Black Friday…..for markets

Today’s report: Black Friday.....for markets

It’s worth highlighting the exceptionally thin trading conditions as the week gets set to close out, with US desks already cleared out since mid-week for the Thanksgiving holiday break. Having said that, we are seeing some intense risk off flow into Friday.

Download complete report as PDF

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

Setbacks have extended to retest the critical 61.8% fib retrace off the 2020 low to 2021 high move. Technical studies are now tracking in extended territory on the weekly chart, warning of the need for a corrective bounce ahead. Look for the market to hold up on a weekly close basis above the 61.8% fib retrace around 1.1275.

  • R2 1.1465 – 15 November high– Strong
  • R1 1.1386 - 16 November high – Medium
  • S1 1.1186 - 24 November/2021 low – Medium
  • S2 1.1168 – June 2020 low – Strong

EURUSD – fundamental overview

Yield differentials and a worsening COVID situation in Europe continue to weigh on the Euro to fresh yearly and multi-month lows. ECB's Villeroy isn't worried about inflationary drivers in the EU becoming structural and sees no evidence of strong upward pressure on wages. Villeroy is ready to end PEPP on schedule while retaining the program's infrastructure intact as a "virtual tool box." Trading conditions will be exceptionally thin on account of the US Thanksgiving holiday break. Key standouts on today’s calendar include German import prices, and an ECB Lagarde speech.

EURUSD - Technical charts in detail

GBPUSD – technical overview

The market is in a correction phase in the aftermath of the run to fresh multi-month highs earlier this year. At this stage, additional setbacks should be limited to the 1.3200 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high.

  • R2 1.3608 – 9 November high – Strong
  • R1 1.3514 – 18 November high – Medium
  • S1 1.3297 – 26 November/2021 low – Medium
  • S2 1.3250 – Mid-Figure – Medium

GBPUSD – fundamental overview

The Pound has been under pressure on yield differentials with the US Dollar, and on this latest uptick in the coronavirus. Trading conditions will be exceptionally thin on account of the US Thanksgiving holiday break. Key standouts on today’s calendar include German import prices, and an ECB Lagarde speech.

USDJPY – technical overview

The longer-term trend is bearish despite the recent run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption back down towards the 100.00 area. It would take a clear break back above 116.00 to negate the outlook.

  • R2 116.00 – Figure – Strong
  • R1 115.53 – 24 November/2021 high – Medium
  • S1 113.58 – 19 November low – Medium
  • S2 112.72 – 9 November low – Strong

USDJPY – fundamental overview

Yield differentials are clearly having a bigger impact after the market priced in a more hawkish Fed path on the Powell reappointment. At the same time, after dropping to fresh yearly lows against the Dollar this week, we've seen a resurgence in Yen demand into Friday as risk off flow intensifies on the back of the latest COVID fears. Trading conditions will be exceptionally thin on account of the US Thanksgiving holiday break. Key standouts on today’s calendar include German import prices, and an ECB Lagarde speech.

AUDUSD – technical overview

The Australian Dollar has been in the process of a healthy correction following the impressive run towards a retest of the 2018 high earlier this year. At this stage, the correction is starting to look stretched and setbacks should be well supported down into the 0.7000 area.

  • R2 0.7371 – 15 November high – Strong
  • R1 0.7305– 17 November high – Medium
  • S1 0.7106 – 20 August/2021 low – Strong
  • S2 0.7100 – Figure – Strong

AUDUSD – fundamental overview

Aussie retail sales have exceeded expectation, but this hasn't prevented the Australian Dollar from trading back down to the yearly low on the back of intensified risk off flow on renewed COVID worry. Trading conditions will be exceptionally thin on account of the US Thanksgiving holiday break. Key standouts on today’s calendar include German import prices, and an ECB Lagarde speech.

USDCAD – technical overview

Finally signs of a major bottom in the works after a severe decline from the 2020 high. A recent weekly close back above 1.2500 encourages the constructive outlook and opens the door for a push back towards next critical resistance in the 1.3000 area. Any setbacks should be well supported into the 1.2200s.

  • R2 1.2775 – 29 September high – Strong
  • R1 1.2745 – 23 November high – Medium
  • S1 1.2585 – 19 November low – Medium
  • S2 1.2492 – 16 November low – Strong

USDCAD – fundamental overview

US equity futures are taking a massive hit on Friday as COVID fears perk back up. Oil has also been dumping, only adding further to downside pressure on the Loonie. Trading conditions will be exceptionally thin on account of the US Thanksgiving holiday break. Key standouts on today’s calendar include German import prices, an ECB Lagarde speech, and the Canada budget balance.

NZDUSD – technical overview

The market has entered a period of intense correction after running up to a yearly and multi-month high. Back below 0.6800 would suggest a more significant bearish structural shift.

  • R2 0.7133 – 10 November high – Medium
  • R1 0.7081 – 15 November high – Medium
  • S1 0.6810 – 26 November low – Medium
  • S2 0.6805 – 20 August/2021 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar was already underperforming this week on the back of a very discouraging retail sales print and comments from RBNZ Orr that heavy household debt is a reason for concern. We've seen added pressure to yearly lows into Friday as worry around COVID intensifies. All of this has the market reconsidering hawkish RBNZ bets. Trading conditions will be exceptionally thin on account of the US Thanksgiving holiday break. Key standouts on today’s calendar include German import prices, and an ECB Lagarde speech.

US SPX 500 – technical overview

Longer-term technical studies are looking quite exhausted and the market is showing signs of wanting to roll over after racing to another record high. At the same time, the latest breakout above 4600 introduces the possibility for the next major upside extension through 4800. At this stage, it will take a break back below 4500 to take the immediate pressure off the topside.

  • R2 4750 – Psychological – Strong
  • R1 4745 – 22 November/Record high – Medium
  • S1 4600 – Figure – Medium
  • S2 4500 – Psychological – Strong

US SPX 500 – fundamental overview

We're trading just off fresh record highs, and yet, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout and risk of rising inflation should weigh more heavily on investor sentiment in Q4 2021.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1600.

  • R2 1917 – 1 June high – Strong
  • R1 1878 – 16 November high – Medium
  • S1 1759 – 3 November low – Medium
  • S2 1722 – 29 September low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, and coronavirus fallout. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Peformance chart: 30 Day Performance vs. US dollar (%)

Suggested reading

Daily Reports Global FX Insights   LMAX Exchange  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.