- Global equities were broadly higher overnight as expectations rose that COVID-19 vaccines and economic stimulus will be available soon. The FTSE 100 (UK100) led the gains, whilst the Nasdaq 100 (USTEC) and S&P 500 (US500) hit intraday record highs before retreating later in the session.
- The US dollar was broadly sold off with DXY hitting its lowest level since April 2018. With vaccines and stimulus on the horizon then the dollar lost its safe haven status. The Euro (or the anti-dollar) broadly strengthen and saw EUR/USD break above 1.20 for its first time in 2.5 years.
- Bitcoin (BTCUSD) couldn’t quite manage a test of 20k overnight as profit taking ensued around 19,800. Given the significance of this milestone then volatility is to be expected around current levels before the next directional moves unfolds.
- The RBA kept interest rates unchanged at yesterday’s meeting as widely expected, although warned that Australia’s recovery would be “uneven”.
Today’s Calendar Events (Times are GMT+11 Sydney)
- Australian GDP is the main economic event in Asia. There are expectations for Australia to come out of a “technical recession” today, which is defined by two consecutive quarters of negative growth. With Melbourne out of lockdown and South Australia easing restrictions its possible upside pressures may see growth expand. Whether it can growth over 2% as forecast remains to be seen, but failure to expand in Q3 should have negative consequences for AUD and the ASX 200 (AUS200).
- Shortly after China also release service PMI data. With manufacturing data exceeding expectations earlier this week, a decent service PMI print would point towards a broader recovery and instil a risk-on sentiment for the session.
EUR/USD: Bulls Slice Through 1.2000 Resistance
- The broadly weaker dollar sent EUR/USD through 1.2000 like a hot knife through butter.
- A bullish opening Marabuzo candle has formed, and the Marabuzo line (50% retracement of the body) is right on 1.2000.
- Traders can look for bullish opportunities above 1.2000 – clearly a break below 1.2000 invalidates the idea but given the broad weakness of the US dollar we see this as an outside chance for now.
Gold (XAU/USD): Its corrective Low Could Be In Place
- US real rates have been breaking higher for a couple of weeks whilst gold continued to decline – yet gold and US real rates usually share a positive correlation. We have therefore been looking for evidence that gold’s bearish correction has completed, and price action overnight suggests it may have.
- An elongated bullish candle formed on the daily chart, with Monday’s low respecting the lower channel.
- Bulls could wait for a break above 1818 resistance or seek bullish setups above 1800. If Monday was the low that marks the ed of its correction, gold could break to new highs and provide a decent reward to risk ratio for bulls around current levels.
EUR/GBP: A Bullish Breakout Could Be on The Cards
- Bullish momentum has increased below 0.9000 resistance and yesterday’s bullish engulfing candle suggests a breakout could be on the cards.
- A beak above 0.9000 also invalidates a bearish trendline.
- Bulls can wait for a break above yesterday’s high or wait to see if resistance turns into support around 0.9000.
Bitcoin (BTCUSD): Prices are yet to test or break the 29k milestone, and produced a bearish engulfing candle on H4 which respected 18,125 support. A break below 18,125 suggests traders may try to close the gap whilst a break above 20k assumes bullish continuation.
USD/JPY: Prices have tried yet failed to break out of the triangle and printed a bearish pinbar on D1. Yet we will continue to look for bullish opportunities as the bullish engulfing candle around 103.83 – 104.00 support zone carries more weigh and suggest demand down at these levels.
EURO STOXX 50 (STOXX50): Removed from watchlist. Prices gapped back above the broken trendline at market open.
GBP/CHF: The bias remains bearish below 1.2200 resistance.