Thursday November 26th, 2020

US markets are closed for the thanksgiving holiday. The US$ remains weak, equity & oil markets are down, while currency markets retreat from monthly highs. The US$ remains under pressure after the FOMC Minutes hints to expect more QE and the US Jobless claims rose again. Surging covid cases across the US is also adding pressure to the US$ as hospitalization peak for the 16th connective day and mortalities are nearing the highs seen in the spring. US stimulus talks are ongoing, but little progress is being reported. In the currency markets, SEK falls 0.4% after its central banks expands its QE program. The US$ index is flat, Euro rallies while other currencies consolidate from recent highs. CNY & THB are flat while most Asian currencies are up 0.2% with the exception of PHP and THB which are down 0.2%. Trading currencies remain active with JPY up 0.2%, vs AUD & NZD are flat, with ZAR down 0.3%, while MXN & NOK are down 0.4%. With the US holidays expect markets to consolidate with focus to on the ECB meeting.

Oil prices drop 1% as demand concerns resurface as several EU countries extend their lockdowns measures and US President Elect urges US citizens to restrict travel over the thanksgiving holiday. C$ is holding near its 2-week highs as vaccine optimism helped both the oil markets and the TSX to rally. Overall, our bias is that C$ will extend its rally into the new year, but consolidation and rebalancing will likely see opportunities to sell US$ at better levels in the short-term. Support holds at 1.2924 (Nov9th), while resistance at 1.3040 followed by 1.3172.

Euro extends its gains testing 2-month highs (1.1940) in early trading as US$ remains under pressure. The recent lockdown measures in France & Germany saw both countries consumer confidence data results drop below expectations today. The ECB chief economist Lane and ECB Schnabel will be speaking alongside the ECB’s Monetary Policy Meeting Accounts today. The ECB is expected to reiterate coronavirus concerns for the economy, QE is expected but will likely be announced in December. The strengthening Euro may also prompt comments from the ECB as it approaches 1.2. Support holds 1.1815 with resistance at 1.1940, if breached look for a test 1.2011(sep1st).

GBP holds steady around the 1.3350 level on a weak US$ and Brexit optimism. It is unclear if the Chief EU Negotiator will return to London after recent covid concerns stalled in person negotiations. It’s being reported that France accuses the UK of dragging their feet during Brexit talks, while Irelands Coveney said outstanding issues are proving difficult. Tensions have been rising after the EU Commission President said she cannot be certain if a deal is possible. Investors remain optimist that a Brexit deal is coming which is keeping the GBP supported vs US$. Support holds at 1.3280, with minor resistance at 1.3420, if breached look for possible extension to 1.3482 (Sep1st).