It is Thanksgiving public holiday in the US today. With bond and equity markets shut this will mean reduced liquidity across major markets. Many workers take an extended holiday to include Friday too, meaning that markets will tend to be subject to thin volumes until Monday. There has been a marginal degree of profit-taking on USD positions since last night, but markets are likely to be more in drift mode now. Fed minutes showed some members looking for a faster taper, but this is no significant surprise given recent speeches.
- Main drivers: Sentiment marginally positive; Thanksgiving holiday today, thin markets; Fed minutes; a new German government; central bank heads Lagarde and Bailey speak; economic calendar: ECB meeting minutes.
- Sentiment improves: With US markets closed, there is some minor profit-taking on USD positions. This is allowing commodities to find support and indices to tick higher.
- Thanksgiving today: US bond and equity markets are closed. Expect thin volumes with low liquidity. [Thin markets, likely quiet]
- FOMC minutes: showed some participants felt the pace of asset purchases reduction could be increased to end sooner. [USD supportive]
- A new government in Germany: Olaf Scholz becomes the new German Chancellor in the new coalition government after almost two months of discussions [EUR and DAX supportive]
- German Consumer Confidence dips, GDP in line: consumer confidence drops to -1.6, lower than the -0.5 expected. GDP in line for Q3 at +2.5% [marginally EUR negative]
- Central bank speakers: two central bank chiefs speaking today:
-ECB’s Christine Lagarde at 1330GMT – watching for comments on inflation
-BoE’s Andrew Bailey at 1700GMT – watching for comments on inflation and tightness in the labour market
- Economic Data:
-ECB monetary policy meeting accounts (at 1230GMT) – looking for any signals on the end of PEPP or how inflation is impacting policy decisions.
Broad outlook: USD seeing marginal profit-taking. This is allowing commodities to find support and indices to strengthen amid a more positive risk environment.
- Forex: USD strength beginning to unwind slightly across majors.
-EUR/USD up from a low of 1.1215 is now testing initial resistance 1.1225/1.1275. we remain very wary of buying for a rally and prefer selling into strength. Above 1.1290 opens the first important resistance around 1.1355/1.1385.
-GBP/USD rebounding from 1.3315 into initial resistance 1.3340/1.3390. This merely looks to be an unwinding move that will help to renew downside potential.
-AUD/USD has a continuing trend of lower highs and lower lows where rallies are sold into. Unwinding moves are just another chance to sell. Initial resistance 0.7210/0.7230. We favor pressure towards the next support at 1.7170. Resistance is growing at 0.7275/0.7290.
- Commodities: precious metals are threatening to build from support, oil hovering around near term resistance.
-Gold has spent the last couple of days looking for form support around $1780 again. A pick-up from $1778 is now eyeing initial resistance at $1797. A test of resistance at $1802/$1812 will prove whether a serious recovery can form again. We are still looking for sustainable buy signals.
-Silver picked up from a low at $23.26 and the market is looking to build support now. We are still buyers into the weakness but look for confirmation to the end of selling pressure. We now look for higher lows to suggest a new positive trend formation.
-Brent Crude oil rebound has stalled around $82.50/$82.80 resistance. The outlook is still very uncertain. A move above $83.50 would be a key improvement now.
- Indices: Wall Street is showing signs of improvement again after a choppy phase. , DAX still struggling to sustain recovery traction, FTSE looking to strengthen.
-S&P 500 futures have an improving outlook again following a decisive move above 4695. The bulls will look to hold above 4711 and re-open the high at 4740.
-DAX is still in a trend of lower highs and lower lows. Breaking back above resistance around 16,000/16,070 is needed to change this. If not a retreat back towards support at 15,750cannot be ruled out.
-FTSE 100 continues to build a new near term trend of higher lows and will look to build from support around 7280/7290. We look to buy into weakness and retain our medium-term upside target of 7700 whilst the key support at 7180 is intact.