Market sentiment has rebounded from early losses yesterday, with Wall Street clawing back into the close last night and markets are looking more positive today. The issue is whether these rebounds will just be seen as another chance to sell. With volatility measures spiking around and the yo-yo of market sentiment, it makes for very difficult trading conditions. Omicron infections remain a key feature of news flow, with how various governments react to social restrictions being a hot topic (especially in Europe). As the countdown to Christmas continues, there are no Fed speakers to focus on and only Eurozone Consumer Confidence on the calendar.
Main drivers: Market sentiment recovers; RBA minutes; the UK is borrowing more; Turkish Lira rebounds; no Fed speakers; Economic calendar: Eurozone Consumer Confidence
Broad sentiment recovers: The yo-yo moves across major markets continue. Markets are recovering from sharp early losses yesterday. Forex shows a positive risk bias, with indices bouncing early today.
RBA minutes point to patience: The RBA remains committed to highly supportive monetary conditions. Underlying inflation remains low. [A slight drag on AUD moving forward]
The UK borrowing more than forecast in November: Government net borrowing of £16.6bn (£15.4bn exp) [Should be a mild drag on GBP]
Turkish Lira springs back: The massive sell-off on the Turkish Lira has rebounded significantly after the Government brought in measures to protect savers. [TRY strongly Central bank speakers: none due today:
- Eurozone Consumer Confidence at 1500GMT expected to fall to -8.0 (from -6.8 in November)
Broad outlook: the positive risk bias reappears once more. However, holding positions open for any period of more than a couple of days is a risk as markets are swinging wildly.
Forex: USD and JPY are underperforming today, whilst GBP, AUD, and NZD (the currencies hit the hardest yesterday)are all outperforming.
- EUR/USD is ticking back higher into the middle of the range again. Support at 1.1185/1.1220 up towards resistance at 1.1360/1.1380.
- GBP/USD is recovering this morning, with the prospect that a range between 1.3160/1.3375 has now formed. Initial resistance is around 1.3270/1.3280.
- AUD/USD has picked up from support at 0.7080 but traction is lacking in a recovery. Initial pivot resistance is around 0.7130.
Commodities: precious metals ticking higher, oil rebound stuttering.
- Gold outlook is beginning to improve. Despite a failure in the move above $1800, holding above $1790 marks an improvement. A break above $1815 would be bullish and open $1835/$1845. Closing back below $1788 would be disappointing now.
- Silver is trying to form a recovery with a strong tick higher this morning. The daily technicals point to a rebound and a test of the initial resistance at $22.67. A close above implies further recovery to test $23.00 resistance.
- Brent Crude oil is in recovery from $69.50 but the move is faltering under the $72.85/$73.50 resistance and this risks being a selling opportunity.
Indices: how the recovering indices react around old breakdown levels will be important.
- S&P 500 futures rebounded off 4520 (just above the long-term uptrend channel support around 4513) and the key reaction low at 4492. However, the pivot band of resistance 4585/4610 is a barrier to recovery.
- DAX once more bounced (from 15,058) to leave crucial medium-term range support 14,810/15,000 intact. Previous selling phases have found willing buyers. Recovery needs to get through initial resistance 15,425/15,510.
- FTSE 100 has rebounded off 7112 but the market needs to get back above 7300 which is a near-term pivot resistance. A bull failure risks retreating once more, but above 7300 opens 7350 and 7400. The market remains highly indecisive.