Friday November 25th, 2022

The US$ and oil prices strengthen, equity markets are mixed, while US yields rise as markets remain subdued amid thin volumes on Black Friday. Equity markets are mixed heading into Black Friday sales, with retail companies under pressure as the holiday shopping season kicks off amid concerns of slowing global economy and soaring inflation. China frees up $70 bln for banks to underpin slowing economy amid surging covid cases and a continued property downturn. Following the Thanksgiving Day holiday, US bond & stock markets will close early and there are no CAD or US economic data releases today. In other news. Zelenskyy vows Ukraine will withstand Russian attacks on power networks (FT). Foxconn’s woes to take bigger toll on giant China iPhone plant as more workers leave impacting 30% of the sits production. German GDP growth grew slightly more in Q3 raising hopes of a less severe recession. China’s central bank will offer cheap loans to financial firms for buying bonds issued by property developers. Spain pushes ahead with windfall tax on banks and energy groups. In Currency markets. The US$ index firms in early trading but remains set for a net weekly loss amid expectations Fed will slow interest rate hikes. The GBP is set for its 3rd weekly gain, up 5.7% in November vs US$. CNY weakens on covid concerns down 0.2%, while Asian currencies are flat on average vs US$. Trading currencies come under selling pressure with CHF & NOK are flat, while SEK slips 0.1%, AUD & MXN down 0.2%, NZD falls 0.3%, and JPY & ZAR weaken 0.45% vs US$.

Oil prices strengthen in early trading, ending the week marked by ongoing Chinese demand concerns and haggling over a Western price cap on Russian oil prices. The C$ holds within a tight trading range balancing a less hawkish BoC, volatility in oil prices and the weaker US$ index this week. With the absence of any economic releases today and expectations many Americans will be taking a long weekend, we anticipate markets will be sidelined in thin trading today. Support lowers to 1.3285 while resistance resets to 1.3400.

EURCAD holds steady as markets are subdued with the absence of the US markets. Support holds at 1.3750 while resistance remains at 1.3900.

Euro holds steady around 1.0400 in quiet trading markets. The trading action remains subdued on Black Friday and the single currency remains on track to end the week in positive territory. ECB board member Schnabel warns it has ‘limited’ room for small rate rises while energy support schemes risk keeping EZ inflation levels high. Brussels is bracing for revolt over its energy crisis plan unless it revises its Russian gas cap with several EU countries threatening to veto wider package after ‘heated’ emergency meeting. Intraday we expect markets to hold within current trading ranges. Support rises to 1.0350 while resistance holds at 1.0450.

GBPEUR holds steady in thin Black Friday markets. Support remains at 1.1550 (.8658) while resistance holds at 1.1700 (.8547).

GBP is steady near three-week highs vs US$. The pound holds steady, setting its 3rd week of gains vs US$ as the combination of the prospect of the Fed pivoting on interest rates, perceived return of stability to the UK financial markets and general weakening US$. The Bank of England warns of future UK rate rises if inflation persists, this following a 75bps rate hike this month and despite the Bank’s gloomy UK economic forecast. Intraday expect the pound to hold with its current trading range in thin US trading conditions. Support resets to 1.2050, while resistance rises to 1.2150.