Daily Market Outlook, November 21, 2019 

Daily Market Outlook, November 21, 2019 

Main Market Themes

Markets slipped overnight as trade uncertainty deepened further over a Reuters news story that said a US-China phase one trade deal may not be completed this year alongside FOMC meeting minutes that offered little clue on the Fed’s next policy move. 

Reuters reported that the inking of the highly anticipated trade deal could be delayed to next year, as opposed to the initial December target with issues on tariffs rollback serving as the main impediment. 

US main indexes fell by 0.4-0.5% from record highs, treasuries yields edged lower by 2-4bps, spurred by havens demand. 

President Trump is expected to sign the Hong Kong Human Rights and Democracy Act that received a strong bipartisan support which would worsen the already fragile US-China relation and risk jeopardising the current trade talks progress. 

Markets are set to retreat into a cautious mode, JPY and gold were seen trading higher and stocks futures point to a weak start. Yesterday, the PBOC lowered its one-year loan prime rate to 4.15% from 4.20% in a bid to ease financing conditions for the corporate sector.

No surprise from FOMC meeting minutes as Fed reiterated stance to keep rate steady: The latest FOMC meeting minute turned out to be a non-event as widely expected as the Federal Reserve reiterated its stance to keep rate on hold after delivering the third rate cut in the late October meeting. Officials believe that a 25bps reduction in the Fed funds rate at this meeting was appropriate to provide “insurance” against potential downward risk to the economic outlook and to return inflation back to its 2% target, citing persistent weakness in global growth and “elevated” trade uncertainty. On policy outlook, the stance of policy after this 25bps cut would be “well calibrated” to support the outlook of moderate growth, a strong labour market and inflation near 2% and would “likely remain so” as long as incoming information about the economy “did not result in a material reassessment of the economic outlook”. Some officials judged that the Fed should reinforce in its statement to indicate that another reduction in the fed funds rate was unlikely in the near term unless data weakened. 

Thursday’s US economic docket features the usual initial jobless claims, October existing home sales, as well as the Philadelphia Fed business outlook index for November. At 3am SGT (Friday), Cleveland Fed President Loretta Mester will be speaking at the Financial Stability Conference.

Today’s Options Expiries for 10AM New York Cut (notable size in bold)

• EURUSD: 1.1000 (EUR1.2bn); 1.1025 (EUR605mn); 1.1035 (EUR669mn); 1.1050 (EUR884mn); 1.1090 (EUR1.2bn); 1.1105 (EUR496mn); 1.1110 (EUR357mn); 1.1125 (EUR497mn); 
• USDJPY: 108.00 (USD851mn); 108.20 (USD411mn); 108.30 (USD994mn); 108.35 (USD465mn); 108.45 (USD447mn); 108.50 (USD1.2bn); 108.70 (USD412mn); 108.75 (USD620mn); 109.25 (USD380mn); 110.00 (USD862mn)
• GBPUSD: 1.2910 (GBP201mn); 1.2945 (GBP305mn); 1.2955 (GBP421mn); 1.2965 (GBP418mn); 1.2990 (GBP322mn); 1.3000 (GBP1.5bn)
• AUDUSD:  0.6800 (AUD429mn); 0.6805 (AUD323mn); 0.6810 (AUD261mn); 0.6850 (AUD1.9bn); 0.6865 (AUD861mn); 0.6875 (AUD346mn); 0.6900 (AUD503mn)

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. EURUSD...UPDATE 1.1030 test appears to be uderway with intraday divergence weighing. Watching for intraday reversal patterns into 1.10/30/40 to add long exposure.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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