Tuesday November 24th, 2020

Equity, oil and currency markets extends their gains on the Biden transition news and vaccine optimism. The US President authorized the General Services Administration to facilitate the transition to President-elect Biden. Janet Yellen former chair of the Fed is Biden’s pick to become the new Treasury Secretary, an advocate of fiscal stimulus her nomination is pleasing markets. Asian markets up just 0.1% vs US$ as Sino/US tensions continue under the current US administration. Trading currencies extended their gains on the US transition news with JPY up 0.2%, MXN up 0.4, ZAR & NOK up 0.65%, while both AUD & NZD jump 0.95%. Focus remains Trump/Biden election updates, US Consumer Confidence, Housing Price index data alongside Feds Williams & Clarida speeches. 

Oil prices retest highest levels since March spurred by anticipated demand growth amid vaccine headlines. Goldman Sachs expects OPEC to delay production ramp-up for 3 months and predicts Brent prices to average US$47 in Q1/21. C$ continues to edge higher as equity and oil markets continue to strengthen. BOC Gravelle said A resilient financial system and a targeted response by authorities has tempered the impact of the covid-19 pandemic on Canada’s financial system. BOC Wilkins will be speaking today. Support holds at 1.3025, if breached look for 1.2928 next, while resistance at 1.3122.

Euro stalls around 1.1900 amid a weakening US$ and upbeat German data. German GDP & IFO data beat expectations, as well French Business Climate in Manufacturing data also beat expectations. US$ edges lower as US election concerns ease after the Biden transition begins. Some positive news, the 7-day rolling average of new cases in Europe continues to gradually decline and alongside the vaccine news is continuing to boost investor optimism. The elephant in the room remains the ECB, a rallying Euro towards 1.2 is likely to concern the central bank. Support 1.1815 with resistance at 1.1920, if breached look for a test 1.2011(sep1st)

GBP holds on to gains as the US$ remains under pressure and Brexit optimism continues. The announcement that Biden’s team officially begins the transition process increased market risk-on sentiment. Brexit is yet to cross the finish line, holding at 95% completion as fisher and state aid issues continue to stall the final Brexit agreement. The lack of news conferences from negotiators remains a positive and the election of Biden will put additional pressure on the UK PM to secure the Brexit deal. The UK remains in lockdown while positively the 7-day average curve is falling, but mortalities remain high. Brexit remains the primary driver for GBP. Support lowers to 1.3280, with minor resistance at 1.3420, if breached look for possible extension to 1.3482 (Sep1st).