USDCHF, H4 | Bearish Momentum!

Type: Bearish ReversalKey Levels:Resistance: 0.92687Pivot: 0.9238Support: 0.91684Preferred Case:Prices are on a bearish momentum. We see potential for a dip from our Pivot at 0.9238 in line with 38.2% Fibonacci retracement and 127.2% Fibonacci extension towards our Take Profit at 1st support at 0.91684 in line with 78.6% Fibonacci retracement.Alternative Scenario:Alternatively, prices might climb towards our 1st resistance at 0.92687 in line with 50% Fibonacci retracement and 161.8% Fibonacci Projection.

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GBPCHF, H4 | Bearish Continuation

Type: Bearish ReversalKey Levels:Resistance: 1.23403Pivot: 1.22834Support: 1.22023Preferred Case:Price is abiding to the descending trendline resistance, signifying bearish momentum. We can expect price to drop from pivot level in line with 50% Fibonacci retracement and 127.2% Fibonacci projection towards 1st Support in line with 127.2% Fibonacci extension.Alternative Scenario:Alternatively, price can push up to 1st Resistance in line with 78.6% Fibonacci retracement.

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BTCUSD, H4 | Bearish Continuation

Type: Bearish DropKey Levels:Resistance: 58321.35Pivot: 57082.42Support: 53640.96Preferred Case:Price is reacting in between a descending channel, signifying an overall bearish momentum. We can expect price to drop form pivot level in line with 38.2% Fibonacci retracement toward 1st Support in line with 78.6% Fibonacci projection.Alternative Scenario:Alternatively, price could push up to 1st Resistance in line with 78.6% Fibonacci retracement and 127.2% Fibonacci Projection.

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Yen shines, Aussie sags as Powell turns hawk despite Omicron uncertainty

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Fed Chair Powell Retires 'Transitory,' the Dollar Flies

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December to be overshadowed by Omicron?

USA500, Daily

December is traditionally a strong month for global equity markets, especially in BULL years. During November all three of the major US equity markets posted new all-time highs, before being shaken by the arrival of the latest COVID-19 variant – Omicron. Initial reaction, as normal in markets, is to overreact to anything it is not expecting; the ONE thing above all else that markets hate is a surprise. Although a new, more transmittable variant was somewhat inevitable as the virus persisted and low-income countries continue to struggle to reach even 20-30% vaccination levels, the key metric continues to be hospitalizations and death rates and on these we will have to wait another few weeks. News this week has whipsawed from countries closing borders, President Biden warning against Omicron panic and pledging no new lockdowns, the WHO warning that the omicron variant poses ‘very high’ global risk and is likely to spread and Fed Chair Powell telling the Senate that the variant poses downside risk to economy and complicates the inflation picture.

So, the traditional December equity rally has some significant headwinds this year, however the fundamentals remain robust and history is on the side of a positive month. Since 1970, the key equity markets (UK100 & USA500) have risen almost every December – 43 years out of 50, or 86% of the time¹. 2021 is the 12th year of the equity market bull run. During November the USA500 rallied and tested 4,700 very quickly and then consolidated. However, it has only managed to close north of this key level on two days, (November 18 and the Futures closed higher on Thanksgiving (25th) on a low volume day). The market tanked -2.27% on Friday, losing over 106 points, and struggles to hold 4600.

Since 1987, the USA500 has logged gains in 26 of 34 years from the close on Friday after Thanksgiving to year end.³ Five of the best (positive) trading days for stock markets (UK100 & USA500) for the entire year occur in December – all of them after December 21.²

December 2018 was a recent notable exception for the final month of the year. The S&P500 shed close to 300 points and over 10.5% that month as the stock market had its worst December since the Great Depression. President Donald Trump’s trade war with China, the slowdown in global economic growth and concern that the Federal Reserve was raising interest rates too quickly all contributed to the pessimistic reaction. In 2019 and 2020 it returned to trend, rising 2.29% and 2.45%, respectively. A close over 4602 today will see a positive November, however the next few weeks are likely be particularly volatile as Omicron headlines and economic data releases weigh on risk sentiment and investor outlook.

¹ The Stock Market Handbook – David Schwartz

² The Stock Market Handbook – David Schwartz

³ The Stock Trader’s Almanac – https://jeffhirsch.tumblr.com/

 

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Virus, inflation & Fedspeakers overshadow NFP

The markets changed on a dime last week as worries of the bearish impacts over the new Omicron covid variant weighed heavily on equities, while concurrently supporting a swift flight into haven assets. Inflation trades were hit hard and oil prices plunged alongside hefty declines in travel shares and financials. The USA30’s -2.5% plunge on the day was the largest since October 2020. For the week, Wall Street was off -2.3% to -3.1%. But losses in Europe were much deeper with the UK100 crashing -6.1%, while the GER30 tumbled -5.6%.

Meanwhile, fears over near term hawkish central bank outcomes from the BoE and FOMC were sharply deflated, and that helped knock yields lower too. Treasury yields richened double digits, taking the 2-year down to 0.498% at the close, with the 10-year at 1.473%. The Gilt slid 14.5 bps to 0.819%, while the Bund was down 8.7 bps to -0.341%. The focus on Omicron will distract the markets from key data ahead. There is also a host of Fedspeakers.

The calendar has a few important data releases this week but they will lose some of their potency as worries over the Omicron virus will keep the tone jittery and outlooks more uncertain. This week’s focus was going to be the nonfarm payroll report on Friday as the FOMC has yet to fulfill the second part of its mandate, full employment, though it is getting closer, but now, Omicron will take the top spot on the wall of worry as the spread is monitored, along with the various mitigation measures. Already the US and other countries are banning travel from Southern Africa. Meanwhile, there is another heavy Fedspeak docket and it will be helpful to hear their views on current conditions, though we don’t expect any of them to pre-judge their decisions for the December 14-15 policy meeting considering how quickly things change. 

Until Omicron reared its ugly head, inflation was going to remain in focus this week, although attention would quickly turn to Friday’s November jobs data with another strong report the potential catalyst for the FOMC to announce it would speed up its QE tapering in December. Numbers in line with projections could be close to getting the Fed to pick up the pace as Chair Powell has said it’s the accumulation of evidence, not necessarily the report. A 440k increase is expected in November payrolls after the 531k rise in October. The jobless rate should hold steady at 4.6% for a second month, down from 4.8% in September. Hours-worked are assumed to rise 0.3%, while the workweek holds at 34.7 from October. Average hourly earnings are assumed to rise 0.4% with the y/y wage gain climbing to 5.0% from 4.9%.

Meanwhile, so far today the US Dollar has come under fresh pressure as virus jitters fueled another wave of risk aversion. The USDIndex is at 95.74, below the 6-session low of 95.75 it clocked on Friday. The index had bounced to 96.44 highs in NY on Monday, as traders largely determined that the Omicron scare on Friday was overdone, but warnings from Moderna that the variant will leave current vaccines much less effective, saw traders ditching stocks and moving back into bonds. The US 10-year rate plunged -7.3 bp to 1.426% and oil prices slipped to USD 68.32.

EURUSD lifted to 1.1360 amid a broad move higher in the single currency. Bunds are underperforming versus Treasuries, ahead of what is likely to be a very hot Eurozone inflation number and as German labour market data continues to look better than anticipated. ECB Vice President Guindos repeated this morning that inflation is likely to stay higher for longer, although officials have been trying to play down the importance of the inflation spike, which saw German HICP hitting 6.0% y/y yesterday. The impact of the Omicrom virus variant remains unknown, and until scientists get a better handle on the transmissibility and virulence of the new strain, markets are likely to remain jittery. Yields remain below recent highs, but even if it may take two weeks for full details on the new Covid-variant to be confirmed, it seems unlikely that Fed QE tapering and the timeline for rate hikes will be impacted to the extent Friday’s moves suggested. Still, until details on the variant are fully known, USD may remain fickle.

USDCAD lifted to 1.2797 as a fresh wave of risk aversion has hit confidence in the global recovery and oil prices. Fresh warnings that existing vaccines won’t be as effective against the Omicron variant have weighed on confidence and the USOIL has dropped to just $67.98 during the European AM session, which has put pressure on the CAD. Indeed, oil prices will continue to drive CAD direction, though traders will also keep a close eye on Canada GDP data today.

Russia’s Deputy Prime Minister Novak said a meeting of the OPEC+ joint ministerial monitoring committee “was postponed to get more information about the current events, including the new virus strain”. After speculation of a reaction to the release of strategic oil reserves, the comments added to talk that OPEC+ may postponed the planned increase in output as Novak confirmed that the alliance will discuss “the need for measures.

Nevertheless, there is a host of Fedspeakers this week, including Chair Powell, VC Clarida, and Williams. It may be too early in the Omicron phase for them to shed much light on their thinking, but comments from Bostic on Friday suggested he is not worried, yet. Chair Powell and Treasury Secretary Yellen will testify on the CARES Act before the Senate Banking Committee today, and then again before the House Financial Services Committee (Wednesday). Williams (Tuesday) will speak at a food insecurity event. VC Clarida (Tuesday), who will be out of this job soon, discusses Fed independence. Bostic (Thursday) will speak on the high cost of housing and will also take part in a Reuters event. Daly and Barkin (Thursday) will be at the Peterson Institute. And Bullard (Friday) will speak at the Missouri Bankers’ Association. The Beige Book (Wednesday) will likely reflect ongoing inflation concerns as well as some further downshifting in economic activity, as was the case in the October release.

Click here to access our Economic Calendar

Andria Pichidi 

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Covid Fears Keep Risk Assets Under Pressure

Risk assets resumed downside while demand for sovereign debt of developed countries is rising across all maturities. The market is clearly dominated by risk-off, pending new information on how contagious and lethal the new covid strain, as well as information about effectiveness of existing vaccines. Treasury yields are falling suggesting that investors are withdrawing their bet on the rapid tightening of the Fed's policy, the adequacy of these expectations should be clarified by another speech by Fed head Powell, this time today in Congress. The acceleration of inflation in Germany requires more action from the ECB.Yesterday's rally was short-lived, selling resumed during the Asian session on Tuesday. European indices are falling by an average of 1.5%, futures for US indices are losing less than 1% at the moment. The commodity market, led by oil, remains under pressure, worries about consequences of the spread of the new strain have not gone anywhere. Powell announced yesterday, as expected, that the omicron poses a threat to achieve the Central Bank's dual mandate - maintaining price stability and achieving maximum employment. Markets interpreted this as a signal that the rate hike will be delayed.A reassessment of expectations of how quickly the Fed would tighten policy, coupled with higher inflation in Germany, pushed the US-German short-term rate differential down by 20 bp in three days:Prices in Germany rose by 5.2% on an annualized basis, exceeding forecast by 20 bp. Today there will be data on inflation as a whole for the Eurozone. The chances that the ECB will move faster to slow down the QE rate have increased, which had a positive impact on the euro. Considering that the dollar retreats on all fronts, the main dovish impact came from Powell’s speech yesterday.Accordingly, with the emergence of positive news associated with the new strain, one can expect that investors will again bet on the rapid withdrawal of stimulus measures from the Fed, which will likely revert USD downside.

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Fed's Powell Warns Over Omicron Threat

Obstacles AppearJust as bulls thought they were finally beginning to run with the ball, it seems the news of the Omicron variant has well and truly screwed up the play. Fed chairman Powell is due to testify at the Senate Banking Committee later today. However, Powell’s planned comments were released by the Fed last night and suggest a great deal of caution has moved into the outlook with regard to the Omicron variant.Powell: Downside Risks In his comments, Powell noted: “The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation.” The Fed chair went on to say: “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labour market and intensify supply-chain disruptions.”Fed Tightening Expectations DashedAhead of Friday’s new regarding Omicron, the market had been ramping up its Fed tightening expectations in response to a slew of better data recently. Inflation in particular has been soaring higher, while other key indicators, such as retail sales and employment readings, have also been on the rise. With this in mind, traders anticipated that the Fed would likely need to step up the pace of its tightening program, forecasting also that the Fed would likely raise rates ahead of schedule also.However, in light of the news and the fears regarding the severity of this new strain, traders have since scaled back their tightening expectations with USD under selling pressure as a result. With many countries around the globe closing their borders, imposing fresh lockdowns and the risk that many more will be forced to follow suit if the new variant proves to be as dangerous as initially thought, then this could easily derail the US and global recovery.NFP Up NextIn light of the current news, Friday’s employment readings in the US will likely take something of a backseat. A solid number, while still positive, will struggle to be viewed as a reason for tightening given the fresh risks in the Fed’s outlook. Additionally, if there is any weakness in the data this will likely amplify the current selling, weighing on USD further.Technical ViewsDXYThe decline from just ahead of the 97 level has seen DXY trading back down into the bull channel. However, we have seen buying into the dip and, while price holds above the 95.61 level, the focus is on further upside. A break below 95.61, however, would likely be accompanied by a shift in momentum readings, paving the way for a deeper correction.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/feds-powell-warns-over-omicron-threat"
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What the Omicron variant means for your money

The Omicron variant of Covid-19 is panicking the markets. Will we see a new lockdown? What does it mean for the economic recovery, for inflation and for your portfolio? John Stepek explains.

from Moneyweek RSS Feed https://moneyweek.com/investments/investment-strategy/604173/covid-omicron-variant-effect-markets-and-your-money
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Market Spotlight: ZAR Short Opportunities

ZAR Under PressureFollowing the initial sell off in ZAR on Friday as news of the variant first broke, price has since stalled and remained within the range of that initial day’s decline. For now, price is continuing to hold support at the 6.964 level. However, given the downside risks in the outlook, pertaining to the Omicron news-flow, and the likelihood that JPY strengthens further on safe haven demand, there focus is on a continuation lower, in line with bearish MACD and RSI readings. With this in mind, bears can look for a break of Friday’s lows (sub 6.964) targeting a move down to the 6.669 level initially and a test of the channel low.Keep An Eye OnThe key issue here is news around the Omicron variant. If incoming news worsens this will increase the pressure on ZAR and increase the safe haven demand for JPY, driving this pair lower. If news flow lightens up, for example if scientists declare the strain is not as lethal as thought or is more responsive to vaccines than first thought, this will likely fuel a reversal in the current dynamic.

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The IndeX Files 30-11-2021

Omicron Towers Over MarketsBenchmark global equities remain under heavy selling pressure this week as uncertainty over the new COVID strain, Omicron, continues to grip markets. Markets were roiled late last week in response to the first announcement upon the discovery of the new strain, which is thought to be more contagious and less responsive to vaccines than Delta and Beta. Initially this week, however, there was a pause in selling on Monday as world leaders urged caution, suggesting that it would take at least a few weeks before scientists can assess the real threat from the virus. However, with further cases popping up around the globe it seems that traders are acting ahead of the curve and squaring riskier positions.Given the tightening restrictions in place across Europe ahead of the new strain’s emergence, traders sense that the months ahead (particularly for the West heading into winter) are looking perilous. Several countries have now closed their borders once again in a bid to curtail the spread of the virus with the US refusing to rule out further travel restrictions. For now, the market is clearly erring on the side of caution while it awaits further details around the new strain, suggesting that near term we are likely to see continued selling unless there is a major shift in the narrative around the new variant.Technical ViewsDAXThe near 8% breakdown below the rising channel has seen price plummeting back down to the 15078.83 level. While this level is holding as support for now, with both MACD and RSI bearish, there are clear downside risks towards the 14791.27 level next.S&P500The sell off in the S&P has seen the market breaking down below the rising channel. However, for now, price is sitting in a block of consolidation at the foot of last week’s decline, having not yet broken the lows. With MACD and RSI both bearish, the focus is on a test of the 4545.25 and 4475.25 levels next.FTSEThe sell off in the FTSE has seen the market trading lower from around the 7250 level to current 7005 lows. For now, price is sitting atop the bull channel support and 6968.7 level. A break lower here, however, will open the way for a test of the 6832.2 level next.NIKKEIThe breakdown below the rising channel in the Nikkei has seen price moving down to test the 27422.9 level support, ahead of the pivotal 26932.1 level. This lower level is a major long term level and a break below there would be a strong, bearish development for the market.

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Should you overpay your mortgage?

People are keen to cut the size of their home loans, but is overpaying your mortgage the best option?

from Moneyweek RSS Feed https://moneyweek.com/personal-finance/mortgages/604146/should-you-overpay-your-mortgage
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Four of the best new funds in the evolving world of ETFs

The latest exchange-traded funds (ETFs) offer access to themes ranging from infrastructure to smart homes. David Stevenson takes a look at four of the best.

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