Major markets have a mixed look to them as the European session gets up and running. The positive momentum of earlier in the week has waned slightly and markets are now struggling for traction. There is a bias hinting towards safe-haven currencies amongst the forex majors. Elsewhere, markets are consolidating, with the rally on oil just hovering now and equity markets are around the flat line on the day. Aside from US jobless claims, there is little on the economic calendar to impact.
- Main drivers: Sentiment mixed; China inflation higher but misses estimates; the UK to increase social restrictions; Economic calendar: US jobless claims later
- Sentiment mixed: European markets looking mixed, oil hovering, precious metals mixed, forex majors with a mild risk negative bias.
- China inflation jumps but is lower than expected: China's CPI jumped to +2.3% in November (from +1.5% in October). However, this was lower than the +2.5% expected. Furthermore, the PPI inflation was 12.9% (higher than the +12.4% expected). [mixed for risk appetite]
- UK tightens social restrictions: workers are urged to work from home and restrictions are increased on public venues. [mild drag on GBP]
- Central Bank of Brazil hikes as expected: The central bank increased the Selic rate by +150 basis points (+1.5%) as expected
- Central bank speakers: the FOMC is in its Blackout Period. There will be no FOMC speakers until after the next FOMC meeting on Wednesday 15th December.
- Economic Data:
- US Weekly Jobless Claims at 1330GMT is expected to fall slightly to 218,000 (from 222,000 last week).
Broad outlook: markets are looking fairly mixed today with the little real trend on show.
Forex: there is a mixed outlook for the USD developing. Ranging against EUR and JPY, strength versus GBP, broadly weakening versus AUD, and potentially NZD.
- EUR/USD a strong rebound from 1.1227 is now pulling back again as the key resistance around 1.1380 remains firm. This is turning into a range between 1.1185/1.1385.
- GBP/USD still trending lower but the support around 1.3195 seems to be holding, for now. A stream of lower highs at 1.3260 and 1.3290 lie overhead. Below 1.3130 the next real resistance is 1.2850.
- AUD/USD the impressive recovery is just on pause this morning. We would look to use weakness as a chance to buy, with support 0.7115/0.7140.
Commodities: precious metals continue to build a sideways consolidation. Oil is seeing the recovery on pause this morning.
- Gold is stuck sideways now. Support is building at $1762/$1772 but resistance at $1790/$1800 remains a big barrier. Daily technicals still marginally favor a retest of $1758. The bulls need a break above $1815.
- Silver is still stuck hovering around support at $22.00/$22.25 but under resistance at $22.60/$23.00. Below $22.03 opens $21.40.
- Brent Crude oil recovery is just easing back this morning and maybe about to see a pullback towards the breakout support around $73.20/$73.50. Key resistance overhead at $77.80.
Indices: The recovery is continuing from yesterday’s consolidation. We still look to use near-term weakness as a chance to buy.
- S&P 500 futures have turned back from 4711 but we look to use supported weakness as a chance to buy. There is good initial support around 4650/4665. We look for a retest of the highs again at 4740.
- DAX continues to drift back slightly but we look for support formation and buy signals to resume the bull run higher. There is good support between 15,510/15,600. Initial resistance is 15,868 before 15,975/16,030.
- FTSE 100 the recovery is stalling, just under key resistance at 7401. There is good support around 7260/7320 to use for buying into weakness.