US GDP Rebounds Yet Remains Below Pre-Pandemic Levels | - International

  • US GDP expanded by 33.1% in Q3 to set a new record. Yet it should also be taken in context that this rebound follows on from a record downturn in Q2. That said, the easing of restrictions has given the US a huge economic boost, yet it remans a far way from its peak prior to the pandemic and, with rising cases, we cannot rule out the potential for another lockdown.
  • US indices put in a mild rebound on the back of firmer growth, with the Nasdaq 100 (USTEC) leading the pack with on firmer earnings in the technology sector.
  • The ECB outlined plans to expand their bond purchases in December and kept interest rates unchanged. EUR/USD fell to a 1-month low and was the most volatile major of the overnight sessions.
  • Oil prices crashed through key support due to lower demand expectations due to European lockdown.
  • The Bank of Japan kept monetary policy unchanged as widely expected, lowered growth expectations for 2020 but slightly raised them for 2021. CPI estimates remained unchanged.


Today’s Calendar Events (Time are GMT+10 Sydney)

  • Japan’s industrial output is expected to rise 3.2% in September from 1% previously.
  • A host of data for Europe includes French, German and Eurozone (EZ) GDP and employment for EZ. That said, the data points would have the be quite far away from forecasts to make an impact, given the acceleration of Covid-19 and renewed lockdowns that are driving European markets at present.


AUD/USD: Prices Test Major Support at 70c

  • 70c has provided both support and resistance. Whilst prices remain above it, bulls will try and take it higher, but if it breaks to the downside it could trigger stops and entice more bears to the table.
  • A potential triangle is forming which projects an approximate target around 0.6650. Yet we need a clean break beneath 0.7000 to confirm it.
  • Over the near-term we could see a minor bounce within the triangle. A break above the sloping trendline invalidates the pattern and a break above 0.7162 assumes bullish continuation.


USD/CNH: Trying to Carve Out a Swing High

  • A bearish 2-bar reversal has formed to suggest a swing low has formed below the 7648 high.
  • It has also stalled around the 20-day eMA, which has previously capped gains during this downtrend.
  • A break beneath yesterday’s low assumes a swing high is in place and the bearish trend is set to resume.


Nikkei 225 (JP225): Breakout of Bearish Wedge

  • The Nikkei broke out of the bearish wedge pattern which we highlighted on Monday, although support has been found around 23,000.
  • If successful, the pattern projects a target around 21,700 (the wedge base).
  • A break beneath yesterday’s low assumes bearish continuation and brings the 22,585 and 21,700 lows into focus.
  • If prices rally back inside the wedge formation the pattern becomes invalidated.


Watchlist Update

AUD/JPY: The bias remains bearish below 73.97 – 74.20 resistance zone with 72.53 in focus.

AUD/CHF: Prices have retracted towards the lower bounds of the 0.6450 0 0.6500 resistance zone. Bears could consider seeking a swing high on an intraday timeframe to target the 0.6375 low.

EUR/JPY: Prices have moved beyond the target around 122.34 support. We’d refer to step aside and reconsider shorts following a period of consolidation or a minor retracement.  

Bitcoin (BTCUSD): Removed from watchlist. The bearish wedge made it ¾ of the way to the 12,875 target before bullish momentum returned and invalidated the pattern.


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