Investors’ appetite for risk exposure grew stronger this week. Despite Covid accelerating across key economies, vaccine headlines have underpinned bullish momentum. At the same time, lingering worries over a contested U.S. election appear to be fading from the market’s risk profile.
Trading volume was light following the U.S. Thanksgiving holiday, but the S&P 500 and Nasdaq Composite closed at record highs. Meanwhile, the US Dollar continued to struggle as markets slide further into a risk-on stance. In spite of the weaker greenback, anti-fiat gold prices collapsed to a four-month low. The trend in precious metals likely reflects a recent easing in dovishness across central banks.
UK-EU post-Brexit negotiations drove the Pound lower against the Euro with EUR/GBP rising to its highest level since November 17. GBP/USD managed to gain 0.25% against the weak greenback. Yet another week passed with negotiators from both sides failing to find common ground. Chances for an unorderly exit from the European Union appear nearly imminent with time quickly running out.
Oil prices reflected the upbeat economic prospects that helped drive equity markets higher. U.S. crude oil futures climbed above the 45 handle for the first time since March. Traders will key in on the upcoming OPEC+ meeting scheduled to kick off on Monday. The key issue in next week’s meeting will be persuading hesitant member nations to extend the current round of output cuts as demand worries linger.
Cryptocurrency prices took a hit across the board to close out the week. Bitcoin sank near 10% after rising to a new multi-year high earlier this month. November is still shaping up to be a big win for Bitcoin with current month-to-date gains north of 20%. Traders will look to hold the psychologically important 1700 level next week with the current price action directly above.
China will start the week with NBS Manufacturing PMI data. Afterward, markets will focus on an RBA interest rate decision. Australia is also on tap to release Q3 GDP data. Inflation and unemployment data out of the Eurozone and Germany will come after. The United States will report Manufacturing PMI from ISM on Tuesday. Finally, the U.S. Non-farm payrolls report will cross the wires. Economists expect a 500k gain in jobs according to the DailyFX Economic Calendar.
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Gold prices could claw back lost ground ahead of the non-farm payrolls report for November, buoyed by a dovish FOMC, falling real yields and rising inflation expectations.
Traders in the Euro have a big decision to make this weekend: if EUR/USD hits 1.20, will it continue to advance, consolidate or fall back?
Whilst bullish momentum remains in equity markets after an impressive month of November, overbought conditions are beginning to show
A liquidity thinned week has had the USD on the backfoot with the greenback now below 92.00.
Sterling remains controlled by post-Brexit trade talks and this heightened nervousness is now playing out in various GBP-pairs
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The general tone and trend for global stocks is favorable for higher prices as a new week and the final month of the year arrives.
The Australian Dollar continues to drive higher on improved market sentiment. AUD/USD is quickly approaching its 2020 high. Bearish RSI divergence from the prior high has formed, but bulls look to capitalize on recent momentum.