After the US dollar slipped lower on Friday in the wake of the lower than expected US jobs report, there is a degree of bounce back early on Monday morning. Rising bond yields continue to be the standout market driver and this is once more hampering equity markets. Wall Street is hovering a shade above flat, but European markets are now slipping back lower. Rising yields tend to be negative for precious metals and once more this seems to be weighing on Gold and Silver.

It is a fairly quiet day for economic data. It is a morning of lower-tier Eurozone data on the calendar with the Sentix Investor Confidence and Unemployment.   

Today’s news

  • Main drivers: Markets start the week mixed; US 10 year Treasury yield at two-year highs; UK talks with Russia; UK talks with EU; Economic calendar: Eurozone Investor Confidence and Unemployment
  • USD rebounding, indices and commodities mixed: After the weakness on Friday on the back of the payrolls report, USD is supported on Monday by the continued rise in US bond yields. This is also preventing a recovery in indices, whilst also restricting any buying on precious metals 
  • US bond yields at multi-year highs: The US 10 year yield has risen above 1.80% (the) and is well clear of the 1.776% March 2021 high, reaching its highest level since January 2020. Markets continue to price in an ever tighter outlook for Fed monetary policy. [Risk negative] 
  • US and Russia talks: Preliminary talks in Geneva over the weekend surrounding Russian involvement in Eastern Europe will continue on Monday [Risk uncertain] 
  • UK and EU talks over post Brexit relationship continue: Suggestions are that UK Foreign Minister Truss could still invoke Article 16 which would override the agreement and threaten a breakdown. [Risk to GBP and EUR uncertain] 
  • Economic Data:
  • Eurozone Sentix Investor Confidence at 0930GMT. Confidence is expected to drop to +12 in January (from 13.5 in Dec).
  • Eurozone Unemployment at 1000GMT. Unemployment in November is expected to have fallen to 7.2% (from 7.3% in October). 

Markets Outlook

Broad outlook: Markets are once more reacting to higher bond yields by turning USD positive and risk negative today. 

  • Forex: Mild positive USD bias across major pairs. This is mainly seen versus EUR, NZD and CHF. 
  • EUR/USD is again re-affirming the trading range as it falls over around key resistance at 1.1360/1.1385. We retain a neutral positioning. Initial support c. 1.1270 above the 1.1185/1.1220. The big 7-month downtrend is falling at c. 1.1425 today.
  • GBP/USD recovery still retains a positive bias with the run of higher lows (latest at 1.3490) but there is resistance at 1.3600 to clear and there is a very slight slowing in the strong positive momentum. We are also mindful that the key 7-month downtrend is just overhead at 1.3630.  


  • AUD/USD resistance around 0.7170/0.7185 is still an issue as the outlook continues to look slightly corrective (especially on the 4-hour chart). If the market begins to trade decisively below 0.7170 then pressure will increase towards 0.7130 and potentially 0.7080 again.
  • Commodities: negative bias on precious metals, but oil remains positive.
  • Gold retains a slight corrective bias and continuing to trade below $1800 will sustain this for pressure towards $1780.  A close below $1780 opens $1750/$1760. Initial resistance $1798/$1807.
  • Silver the rebound from Friday is struggling for traction and we would be looking to sell any unwind towards $22.50/$22.70. which is now a key medium-term pivot resistance. We favour downside pressure towards $21.95 and potentially $21.40.
  • Brent Crude oil has just stalled the rally around $83.10 but a closing breakout above $82.80 would open the next key resistance band at $86/$87. Positive momentum favours buying into weakness, with support growing at $79.60/$80.20.

Indices: rising US bond yields are negative for indices, with Wall Street especially feeling the pressure. FTSE 100 seems to be the outperformer for now.    

  • S&P 500 futures failed under 4711/4742 (old support which has become new resistance), with the market posting lower highs and lower lows. The next support is at 4622/4642 with negative near term momentum. A move back above 4715 would help to improve the outlook but for now, a negative bias continues.
  • DAX is dropping again as another intraday rally is sold into. Pressure is growing for a test of 15,800 and a close below would see more significant deterioration within the medium to long term trading range again. Initial resistance at 16,016.
  • FTSE 100 has maintained a position amidst a consolidation above the support band at 7365/7401. A move under 7365 opens a deeper correction within the uptrend channel, but for now, there is still a positive bias to the daily chart and a move above 7507 re-engages a bullish outlook.

Support and Resistance levels