What we are looking for
- USD is managing a minor clawback: USD has regained some minor ground on major forex but the existing corrective trend continues.
- Indices supported but quiet: With many US traders on an extended holiday for Thanksgiving we are not expecting any significant direction today. US futures have re-opened marginally higher on a little bit of catch-up to European gains yesterday.
- Commodities mixed: A slight negative bias to risk is pulling silver lower. Oil has ticked slightly higher, whilst gold is all but flat.
- Liquidity and volatility still impaired: With US markets only open for half a day today, many US traders will be taking a long weekend for Thanksgiving. Subsequently, we can expect a continuation of the lull for markets with reduced liquidity. This may mean erratic but likely to still be subdued trading volatility.
- Data traders: It is another quiet day on the calendar. There are no major economic announcements for data traders to go on.
It is Black Friday today in the US. The day after Thanksgiving is an odd half-holiday for US markets that many traders use as an opportunity for an extended Thanksgiving break. Bond markets and Wall Street do re-open for half a session but this often comes with significantly reduced volumes. Subsequently, there tends to be little direction for traders.
Into the European session, there is limited newsflow to drive markets, but there is a marginal negative bias to trading sentiment. This is helping the USD into the slightest of gains (mainly against the higher beta, and commodity currencies), but the moves are very limited. We are not anticipating any decisive direction today.
Once more, it is all quiet on the economic calendar today. There are no major economic announcements today.
Market sentiment is still subdued but marginally risk-negative: A minor USD rebound versus the higher beta currencies. with mixed moves on commodities and flat equity markets.
Treasuries re-open with yields slightly lower: Yields have been falling since Wednesday’s data disappointments and dovish Fed minutes.
OPEC producers reiterate the OPEC+ framework: Saudi and Iraqi officials have stressed the importance of OPEC+ targets. This is important as Iraq has previously been pushing for higher production. The oil price has found support on this news.
Cryptocurrencies rally tails off: Crypto has rebounded in recent days. However, with the Thanksgiving holiday in the US, the momentum of the move has eased off. Bitcoin is slightly lower by -0.7% at $16410. Ethereum is -1.4% at $1179.
- There are no major economic announcements today.
Major markets outlook
Broad outlook: Markets remain subdued.
Forex: There is a very slight risk-negative feel as NZD and AUD slip back.
- EUR/USD has pulled decisively higher this week although is a little subdued with Thanksgiving. Looking towards next week, the support that has formed around 1.0220 (above the 1.0100/1.0200 old key breakouts) is a key floor now. With the RSI above 60 and a real sense that the weakness is a chance to buy, the market is now eyeing a test of the 1.0480 reaction high. A breakout opens 1.0615 as the next test. Initial support is 1.0345/1.0390.
- GBP/USD has burst through resistance at 1.2028 to trade at three-month highs as the market pushes higher along with is now an expanding uptrend channel. Momentum is strongly positive, with the RSI in the 60s and at its strongest since January. This continues to suggest near-term corrections remain a chance to buy. The support between 1.1710/1.1780 continues to strengthen with recent moves. The next important resistance is the August high of 1.2295.
- AUD/USD has again recovered strongly with the rebound from 0.6585. Moving above the old key breakout band 0.6520/0.6550, the bulls have now broken a big downtrend that dates back to April. Momentum remains strong but the price is just easing back slightly this morning from the test of 0.6797. With the RSI positively configured, weakness is being seen as a chance to buy. A move above 0.6797 would be the next key breakout and would open 0.6915 as the next test.
Commodities: Precious metals are just easing back slightly. Oil is trying to build a recovery within the trading range.
- Gold holding the support at the neckline of the base pattern around $1730/$1735 is key to the recovery outlook. After two positive sessions, the price has just eased back slightly this morning. However, with the RSI holding above 50 the outlook for the recovery remains positive and near-term weakness is seen as a chance to buy. Moving back below $1747/$1750 would sour the near-term outlook slightly, however, we continue to favour pressure on $1786 in due course. The big base pattern implies $1844. The low at $1728 is growing in importance.
- Silver has eased back from $21.67 back into the old pivot band between $20.85/$21.23. However, with the RSI momentum remaining above 50 we still favour buying into near-term weakness. If the momentum continues to remain positive we favour a retest of the $22.24 high in due course. A close under $20.57 would be a disappointment now.
- Brent Crude oil has struggled to hold on to near-term gains recently. This week, the technical rally quickly faltered and the three-week downtrend remains a corrective factor. However, we see the market as being in an almost $20 multi-month trading range between $82.85/$101.20 and look to play this range. Initial support is $84.65 with mid-range resistance now between $88.25/$90.40.
Indices: There is a positive bias to Wall Street, whilst European markets continue to find buyers into weakness.
- S&P 500 futures have ticked decisively higher ahead of the Thanksgiving break and are still close to testing the resistance at 4050. Holding on to the support band of the previous breakout between 3883/3935 is an important positive development with the recovery looking for the next upside break. A close above 4050 opens 4145 as the next test. The primary downtrend of 2022 comes in at 4088. Thanksgiving will likely leave moves subdued into the weekend.
- German DAX continues to move higher with near-term weakness still being bought into. There is a succession of higher lows and higher highs as it moves to its highest level since early June. Initial support is at 14323/14360. The RSI has been above 70 now for two weeks and despite the risk that the move runs out of steam, there are no momentum sell signals yet and there is still an appetite to buy. The next important resistance is at the June high of 14708 which marks the bottom of a hugely important resistance band between 14700/14800.
- FTSE 100 remains strong (although it is lagging slightly behind the DAX rally) and continues to push higher along the support of a six-week uptrend. A minor lull in the momentum has come with Thanksgiving, but the trend remains strong. A close above 7516 would open the key August high of 7578, the July rally high. There is good initial breakout support around 7380/7440. A close below 7304 would be corrective.
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