Monday November 8th, 2021

The US$ dips, oil prices rise, equity markets are mixed and US yields firm ahead of Fed Chair Powell speech. The US$ index is down slightly from 94.62 Friday’s and 2021 high but is supported by the upbeat Job’s data and firmer US yields. In the absence of key macroeconomic data today markets will be focused Fed Chair Powell who will deliver the opening remarks at a virtual conference titled “Gender and the Economy Conference. Also on the docket today ECB Lane, BoE Governor Bailey, NY Fed Williams and Fed Vice Chair Clarida are speaking, and markets will focus on the central banker comments for intraday direction. In other news. The US Congress passes the US$ 1.2T infrastructure bill, US President Biden calls the bill a “once-in-a-generation” investment. China posts a record trade surplus in October at US$84.54Bln. China’s President Xi lays the groundwork for an unprecedented bid for a third term as the communist party leader. Covid. The US for the first time since the pandemic opens its air and land borders to vaccinated travelers. Global covid cases hit 250 million as some eastern European countries hit record infection levels. German covid infections hit highest levels since the start of the pandemic. In currency markets. The US$ is steady ahead of central bank speakers today. NZD rallies on news that NZ’s covid restrictions will be eased, CNY firms 0.1% while Asian currencies are up 0.15% on average vs US$. Trading currencies are mixed with JPY, ZAR & NOK are down 0.05%, while AUD is flat, MXN firms 0.4%, and NZD rallies 0.5% vs US$.

Oil prices gain +1% boosted by the news of economic growth with the US infrastructure bill passing and the rise in Chinese exports. Demand for jet fuel looks set to rise as more governments reduce covid travel restrictions. C$ recovered from its 3-week lows finding support from Friday’s CAD jobs gains and oil prices rallying +4% since Thursday. Intraday markets will be focused on central bank policymaker’s speeches for signs of interest rate direction and timing. Our bias remains bullish for C$ and see current levels as good selling opportunities. Support resets to 1.2365, while resistance holds at 1.2498 (Oct12th).

Euro bounces modestly in quiet currency markets. Euro firms slightly as investors wait for Fed Chairs Powell’s comments later today. Investors remain focused on the monetary policy divergence between the FED & the ECB and the prospect that the ECB will lag the FED in raising rates which will keep pressure on the Euro. Brexit tensions continue to simmer with the Irish minster warning that the EU could scrap the Brexit deal if the UK triggers Article 16 over the NI protocol. Support holds at 1.1511 (2021 lows), if breached look for a potential selloff to 1.1408, while resistance holds at 1.1610.

EURGBP strengthens in early trading as investors are concerned at the potential the EU could ditch the entire Brexit deal. Support holds at .8535 (1.1716) while resistance remains at .8625 (1.1594)

GBP recovers above 1.35 vs US$ in early trading. In the absence key economic data releases investors will be focused on both the Fed & BoE policymakers and Brexit developments for intraday direction. Irelands Foreign Minister Coveney commented on Sunday that the UK was “deliberately forcing a breakdown” over the Norther Ireland Protocol. Coveney further added that the EU could suspend the entire Brexit deal if the UK were to trigger Article 16. Support resets to 1.3455 if breached look for 1.3411 (2021 low), while resistance rises to 1.3545.