing on a move through the 0.7180 area opening a deeper move over several days to the 70 cents level. Topside offers through the 0.7350 area are likely to continue to be strong with increasing offers beyond the 0.7380 area through to the 0.7410-20 level before stops appear however, offers around the 0.7450 area are likely to increase beyond the level.

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