Risk in the balance
- Thought for the day - Don't look at technicals as the 'holy grail'
- The Bank of Canada's last rate statement
- GBPUSD catches a bid
- German health minister: COVID-19 infection numbers and deaths too high
- Silver sits under key resistance
- ECB's Rehn: PEPP envelope not a target, but a ceiling for now
- Gold ETF holdings show selling slowing?
- Major pairs indecisive as risk trade in balance
- IEA revised down global demand for 2020 by 50,000bpd
- Cable drops into Sunday's gap
- Had a bay day at work? Probably not as bad as this Citigroup employee
- Australian miners index surge to highest since 2008
- French November EU normal CPI +0.2m/m vs +0.2% m/m expected
- Switzerland November producer and import prices -0.1% vs 0.0% m/m prior
- UK October average weekly earnings 2.7% vs 2.2% 3m/y expected
- Will the Fed fail to twist?
- Japan's retail traders set new record
- Gold call-skew recovers
- China's gold imports dipped in October
- Australia's ASX unofficially closes down -0.43%
- Economic data coming up in the European session
Other markets
- FTSE -0.39%
- Euro Stoxx +0.46%
- Dax +0.73%
- CAC +0.29%
- Bitcoin +0.73%
- Gold +0.93%
- US oil +0.13%
The session started with a mild risk off theme. News of London going into tighter COVID restrictions and New York heading for a shutdown sent risk assets lower. The Asia-Pac indices were lower across the board and US futures were in negative territory to start the session. Oil took a dip on demand fears from COVID restrictions and copper paused its bull run too. However, around mid morning in the European session sentiment lifted and there are more postive tones in the market now. US equity futures are pushing higher, commodities have lifter and AUD is finding some buyers as the earlier sellers step aside.
In terms of economic data it was another quiet session. However, UK employment data showed that UK unemployment rose in the three months through to October. The number of people looking for work in the period increased to 241,000 and the jobless rate rose to 4.9%. You can see the rate of joblessness below.
The UK Gov't expects the jobless rate to rise to 7.5% next year with a no-deal Brexit only likely to add to the woes. The diplomatic rift between Australia and China weighed on the AUD at the session start. The expectations of the RBA extending QE purchases next year alongside the souring risk sentiment also opened up the downside for the AUD. The falls were still very modest in the big scheme of things and a pullback in the AUD was to be expected at some stage. In the end the AUD sellers stepped aside and AUD started picking up around 0900GMT and reversing some of the gains. The Fed will set the tone tomorrow. If they do end up 'twisting' that will open up further upside for the AUDUSD pair.
EU/UK Brexit negotiations saw the GBP move sideways, lower, and then move higher after Sunday's gap was touched. As always expect more twists and turns in Brexit negotiations over the coming few days. December 31 is the deadline though so, bar an extension (unlikely), we should finally see Brexit resolved this month. However, this is not the first time I have said/thought this.
One particular vulnerability to look out for is a no-deal Brexit. If that takes place towards the end of the year, with many investors away from their desks and low liquid markets, that could see large price swings. So a no-deal Brexit is a big risk over the Christmas period for potentially large moves in the GBP. Calling what those moves will be is harder as any kind of certainty is ultimately probably going to be good for the GBP.
As mentioned yesterday one key theme into year end is USD weakness on a Fed with potential to 'twist' on Wednesday. Don't miss the USD selling post which outlines a possible approach and explains the typical USD weakness into year end. See here. Many people are calling for a USD retracement before year end, but I'm not one of them, The time for a USD retracements would make sense at the start of the year from a seasonal perspective. However, I don't have a crystal ball, so just be nimble whatever you decide regarding the dollar.
That's all from me today and Justin will be back at the helm tomorrow.
