Tuesday November 17th, 2020

Equity, oil and currency markets stall amid surging coronavirus cases and US political uncertainty. President Elect Biden calls for a stimulus deal in 2020 without compromise and avoids shutdown questions. In the US the coronavirus average 7 day of infections hits 150k and hospitalizations hit a new high of 73k per day, with several states introducing fresh lockdown measures. The Fed Chair is speaking today, investors are looking for signs of further Fed support during the pandemic. CNY strengthens 0.45% at its strongest level in +2 years, while Asian stall-flat on average vs US$. European currencies have rallied while trading currencies are mixed with MXN & ZAR down 0.4%, NZD down 0.2%, AUD flat and JPY rallies 0.35% vs US$. US election updates and the US retail sales data will provide intraday day direction.

Oil prices hold steady as OPEC expects to see oil output cuts extended into 2021. Positive vaccine news and OPEC actions is seeing speculators turning net long oil futures. C$ looks poised for further strength as vaccine hopes and OPEC output cuts boosts investor sentiment. Uncertainties remain as coronavirus continue to climb, our bias switches to sell US$ on any rallies towards. Support 1.3025 and resistance at 1.3170.

Eur advances to the key 1.1880 as risk-on sentiment prevails over the current EU coronavirus surge. Focus will be on ECB Lagarde who is participating in an online Q&A session during the Bloomberg New Economy Forum. The ECB have highlighted concern over a strengthening Euro in a weak EU economy and this may be addressed in her comments. ECB’s Visco warned that removing stimulus too early risks jeopardizing the EU’s recovery. Our bias is to sell Euro on any tests over 1.1950 vs US$. Support holding at 1.1780 with resistance at 1.1880, if breached look for a test 1.2011(sep1st)

GBP jumps 1.3260 on fresh Brexit hopes. The UK Chief negotiator said a Brexit deal could be achieved next week, while some UK newspapers headlines expressed concerns that the UK was giving into EU demands. The Irish PM said the Outline of Brexit deal is clear and the election of Biden could be the tipping point to getting UK PM to a deal. A Brexit deal will be overall positive for GBP and with the added optimism from vaccines, GBP is likely to rally further. BoE Governor is speaking later today, and markets will track his comments closely. Support 1.3150 with resistance holding at 1.3280, if breached look for possible extension to 1.3482 (Sep1st).