NZD/USD is currently trading in a sideways manner near 0.6975, having faced rejection at the psychological hurdle of 0.70 on Tuesday.
The 14-day relative strength index is reporting overbought conditions with an above-70 print. The MACD histogram is producing smaller bars above the zero line in a sign of weakening of the upward momentum.
As such, the pair could pull back to the 10-day Simple Moving Average (SMA), currently at 0.6910. A close below the average would neutralize the immediate bullish view.
On the higher side, 0.70 is the level to beat for the bulls.
GBP/JPY tests a three-day-long support line while flashing 139.62 as a quote during the early Wednesday. The pair recently took a U-turn from 139.83, the highest level in a fortnight amid bearish MACD signals.
Hence, sellers are targeting a confluence of 100-HMA and 50% Fibonacci retracement of November 11-19 downside, near 138.40/35, while trying to break the 139.55 nearby trend line support.
During the fall, the November 16 high around 138.90 can act as a buffer whereas the monthly bottom close to 137.20 can please the GBP/JPY bears afterward.
Alternatively, an upside clearance of the adjacent resistance line, at 139.82 now, will have to cross another falling trend line, from September 01, currently around 139.85, before eyeing the 140.00 threshold.
If at all the bulls manage to cross the 140.00 psychological magnet, the monthly high near 140.30 and the early-September low close to 140.50 may test the uptrend towards the yearly peak of 142.71.
Trend: Pullback expectedFull Article
According to the latest Reuters poll of 40 strategists, the S&P 500 index is set to rise 9% by the end of 2021, as the coronavirus vaccines rollout is likely to boost a post-pandemic economic and corporate earnings recovery.
“The benchmark S&P 500 will finish 2021 at 3,900, a 9% gain from its close Monday of 3,577.59. The index is expected to end 2020 at 3,600, close to its current level.”
“Wall Street analysts expect S&P 500 earnings to jump 23% in 2021 after falling more than 15% in 2020, according to tn I/B/E/S data from Refinitiv.”
“Asked when earnings will return to pre-COVID-19 levels, most respondents said it would happen within a year.”
“The Dow Jones industrial average, which was near 30,000 through Monday, will finish next year at 32,500, up around 10% from Monday’s close.”
“Some strategists predict the gains in cyclical will extend far into 2021, but others say the rotation may not be long-lived.”
“Strategists in the poll said expectations the Fed will remain accommodative help to bolster the case for equities next year.”
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY reference rate at 6.5749 vs. Tuesday’s 6.5809.
The PBOC injected a CNY120 billion via seven-day reverse repos in open market operations (OMOS) while CNY100 billion matured.
Therefore, the net injection stood at CNY20 billion, the same as that seen on Tuesday.
USD/CNY is looking to extend its winning streak into the third day on Wednesday, despite the latest declines in the US dollar across the board.
At the press time, the cross adds 0.10% to trade at 6.5915.Full Article
“Gold to average below $1,760 an ounce by the end of next year and then drop all the way to $1,633 at the end of 2022.”
“The situation will turn around only by mid-2023, when the precious metal will begin to climb and rise to $1,848 by September 2024, according to the long-term forecast.”
“This outlook comes as gold has been on a losing streak amid better economic data and more risk-on sentiment in the marketplace in light of positive COVID-19 vaccine news.”Full Article
S&P 500 Futures portray market optimism, up 0.50% near 3,650, during the initial hour of Tokyo open on Wednesday. The risk barometer recently got a push from Biden’s comments to unite the US and end the damaging executive orders after the news of the power transition from Donald Trump favored risk-on mood the previous day.
Other than the Democratic Party member’s latest powers to receive the collection of classified intelligence reports prepared for the President, his outlook for the further stimulus also favored the market sentiment. Additionally, expectations that ex-Fed Chair Janet Yellen will offer sound economic policies and combat the coronavirus (COVID-19) added strength to the optimism.
Further, China’s signals that the covid vaccine will be out by 2020 end contrasts the update that Tokyo will have higher activity restrictions for three weeks from this weekend. It should also be noted that Biden’s push for no Irish border and the Saudi Arabia-Iran tension offers additional pressure on the market bulls.
Not only the S&P 500 Futures but Asian stocks also track Wall Street’s gains while the US 10-year Treasury yields rise by 1.1 basis points (bps) to 0.89% by press time.
While market hopes for US economic recovery, preceded by the stimulus, joins the upbeat news concerning the COVID-19 vaccine, a light calendar may offer a little hindrance for the optimists ahead of the US third quarter (Q3) GDP and FOMC minutes.Full Article
Spending on large ticket consumer items moderated in October but the the strong recovery from the pandemic collapse should continue into the holiday season, keeping the economy out of recession despite the second wave of COVID-19 across much of the country.
Durable Goods orders are expected to slip to 1% last month after rising 1.9% in September. Orders ex-transportation are forecast to increase 0.4% following the prior 0.9%. The business spending analog of Nondefense Capital Goods Orders ex-aircraft is projected to rise 0.6% after Septembers 1% increase.
Durable Goods are the Census Bureau’s classification for long-lasting and more expensive consumer purchases. They range from frying pans, electric toothbrushes and shoes to cars, computers and commercial airliners. These expenditures generally follow the overall Retail Sales trends. They are treated as a separate category by the statisticians to differentiate long-term consumer planning from items of day to day use and consumption.
Since the end of the nearly universal lockdowns in May the US consumer has behaved as if the economy was still at 3.5% unemployment instead of falling slowly from 14.7% to its current 6.9%..
Retail sales in the eight months of the pandemic, March through October, averaged 0.89%. In the eight months from June 2019 to January 2020 the monthly average was just 0.30%. For all of 2019 the monthly increase was 0.49%.
In the pandemic the unemployment rate has averaged 9.61%. In the eight months from June 2019 to January the average jobless rate was 3.60%.
As these numbers might seem unexpected, I’ll restate. In the two-thirds of a year since the pandemic burst on the American economic scene, including the shutdown in March and April, Retail Sales gained 0.89% each month while the U-3 unemployment rate averaged 9.61%.
In the eight months immediately prior to COVID-19 Retail Sales averaged 0.30% with 3.60% unemployment.
Durable Goods show a more restrained pattern as might be expected for goods that are desired but not mandatory. For the seven months of the pandemic, March through September, the average increase was 0.242%. For the seven months from July 2019 to January 2020 the average was 0.286%. For all of 2019 the average was -0.25%.
Let us look at the ex-Transport figures also called Core Durable Goods, which excludes high value items like aircraft and other commercial transport equipment.
From March to September this year the monthly gain was 0.33%. In the seven months from July 2019 through January the per month average was negative 0.10%. For all of 2019 the average was -0.07%.
The American consumer seems unfazed by the unemployment brought about by the pandemic. Since the unemployment is patent we can speculate on the cause.
It seems likely that the unemployment created by the lockdowns in March and April, and continuing with the tepid recovery in the restaurant, hospitality and travel industries, has not affected a large portion of overall consumer spending. The immediate return of consumption once the closures ended points to the vast majority of workers retaining or restarting employment.
The second bout of economic restrictions is far less draconian that the first, most retail and businesses remain open. The impact on the economy will likely be unimportant.Full Article
AUD/USD rises to the fresh high since September 02, currently easing to 0.7367, amid Wednesday’s Asian session. In doing so, the aussie pair marks 0.10% intraday gains while taking rounds to the multi-day top of 0.7374.
That said, AUD/USD bulls recently ignored downbeat housing data from Australia. The Constriction Work Done for the third quarter (Q3) dropped below -2.0% forecast and -0.7% previous readouts to -2.3% QoQ.
The reason could be traced from the global market’s optimism concerning the US economy as President-elect Joe Biden has recently been allowed to receive the President’s Daily Brief, the collection of classified intelligence reports prepared for the national leader. Following the announcement, the Democratic Party member showed readiness to unite America while also showing concerns for the Northern Ireland border.
Not only Biden’s readiness to help the US overcome the coronavirus (COVID-19), most likely via further stimulus, but expectations of sound policy moves by ex-Fed Chair Janet Yellen also favor the AUD/USD buyers. Additionally, downbeat US data and global rush towards the risk offered extra strength to the upside momentum.
While portraying the upbeat mood, S&P 500 Futures challenge a two-week high after its Wall Street counterpart offered the highest daily closing on record.
Moving on, a lack of major data can keep the traders directed towards the risk headlines ahead of the preliminary reading US Q3 GDP. It’s worth mentioning that strong GDP figures from the US than 33.1% forecast can trigger fresh pullback moves.
A sustained break of the mid-September top near 0.7345 keeps AUD/USD buyers hopeful towards breaking the 0.7400 round-figure and aim for the yearly high near 0.7415. Meanwhile, 10-day EMA, currently near 0.7285, offers an additional downside filter.Full Article
USD/JPY is attempting a minor recovery above the midpoint of the 104 level in Asian trading this Wednesday, as the bears take a breather after the 30-pips drop seen in the US last session.
The major retreated from 104.75 highs in the American trading, as the US dollar tumbled across the board on a record rally in the US stocks amid improved economic prospects. The coronavirus vaccine progress and strong US business activity data boosted hopes for a quick economic turnaround. The Biden transition kicking off also joined the broader market optimism.
In the first of Tuesday’s trading, the spot followed the strength in the greenback and the uptick in the S&P 500 futures. Therefore, it can be seen that USD/JPY remains at the mercy of the US dollar dynamics while the risk sentiment remains a key market driver.
At the time of writing, the spot trades at 104.52, adding 0.08% on the day and recovering from a dip to session lows of 104.42. The pause in the overnight sell-off can be attributed to the extension of the rally in the US Treasury yields, which save the day for the bulls.
Meanwhile, the advance in the Asian equities, in the wake of the Wall Street upsurge, also helps put a floor under the major. The yen remains on the offers amid downbeat Japanese corporate service price index data and a 2% rally in the Nikkei 225 index.
Next of relevance for the major remains a bunch of critical US economic releases due for release later in the NA session. Markets gear up for the US Preliminary Q3 GDP, Initial Jobless Claims, Durable Goods and Core PCE Index among other minority reports.
EUR/USD buyers attack 1.1900 as markets in Tokyo open for Wednesday’s trading. In doing so, the major currency pair not only tests the weekly top but also targets a descending trend line from November 09.
Considering the bullish MACD and the quote’s ability to stay above 200-HMA, the EUR/USD bulls are likely to keep the baton and break the 1.1905 immediate resistance line.
However, another upward sloping trend line resistance, at 1.1910 now, as well as the monthly high near 1.1920, could offer a noisy run-up beyond 1.1900.
On the flip side, an ascending support line from Monday, at 1.1860, near to the 200-HMA level of 1.1852, can restrict the pair’s pullback moves.
It should, however, be noted that any further weakness past-1.1852 will eye for the weekly bottom surrounding 1.1800.
Trend: Pullback expectedFull Article
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With the race of the coronavirus (COVID-19) flashing positive signs off-late, the Bank of America (BofA) eyes further recovery in the oil market conditions.
Additionally, the US bank expects a high for Brent oil near $60 for 2021 summers in the Northern hemisphere backed by easing travel restrictions to boost demand.
That said, WTI eases from the highest since early March while taking rounds to $44.85. The energy benchmark flashed the heaviest rise last two weeks the previous day amid market optimism over the US President-elect Joe Biden’s transition as the national leader.Full Article