Dollar Edges Lower After Powell's Comments Prompted Gains

from Forex News https://www.investing.com/news/forex-news/dollar-edges-lower-after-powells-comments-prompted-gains-2695426
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Investment Bank Outlook 01-12-2021

Credit AgricoleAsia overnight While China’s official PMI data surprised to the upside yesterday, private-sector data disappointed today. PMI data from other Asian centres was strong, however, which helped support sentiment the face of the dual threats coming from a more hawkish FOMC and the omicron coronavirus variant. Most Asian bourses and S&P 500 futures were trading higher at the time of writing. In G10 FX, the Antipodean currencies were the outperformers on the back higher iron ore prices as well as an upside surprise in Australia’s GDP data. The JPY was the underperforming G10 currency in the Asian session.CIBCKey Headlines BioNTech CEO Ugur Sahin said there's no reason to be particularly worried, Pfizer vaccine is likely to offer strong protection against any severe disease from the new Omicron Covid variant. The mood was certainly better, US equity futures are in black, Yen-crosses are up. However, governments are still taking cautious steps, CDC is working to impose stricter Covid testing rules for travellers entering US; Japanese cabinet sec Matsuno said foreign residents’ re-entry from 10 countries halted; and South Korea is considering variant tests to all entering the country. FX Flows It is certainly a quiet start for December. Sentiment is positive, Yen-crosses traded higher, EUR$ slipped. Most commodities higher. Australia’s third quarter GDP growth wasn’t as bad as many thought. Over the quarter it contracted 1.9% as supposed to estimates of -2.7%. Annual growth was +3.9%. A$ barely reacted, it only moved higher in the mid-morning on small risk-on. Expect to run into offers near the 0.7165 strike for A$780mio expiring today. Reverse of Tuesday, $Yen rose to 113.55 and remained firm throughout the morning. Risk-on mood led Yen-crosses higher, pairs like AUD¥, NZD¥ and CAD¥. There should be some offers ahead of option strikes at 114.00.CitiEuropean OpenA pendulum swing in the FX markets saw market participants cautiously dip their toes into risk assets. Antipodeans outperformed, with NZD (+0.47%) and AUD (+0.5%). UST yields edged higher by 3-4bps across all tenors. There was little news on the Asian morning following Powell’s hawkishness yesterday which roiled markets. JPY was down 0.3% as safe havens declined. Over in the EM space, KRW gained 0.8% on large foreign inflows (USD 779mn) into equities. MXN was up 0.74% as a risk proxy. Oil saw gains with WTI up 3.37% and Brent gaining 3.52%. In the equities space, S&P e-minis were up 0.80% and Nasdaq100 was up 1.32%. Kospi was up 2.17%, HSI +1.10%, Nikkei +0.41%.Looking ahead, the US sees ADP employment change (13:15 GMT), ISM Manufacturing (15:00 GMT) and Powell & Yellen (15:00 GMT). We eye the Fedspeak for more headlines following Powell’s comments yesterday. NOK will see current account (07:00 GMT), SEK will sight Swedbank/Silf PMI Manufacturing (07:30 GMT), CHF its Core CPI (07:30 GMT), and EUR will see Markit Manufacturing PMIs, starting with Italy (08:45 GMT). In the EM space, CLP will see Economic Activity (11:30 GMT) and HUF its Manufacturing PMI (08:00 GMT). RUB (16:00 GMT) and PEN (15:00 GMT) see CPI, and BRL will see trade balance (18:00 GMT).

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-01-12-2021"
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Market Spotlight: Trading Today's US Data

ADP Employment & ISM Manufacturing DueWhile fears around the newly discovered Omicron COVID-variant have taken centre stage, it is important to keep track of the data flow we have at the moment. There is a slew of key US data to keep an eye on with the ADP employment number up first and ISM manufacturing following. We also have Fed’s Powell continuing his testimony at the Senate Banking Committee. While the impact of today’s US data will no doubt be diluted given the current backdrop, there is stull potential for volatility on key data surprises.Firstly, for the ADP number the market is looking for 552k from 571k prior. A print in this region or below will no doubt be a little disappointing ahead of the NFP in Friday and could further weigh on the Dollar. For the ISM manufacturing reading, however, the market is looking for a rise to 61.3 from 60.8 prior. Given the current landscape, it would likely take a solid beat on both numbers to see USD higher.Where to Trade Today’s US Data?USDJPYThe fall back in USDJPY has seen the market reversing hard from the 115.45 level, trading down to test the 112.72 level. The level is holding as support for now. However, any USD weakness from today’s data will likely see a break of the level, targeting a move down to the 111.70 level next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-trading-todays-us-data"
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Shaky Markets Await Further Omicron Updates

Sharp Shift In SentimentThe last few days in markets have served as a sharp reminder of just how quickly sentiment can shift. This time last week, traders were focused firmly on the Fed and expectations that the central bank would be forced to step up the pace of its tightening schedule in order to keep track with the pace of the economic recovery and surging inflation seen in the US. Fast-forward one week and the big focus now is whether the world is about swing back into the depths of the pandemic following Friday’s announcement of a new COVID variant.Awaiting Further Omicron NewsNews about the variant is widespread at this point. So far we know that it is more contagious and potentially better at escaping antibodies and potentially more resistant to vaccines. However, it is still very early stages and scientists have warned that they do not yet have enough data on the virus to declare whether it is in fact the severe threat it seemed to be when first announced last week.Initial Market ReactionSo, with that in mind, what we are seeing currently is an initial, fear-driven, reaction from markets. However, given that so far the virus appears to be a much weaker strain, there is stull a chance that it won’t lead to the widespread return to lockdown which many fear. If this proves to be the case and the new strain is simply deemed more contagious (but, crucially, not more deadly), then markets are likely to react with swift relief, sending risk assets higher and safe haven assets lower.The key then will be in how individual governments choose to handle the outbreak. In Europe already we are seeing a divide between countries adopting a stricter approach (such as Austria, Switzerland, Netherlands) and those taking a more relaxed approach.Worse Case ScenarioHowever, if over the next few weeks the news flow worsens and the new strain proves to be more deadly than previous strains, the current market will gather pace very quickly. Risk assets will come under pressure across the board; equities, commodities, airline stocks and fuel stocks in particular, risk currencies etc. Safe haven assets will be driven sharply higher. Again, the extent to this move will depend on just how bad the new strain turns out to be and the measures it leads to. Ultimately, national lockdowns will be the most damaging events and are the big issues to keep an eye on.Technical ViewsUS 10 Year BondsThe US 10 year bond has been grinding higher within a corrective bull channel over recent weeks. Price is now testing the upper bound of the channel, having broken above the 98’31’7 level. With MACD and RSI bullish, the focus is on further upside while price holds above here. To the topside the next levels to note are 100’00’2 and 101’04’0 above.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/shaky-markets-await-further-omicron-updates"
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Daily Market Outlook, December 1, 2021

Daily Market Outlook, December 1, 2021 Overnight Headlines Powell Places Faster Bond-Buying Taper On Fed's Christmas Table Fed Vice Chair Clarida: High Inflation Seen This Year Is Not A Success Top US Senate Democrat, Republican Confident On Debt-Ceiling Hike Schumer Eyeing Build Back Better Vote As Soon As Week Of Dec 13 Incoming German PM: Action Must Be Taken If Inflation Doesn't Ease UK PM Johnson Assures Another Lockdown Is 'Extremely Unlikely' Caixin PMI Shows China's Manufacturing Activity Contracted In Nov China Reports Highest Daily Local Covid-19 Cases In Nearly A Month Japanese Factory Activity Expands At Fastest Pace In Nearly Four Years Australia's Economy Contracts by Less-Than-Expected In Third Quarter Yen Shines, Aussie Sags As Powell Turns Hawk Despite Uncertainty Oil Rises Ahead Of Two Day OPEC Meeting Under Omicron Cloud Asian Shares Bounce From Year Low But Omicron, Fed In FocusThe Day Ahead Market risk tone improved overnight despite the weaker close in US equities following hawkish comments from Fed Chair Powell (see below). A softer Chinese Caixin manufacturing PMI report was shrugged off, while strong South Korean export figures indicated that trading volumes may be overcoming some of the issues surrounding supply chains. Still, markets remain volatile as investors assess the omicron variant, with very early indications that it may be highly transmissible but there is uncertainty about how lethal it is and the degree of vaccine escape. As focus remains on the potential fallout from the new Covid variant, US Fed Chair Powell yesterday explained his thinking about the additional risks and uncertainties it brings to the economic outlook. He said that rising Covid cases and the emergence of the new variant “pose downside risks to employment and economic activity, and increased uncertainty for inflation”. The point about inflation is that greater supply chain disruptions could drive up costs even as demand cools. We noted as a risk yesterday and in our weekly that the Fed could still hint at a quicker tapering pace owing to inflation risks. Powell yesterday confirmed in prepared remarks to the Senate that that an earlier end to tapering was possible. He and Treasury Secretary Yellen testify in Congress again today, this time at the House. Today’s economic data have likely been overtaken by the discovery of the new variant, the effects of which will show up in future releases. The US ADP employment report, a prelude to Friday’s official nonfarm payrolls release, is expected to show robust private sector jobs growth of over 500k in November. The US ISM manufacturing report, construction spending and the Fed Beige Book will also be watched, including on latest indications for inflation. The main UK/European release is the final November manufacturing PMI readings. The preliminary ‘flash’ PMI showed no let-up in both input and output price pressures for both the UK and the Eurozone. The headline PMIs improved in November for the UK and the Eurozone to 58.2 and 58.6 respectively. Separately, the OECD publishes its Economic Outlook this morning, with probably a passing mention of the recently discovered omicron variant. It nevertheless highlights the ongoing risk to the global recovery from new variants and unequal vaccination rates in different countries. Markets remain volatile as participants assess the economic impact of the omicron variant, which could further complicate central bank policy if it aggravates supply chain disruptions. Oil prices have continued to slide, with Brent crude dropping briefly below $70 ahead of today’s meeting of OPEC+ to decide on production levelsG10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls )EUR/USD: 1.1200 (346M), 1.1320-30 (564M), 1.1400 (1.3BLN)EUR/GBP: 0.8400 (1.9BLN)AUD/USD: 0.7165 (781M), 0.7200 (302M), 0.7270 (375M)AUD/NZD: 1.0450 (266M), 1.0500 (1.3BLN)USD/JPY: 112.50 (334M), 113.00 (323M), 113.50-60 (347M), 114.00-05 (553M)114.90-115.00 (543M). EUR/NOK: 10.15 (745M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.15 Bullish above Consolidates in Asia as risk currencies gain EUR/USD opened +0.38% at 1.1335 after a whippy US session It completed a bullish outside day recovering from low after Powell comments The range so far in Asia is 1.1316/42 and it is 1.1325/30 into the afternoon Risk assets surged in Asia, as Omicron concerns moved to the background EUR/USD has been benefiting from Omicron related sell-offs since Friday EUR/USD technical outlook solid in short-term but fundamentals are negative... Resistance @ the 21-day MA at 1.1387 with support @ the 10-day MA @ 1.1283GBPUSD Bias: Bearish below 1.36 Bullish above. GBP steady – buoyant in Asia, awaiting fresh catalysts GBP steady to buoyant in Asia, awaiting fresh catalysts Cable 1.3310-29, holding above 1.3288 low yesterday, 1.3278 low Friday Holding for now in area of 1.3319-52 hourly Ichi cloud, 1.3322 55-HMA Seen heavy above 1.3331 descending 100-HMA, recent moves above rejected GBP/JPY 151.07-62, above 150.65-67 double bottom yesterday, Friday Also mostly below 151.51 descending 55-HMA, 151.55 hourly Ichi cloud base BoE key going forward, seen more hawkish but weak economy may weighUSDJPY Bias: Bullish above 112.50 Bearish below USD/JPY risk premiums ease, but recovery faces option resistance Better risk sentiment and a firmer USD support USD/JPY in mid 113s Wed USD/JPY recoveries capped 114.00 Tues-Mon. 113.50-114.00 is big option zone $900-million expiries between 113.50-114.00 Wednesday Thursday has $1.2-billion strikes expiring 113.60-70, $1.1-billion at 114.00 Another $1-billion between 113.50-114.00 Friday Related option hedging flow will add congestion and hinder further recovery USD/JPY option implied volatility and downside risk premiums are easing Reflects better risk sentiment and lower perceived risk of USD/JPY dropAUDUSD Bias: Bearish below 0.75 Bullish above AUD/USD pops as risk revival continues into Europe open AUD/USD pops to 0.7171, may shed bearish bias, cue short-covering Wed close above 0.7176 marks exit from Bollinger downtrend channel Risk-on in Asia after Powell comments flattened US yield curve S&P futures +0.8%, oil prices +3.1% as Omicron pessimism abates Asia stocks mostly up even though China Caixin missed Australia's Q3 GDP not as bad as feared, -1.9% q/q

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-december-1-2021"
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Market Update – December 1 – Taper gets a boost & Transitory gets “retired”

Powell “retires” Transitory; in the light of Omicron & surprisingly suggests a faster taper  – Stocks tank, Dollar and Yields rise on faster tightening expectations

• USD (USDIndex 95.90) back down from leap to 96.60 on Powell testimony. Saw a fresh wave of risk aversion as Treasuries sold off, & yields spiked (particularly the 2yr) , Stocks fell significantly with the USA100 down over -2.4% (APPL bucked the trend +3.16%) USA500 -1.90% (-88pts) 4567 and the USA30 off 652 pts or -1.86%. Consumer confidence that saw a slump in the headline, and a rise to a 13-year high in the inflation component. The Chicago PMI fell to 61.8. Home prices increased to fresh record peaks.
• US Yields 10-year rates were down over 7 bps to 1.41% before closing at 1.443% before recovring to 1.468% now.  
• Asian Markets – Equities – Topix and Nikkei are currently up 0.4%, the Hang Seng bounced 1.1% and the CSI 300 is up 0.1%. The ASX, which outperformed yesterday, dropped back -0.3%. Data over night – Japan’s manufacturing PMI came in stronger than expected and while China’s private PMI reading signalled stagnation at 49.9, that was compensated somewhat by the stronger than expected official manufacturing PMI released yesterday. AUD GDP was not as bad as expected -1.9% vs -2.7% & 0.7% last time.
• USOil – continues under pressure, down to $64.08 (14-week lows) yesterday – recovered to test $68.00 today – expectations continue to  grow that OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) of supply in January at their meeting tomorrow.
• Gold finally some intra-day volatility – Powell surprise spiked to $1808 – before testing $1770 with a couple of hours, back to $1788 now. 
• FX markets – Yen rallied USDJPY dipped to 112.50, back to 113.40 now, EURUSD now 1.1326 & Cable steadied to 1.3300-1.3330. 

European Open –  The December 10-year Bund future is down -11 ticks at 172.26, slightly outperforming versus Treasury futures. Central bankers may be getting more nervous about the inflation outlook, but Omicron clearly is clouding over the growth outlook and in Europe at least that will boost the arguments of the cautious camp at the central banks. U.S. yields remain firmly below the levels seen before the new virus variant hit the headlines and sentiment is likely to remain jittery, even if stocks are set to back up from yesterday’s lows, with DAX and FTSE 100 future posting gains of 0.9% and 0.7% respectively and a 1.4% jump in the NASDAQ is leading US futures higher. Data releases today kicked off with a big miss for German Retail sales (-0.3% vs 1.0%), higher UK house prices and firmer CPI from CHF .

Today – PMIs (EZ & UK),US Markit Final Manufacturing PMIs, US ADP and ISM Manufacturing PMI, JTC and OPEC meetings, BoE’s Bailey and Fed’s Powell & Yellen testify.

Biggest FX Mover @ (07:30 GMT) NZDJPY (+0.60%) Risk-sensitive currencies remain volatile, from a slide to 76.65 yesterday, today a rally to 77.80. Currently MAs aligned higher, MACD signal line & histogram over 0 and rising, RSI dipping from 70.00 at 58, Stochastic remain OB. H1 ATR 0.172, Daily 0.84.

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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Factbox-Yellen's watchlist for the U.S. currency manipulator tag

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Analysis-Japan keen to speed up digital yen launch as China adds geopolitical twist

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Dollar Down, Caution Reigns After Hawkish Powell Comments

from Forex News https://www.investing.com/news/forex-news/dollar-down-caution-reigns-after-hawkish-powell-comments-2695187
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USDJPY, H4 | Bearish Momentum

Type: Bearish ReversalKey Levels:Resistance: 114.279Pivot: 113.753Support: 113.054Preferred Case:Prices are on bearish momentum. We see potential for a dip from the Pivot at 113.753 in line with 38.2% Fibonacci retracement and 127.2% Fibonacci extension towards our 1st support at 113.054 in line with 61.8% Fibonacci retracement and 127.2% Fibonacci extension.Alternative Scenario:Alternatively, prices may climb higher towards our 1st resistance at 114.279 in line with 200% Fibonacci projection and 61.8% Fibonacci Retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdjpy-h4-or-bearish-momentum-1stdec"
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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.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdchf-h4-or-bearish-momentum"
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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.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gbpchf-h4-or-bearish-continuation"
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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.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-h4-or-bearish-continuation-1stdec"
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Yen shines, Aussie sags as Powell turns hawk despite Omicron uncertainty

from Forex News https://www.investing.com/news/economy/yen-shines-aussie-sags-as-powell-turns-hawk-despite-omicron-uncertainty-2695120
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