- Volatility remained mostly contained overnight following extended moves post-US election. None of the major markets exceeded their ATR (average true range) and traders are now waiting for a new catalyst to either extend or reverse prior moves.
- In a controversial move, US Attorney General William Barr has allowed federal prosecutors to open investigations into voter fraud, prompting a top US attorney to resign in protest against the move. With no evidence of mass voter fraud, it appears Bidens path to the Whitehouse remains safe but it is preventing the transition team beginning work. Assuming this does go to the Republican dominated Supreme court, the matter should be closed by the 15th of December.
- President elect Joe Biden called Boris Johnson and stated that the Northern Island peace deal should remain protected, which puts pressure on Johnson to play ball with Europe in the Brexit negotiations.
- Redundancies in the UK hit a record high, with over 300k workers being losing their jobs in Q3 alone. The unemployment rate has now risen to 4.8%.
- Production prices in China fell more than expected this month due to lower demand for fuel, despite recoveries from the manufacturing sector. Expectations for CPI and PPI remain subdued in Q4.
Today’s Calendar Events (Time are GMT+10 Sydney)
The RBNZ cash rate meeting at 12pm is today’s main event. Whilst no change of interest rate expected today, markets are pricing in 50 bps of cuts next year which could take the rate down to -0.25%. Therefore, we expect RBNZ to offer forward guidance on negative rates and unveil their plans of a $100 billion asset purchase programme, aimed at spurring business lending. As most of this is expected (and therefore priced in), it could take a particularly aggressive stance from RBNZ to push NZD pairs lower, which remain firm ahead of today’s meeting. Conversely, if they fail to deliver the above expectations, it could end up being another bullish session for NZD pairs.
NZD/USD: Consolidating at 20-month High Ahead of RBNZ
- The trend structure is firmly bullish on the four-hour chart, and prices are currently consolidating within a potential continuation pattern.
- Next major resistance level for bulls to target is around the 0.6930 highs. A break above the correction line or recent cycle high assumes bullish continuation.
- A break below 0.6790 – 0.6800 support zone assumes a deeper correction, and brings the 38.2% Fibonacci retracement level into focus.
- Due to the strength of the trend, the core view remains bullish even if prices initially break lower.
WTI (WTI): Bulls Eye an Break Bove $42
- News of a potential COVID-19 vaccine has seen investors assuming lockdowns may be a thing of the past. Whether that is wishful thinking or not is yet to be seen, but markets are forward-looking, and no lockdowns means a higher demand for fuel.
- Bullish volatility has picked up notably since the bullish engulfing low at 33.82.
- A break above 42.00 brings the 43.85 highs into focus. Should news surface that the vaccine is too good to be true, we would expect oil prices to roll over.
Bitcoin (BTCUSD): Higher Low Formed at 14,800
- The four-hour chart remains in a strong uptrend.
- A bullish candle with a lower wick has formed a swing low, which shows demand around 14,800 and the 38.2% Fibonacci level. A break beneath here warns of a deeper correction.
- A break above 16,000 brings the 17,234 high into focus for bulls. A more aggressive entry could be the break of the correction line, although reward to risk ratio needs to be considered with 16,000 resistance in mind.
Nasdaq 100 (USTEC): Prices continued to sell-off beneath Thursday’s low. The bias remains bearish below 12,480 (although Tuesday’s high can also be used to fine-tune risk management) with 11,000 lows now in focus.
NZD/JPY: Prices are consolidating beneath key resistance at 72.00. This remains a pivotal level going forward, and a minor retracement before eventually breaking above it would not necessarily be a bad thing.
GBP/AUD: The counter-trend move was confirmed with a break above 1.8140.Bulls can target the 1.8300 and 1.8400 handles, or bears could wait for evidence of a lower high to consider a swing trade.
Ethereum (ETHUSD): Bias remains bullish above 425 (Monthly R1) with 480 highs now in focus.