Daily Market Outlook, November 19, 2019
Main Market Themes
Markets ended mixed tracking trade noises amid absence of key events and economic releases. US and Asian major stock indices ended largely in the green while European equities were more mixed.
Global bonds advanced by and large, amid lingering trade jitteries after Beijing said it was pessimistic on a US-China trade deal. The UST curve shifted lower by 1-2bnps with the 10Y paring about 2bps to 1.815%.
The fall in US rates appears to have weighed on the USD, which has fallen 0.2%-0.3%, in index terms, to start the week. The USD indices have fallen around 0.6% over the past week as the US 10 year Treasury yield has fallen from around 1.95% to 1.8%. The USD indices remain well contained towards the middle of the trading ranges over the past six months
Global crude oil prices were lower on the day with the Brent last closed at $62.29/ barrel.
Fed Rosengren, who dissented against all three Fed rate cuts this year, warned that efforts to pursue 2.0% inflation target could put financial stability at risk. In a separate comment, Fed Mester said the Fed should pause now as the Fed monetary policy is now in a good spot.
Fed Chair Powell met Trump at the White House. Trump said they had a “very good and cordial” meeting spanning topics including trade, low inflation and negative interest rates. A Fed statement said Powell’s comments were consistent with his recent public remarks and the policy rate outlook was data dependent.
Tuesday’s US economic docket features housing starts, expected to rebound to 1.32 million in October after an unexpected decline to 1.256 million in the prior month from 1.386 million. New York Fed President John Williams will be speaking at the Capital Markets Conference.
GBP advanced as more opinion polls indicated a likely Conservative majority. The first election debate, between UK PM Boris Johnson and Labour leader Jeremy Corbyn, will take place today, and will be broadcast by ITV.
Today’s Options Expiries for 10AM New York Cut (notable size in bold)
- EURUSD: 1.1050 (EUR860mn) 1.1025 (EUR599mn)
- USDJPY: 108.35 (USD810mn) 108.50 (USD661mn) 108.90 (USD550mn)
- GBPUSD: 1.2900 (GBP240mn) 1.3000 (GBP255mn) 1.2895 (GBP422mn)
- AUDUSD: 0.6900 (AUD506mn)
Technical & Trade Views
EURUSD (Intraday bias: Bullish above 1.1030 targeting 1.1180)
EURUSD From a technical and trading perspective, as 1.1030 now act as support there is a window to set a base targeting a move to test offers and stops above 1.11, a failure below 1.10 would suggest a premature upside attempt, and see prices retreating to test bids at 1.0960, where bulls will likely mount a further attempt to build a base. NO CHANGE IN VIEW
GBPUSD (Intraday bias: Bullish above 1.2870 targeting 1.3000)
GBPUSD From a technical and trading perspective, as 1.2870 supports look for a grind higher to retest offers and stops above 1.30 en route to the broader upside objective of 1.32, on the week only a failure below 1.2820 would concern the bullish bias suggesting further consolidation in the 1.27/1.29 range. NO CHANGE IN VIEW
USDJPY (intraday bias: Bearish below 109 targeting 107.90)
USDJPY From a technical and trading perspective, the anticipated further long liquidation to test bids back towards 108.50 played out and bulls once again defended the key support, a failure to quickly recapture ground above 109 would open a move to retest Fridays lows and likely see newly minted longs throw in the towel again, with the pullback extending to test bids below 108. NO CHANGE IN VIEW
AUDUSD (Intraday bias: Bearish below .6830 targeting .6750)
AUDUSD From a technical and trading perspective, pivotal .6830 prior support now acts as resistance only a sustained drive through this level would suggest a false donside break and confirm a base for another assault on .6900 offers and stops. As .6830 caps upside attempts expect a retest of Fridays low enroute to a test of .6735. NO CHANGE IN VIEW
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High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 71% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!