Friday November 27th, 2020

US$ remains under pressure as vaccine and US transition optimism drives risk-on sentiment. AstraZeneca eyes extra global vaccine trials as questions mount over its current results, while the UK moves to get the vaccine approved before the EU. The US President said he will leave the White House if President-elect Biden wins the Electoral college. The US$ index remains under pressure, down 2.2% MTD and down 4.6% YTD as market optimism reduces US$ safe haven demand. In the UK Brexit negotiations are 95% complete, but tensions continue as both sides struggle to get a final agreement. CNY eases a seasonal demand for US$ and ongoing Sino/US tensions as the Trump administration plans to impose sanctions on several Chinese companies in the coming weeks. CNY down 0.05%, while Asian currencies are down 0.1% on average. Trading currencies are mixed to end a volatile week with AUD & NZD down 0.15%, JPY & NOK strengthened up 0.15%, MXN is up 0.5% and ZAR dropped 0.5% vs US$. No US data releases today, and we expect markets to be relatively quiet today as many US investors take an extended thanksgiving holiday.

Oil markets are mixed with WTI down 1% and Brent Crude prices up 1% to start the day, but both remain set for weekly gains. OPEC will meet next week, and focus will be on the groups decision to maintain current output restrictions or not. C$ continues to hold near its 2-week highs as risk-on sentiment favours the equity and oil markets. US$ weakening trend is expected to continue into 2021, but seasonal year end US$ demand may provide better opportunities to sell US$ on rallies. Intraday expect C$ to remain within a relatively tight range with no data releases and a reduced US trading activity. Support holds at 1.2924 (Nov9th), while resistance at 1.3040 followed by 1.3172.

Euro holds above 1.19 as the US$ remains under selling pressure. Optimism for a smooth US Presidential transition boosting markets risk-on sentiment and rallies Euro. Coronavirus continues to dominate the EU’s focus with Europe’s largest economy Germany seeing the number its coronavirus cases surpass 1mio, prompting the Chancellor to extend lockdown measures to Dec 20th. While in France & Spain their number of new coronavirus cases have dropped, and lockdown measures are being eased. US market are expected to be quiet with no economic data releases. Support holds 1.1815 with resistance at 1.1940, if breached look for a test 1.2011(sep1st).

GBP drifts lower amid Brexit concerns. Brexit negotiations appears to continue to stumble over fisheries & governance, as both the EU and UK report difficulties in reaching a final Brexit agreement. The EU negotiator will be travelling to UK to re-establish in person negotiations. The UK PM said the likelihood of a deal depends on the EU and went on to say a Brexit deal is there to be done. On a positive covid note, the UK will exit its complete lockdown on Dec 2nd, as markets remain hopeful about the AstraZeneca vaccine. Brexit remains the primary driver for GBP. Support holds at 1.3280, with minor resistance at 1.3420, if breached look for possible extension to 1.3482 (Sep1st).