There is a lack of key market drivers as we approach the end of the week, so it will be interesting to see if an element of profit-taking sets in on some of the big moves from earlier in the week. Already there are hints of a kickback against strength in USD and precious metals. Prelim Michigan Sentiment is later.
- Main drivers: Quiet start to Friday; few catalysts, ongoing EU/UK post-Brexit tensions, the economic calendar has Michigan Sentiment later.
- Markets consolidating: after some huge moves after Wednesday’s US inflation upside surprise, there is a quiet start to Friday’s trading. US bond markets re-open flat after Veterans Day public holiday.
- Few catalysts yet: with few catalysts this morning, it will be interesting to see if there is any profit-taking on USD strength [risk neutral].
- Continued EU & UK tensions over Brexit: reports out of both UK and EU suggest tensions are still elevated over whether the UK will push to make unilateral changes to the Northern Ireland Protocol (trade movement between Northern Ireland and the Irish Republic). EU could still tear up the whole Brexit agreement over the issue. [GBP negative].
- Central bank speakers: one Fed speaker today:
FOMC’s John Williams at 1710GMT (permanent voter, leans dovish)
- Economic Data:
Eurozone Industrial Production at 1000GMT, expected to fall by -0.5% MoM in September, leaving 4.1% YoY (5.1% YoY in August)
Michigan Sentiment at 1500GMT, expected to improve slightly to 72.4 in November (from 71.7 in October)
- Broad outlook: consolidation after strong runs in recent days.
- Forex: USD strength consolidating, but watching for signs of a pullback.
EUR/USD tentative signs of support at 1.1435 after the decisive breakdown below 1.1515/1.1525 support. We look to sell technical rallies, with this old support now becoming new resistance to sell into.
GBP/USD tentative support at 1.3355 as market ticks higher. However, we look to sell into strength following the decisive breach of key support at 1.3410 which opened 1.32/1.33. Key resistance now 1.3410/1.3500.
AUD/USD ticking up from 0.7275 but we favor selling intraday rallies into resistance. Initial resistance 0.7360/0.7390.
- Commodities: precious metals just easing back from strong runs higher, oil signs of consolidation
Gold just easing back from $1868 as an element of unwinding sets in. Initial support at $1841 now. We look to buy into weakness for the upswing continues towards $1900. Key breakout support is at $1810/$1834.
Silver easing back from $25.27, we look to buy into supported weakness. Strong breakout support now $24.50/$24.80.
Brent Crude oil remains in a choppy trading range between $80.80/$86.65. Signs of a degree of consolidation today. We are neutral within the range amidst a lack of conviction.
- Indices: Wall Street minor correction is consolidating, still not yet reflected in Europe.
S&P 500 futures consolidation above the support at 4625 but there is still a run of lower highs over the week and a corrective unwind towards 4550/4590 still is the risk. We still look to buy supported weakness. Initial resistance 4661/4678.
DAX easing back from an overnight all-time high of 16,129. The outlook remains positive but tentative currently. If a correction sets in it would be a chance to buy into weakness. Initial support 15,988 with good support 15,755/15,845.
FTSE 100 is seeing an early unwind today with some profit-taking. We look to use intraday weakness as a chance to buy for the medium-term bullish breakout targeting 7700. Good support now 7250/7330 area.