US equities pulled back from record highs, the S&P500 currently down 0.3%. Bond yields fell and the defensive US dollar rose slightly. Markets were focussed on developments in US fiscal and Brexit talks, with neither yet resolved. Commodities, Brent crude oil futures fell 0.5% to $49.00, copper fell 0.3%, iron ore rose 2.6% to $148.65 – an eight-year high, and gold rose 1.2%.
AUD/USD: 0.7374 – 0.7453
EUR/USD: 1.2079 – 1.2166
GBP/USD: 1.3225 – 1.3416
USD/JPY: 103.93 – 104.31
USD/CAD: 1.2780 – 1.2833
NZD/USD: 0.7006 – 0.7028
AUD/JPY: 76.86 – 77.49
AUD/NZD: 1.0520 – 1.0556
Quiet day ahead on the data front with Australian Business confidence the only thing on the domestic calendar. Markets are likely to continue to be driven by the rolling Brexit negotiation headlines while also on the lookout for any stimulus package developments from the US.
This afternoon attention shifts to Europe where the big caveat with Germany’s ZEW is that it surveys financial market professionals and not real businesses on the ground. This explains why the market expects an increase in the expectations index for December, despite rising COVID-19 case counts and a three week extension of Germany’s “lockdown light”. Since the last ZEW survey, news of effective vaccines has buoyed global stock markets on expectations of a return to normal global mobility levels.
The AUD/USD worked its way higher from 0.7275/80 lows and made new recent highs of 0.7453 in offshore trade. The next level of topside technical resistance is now at 0.7500 and again at 0.7516. Buying interest has grown and should slow any dip as we approach 0.7350/70.
Event Risk Data Today
Australia: The NAB business survey is sitting around pre-COVID levels ahead of the November update; the confidence rebound seen in the October survey was driven by Victoria’s reopening.
Euro Area: The ZEW survey of expectations has been pushed lower in recent months by concerns around the growth profile, but the December release will be supported by positive vaccine news. The final estimate of Q3 GDP will likely remain unchanged (market f/c: 12.6%).
US: Consumer credit is expected to remain around $16.1bn in October as auto-loan and credit-card debt lead the recovery. Finally, November NFIB small business optimism is set to remain in limbo until the picture around the vaccine, the spread of COVID, and the stimulus package becomes clearer (market f/c: 102.5).