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Daily Market Outlook, November 8, 2020
News over the weekend saw Joe Biden and his running mate, Kamala Harris, declared as winners of the US presidential election. This, along with better-than-expected October China trade data, have provided a supportive backdrop for stocks, with almost all Asian equity markets trading higher this morning.
Meanwhile, following high-level discussions on Saturday, UK PM Johnson said that a trade deal with the EU was ‘there to be done’. However, the EU’s Von der Leyen reiterated that significant differences remained, ahead of talks continuing in the coming week.
Financial markets over the past week has seen a surge in risk appetite. Global equities have bounced back, while the US dollar has underperformed against its major peers. Some have attributed part of the rise in equities to signs that Republicans may hold on to the Senate, thus reducing the chances a Biden administration will increase the regulatory burden on business, including in the technology sector. But political ‘gridlock’ may also portend a smaller fiscal stimulus package, which may partly explain the fall in US Treasury yields.
One area of policy that will receive particular attention is Mr Biden’s approach to tackling Covid-19, especially with the number of confirmed cases globally moving above the 50 million mark. As a sign of his intent, he is expected to announce a 12-member virus task force later today.
Elsewhere, outside of the Eurozone Sentix Investor Confidence survey for November, the day is void of any major data releases. However, with a number of central bank speakers due, there should be plenty for markets to chew over. Notably, the Bank of England’s Governor and Chief Economist speak at separate events, with the latter likely to attract more interest. Mr Haldane’s speech at 14:00 GMT will focus on the economic impact of the coronavirus and the long-term effects. This follows Mr Bailey’s speech at the Corporation of London Green Horizon Summit at 10:35 GMT, which will also feature comments from ECB President Lagarde (09:25 GMT). Both are expected to focus on the need to chart a course for green and sustainable growth.
Early tomorrow morning, the latest UK labour market report is due at 07:00 GMT. The unemployment rate for the three months to August increased more than expected to 4.5%. Methodological changes by the ONS to correct for lower response rates of renting households during the pandemic has resulted in more of an upward trend in unemployment this year. For the three months to September, expect a further increase in the jobless rate to 4.8%, the highest since 2016
Today’s Options Expiries for 10AM New York Cut
- EURUSD: 1.1780 (300M), 1.1800 (782M), 1.1900 (3.1BLN)
- GBPUSD: 1.3000 (705M), 1.3100 (461M), 1.3250 (308M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.1780 bearish below
EURUSD From a technical and trading perspective, the failure to hold 1.1687 lows opens quick move to test 1.1610 as 1.1780 contains upside attempts look for a test of the pivotal 1.15. UPDATE through 1.1780 opens a move to challenge offers and stops above 1.19 as the next upside objective
Flow reports suggest topside offers through to the 1.1920 level, even there where you’re likely to see weak stops you will find the same type of congestion continuing to the 1.1950 before weakening a little and increasing for any move to the 1.2000 level. Downside bids light through the 1.1800 area with weak stops on a dip through the 1.1780 area and opens the market for a renewed challenge of the 1.1700 area with light support from there
GBPUSD Bias: Bullish above 1.2861 targeting 1.3266
GBPUSD From a technical and trading perspective, while 1.2950 attracts sufficient bids look for a test of primary equality objective at 1.3264
Flow reports suggest topside offers increasing through to the 1.3200 level with weak stops likely on a move through the level and becoming weaker on a break through to the 1.3260 area with limited offers once through the 1.3300 area, Downside bids light through to the 1.2950 level before stronger bids start to appear and increase through to the 1.2900 level with weak stops likely on a dip into the 1.2880 level again with stronger bids appearing into 1.2850.
USDJPY Bias: Bearish below 104 bullish above
USDJPY From a technical and trading perspective, as 104.30 supports look for a test of descending trendline resistance at 105.50 Update as 104 now acts as resistance look for a test of 103 next
Flow reports suggest downside bids into the 103.00 level and likely to continue through to the 102.80 before weak stops appear and the market then finding limited bids through to the 103.20 area and the same story however, the bids are likely to increase on each dip, Topside offers light through the 103.80-104.00 with weak stops likely on a push through the 104.20 area, stronger offers likely to be building through the 104.50 area and increasing towards the 105.00 level.
AUDUSD Bias: Bearish below .7243 bullish above
AUDUSD From a technical and trading perspective, as .7240 now acts as support look for a retest of offers and stops above .7400
Flow reports suggest topside congestion through the 0.7300 area and likely to continue through to the 0.7320 area before a little less resistance through to 0.7350, however a push through this level is likely to see increasing offers into the 0.7380 level and continuing through to the 0.7420 and the highs since September, strong breakout stops likely on a move through the level and opening a larger move higher against the rub of the economics for the moment. Downside bids light through to the 0.7140 level before finding some light congestion with stronger bids into the 71 cents level to some extent however weak stops and then better bids through the 0.7050 area and increasing into the 70 cents level with short term profit taking likely
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!