Sat, Nov 28, 2020 @ 08:23 GMT
Home Action Insight Market Overview Dollar Shrugs Strong Durables, Softer in Tight Range

Dollar Shrugs Strong Durables, Softer in Tight Range

Dollar weakens again today but stay in very tight range as indecisive trading continues. The stronger than expected durable goods orders were are ignored by the markets. White House’s comment that stimulus deal will be there in “coming weeks” is also shrugged off. Swiss Franc is following Dollar is the weaker one. On the other hand, New Zealand and Canadian Dollars are the stronger ones, followed by Yen. Overall, the major pairs and crosses are still stuck in familiar range.

Technically, NZD/USD is attempting to accelerate upwards but the move isn’t too convincing yet. Sustained break of the near term rising channel will rise the chance for retest 0.6797, or even resume larger rally. But a reversal from current level, followed by break of 0.6659 minor support will keep the channel intact. That will also retain the view that price actions from 0.6511 area merely a corrective recovery. More importantly, in this case, correction from 0.6797 is not finished and would resume through 0.6511 at a later stage.

In Europe, currently, FTSE is down -0.06%. DAX is own -0.16%. CAC is down -0.73%. Germany 10-yaer yield is down -0.0131 at -0.589. Earlier in Asia, Nikkei dropped -0.04%. Hong Kong HSI dropped -0.53%. China Shanghai SSE rose 0.10%. Singapore Strait Times dropped -0.41%. Japan 10-year JGB yield dropped -0.0062 to 0.030.

US durable goods orders rose 1.9%, five increase in a row

US durable goods orders rose 1.9% mom to USD 237.1B in September, well above expectation of 1.1% mom. That’s also the five consecutive month of growth. Excluding transportation, new orders rose 0.8% mom, also beat expectation of 0.4% mom. Excluding defense, new orders rose 3.4% mom. Transportation equipment rose four of the five months, led the increase, by 4.1% mom to USD 76.8B.

UK CBI retail sales dropped to -23, a warning sign of further loss of momentum

UK CBI retail sales balance dropped to -23 in October, down sharply from +11. Sales are expected to drop at a similar pace next month at -26.

Ben Jones, CBI Principal Economist said: “The fall in retail sales in October is a warning sign of a further loss of momentum in the economy as coronavirus cases pick up and restrictions are tightened across many parts of the country.

Scholz: Additional coronavirus measures to taken as uniformly as possible across Germany

German Economy Minister Peter Altmaier said the country is dealing with “exponential growth” of coronavirus infections while “the number of new infections is rising by 70-75% compared to the week before.” He expected number of daily new cases to jump to 20k a day at the end of this week.

Separately, Finance Minister Olaf Scholz also said the development was “very worrying”. Additional measures to curb the spread “should be targeted, temporary and focussed.” “They should be taken as uniformly as possible across Germany and be generally understandable.”

“So far, our country has fared quite well during the coronavirus pandemic and it will be decided in the coming weeks whether it will stay that way. It’s in our hands,” he added.

RBA Debelle: Economy probably recorded positive growth in Q3, rather than negative

RBA Deputy Governor Guy Debelle told Senate that the first recession in 30 years could have already ended in Q3. “At the moment our best guess is it looks like the economy probably recorded positive growth rather than negative,” he said. “The strength elsewhere in the country was more than the drag from Victoria, and possibly the drag from Victoria was a little less than what we had guessed.”

Separately, Assistant Governor Michele Bullock said the Australian financial system “remains profitable, notwithstanding substantial loan loss provisions”. Their “strong capital position allows them to continue to lend to support the Australian economy.” But she also warned warned that “the economic recovery is expected to be unpredictable and uneven so there will be rising business insolvencies and problems for some households in servicing their debts.”

New Zealand trade deficit widened to NZD -1B in Sep

New Zealand goods exports dropped NZD -350m, or -8.0% yoy to NZD 4.0B in September. Goods imports also dropped NZD -643m, or -11.0% yoy, to NZD 5.0B. Trade deficit came in at NZD -1017m, narrowed from August’s NZD -282m, largely inline with expectations. Imports from all top trading partners decline, including China, EU, Australia, US and Japan. Exports to all top trading partners also declined, except to US.

For the quarter, exports rose 0.7% qoq to NZD 14.8B in Q3. Imports rose 3.3% qoq to NZD 13.6B. Trade balance for Q3 was a surplus of NZD 1.2B.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1789; (P) 1.1824; (R1) 1.1846; More…..

Range trading continues in EUR/USD below 1.1880 temporary top and intraday bias stays neutral. With 1.1688 support intact, further rise remains in favor. On the upside, break of 1.1880 will target a test on 1.2011 high. On the downside, though, break of 1.1688 will likely extend the corrective pattern from 1.2011 with another leg. Intraday bias will be turned back the downside for 1.1612 and below.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1422 resistance turned support holds.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
21:45 NZD Trade Balance (NZD) Sep -1017M -1015M -353M -282M
09:00 EUR Eurozone M3 Money Supply Y/Y Sep 10.40% 9.60% 9.50%
11:00 GBP CBI Realized Sales Oct -23 -2 11
12:30 USD Durable Goods Orders Sep 1.90% 1.10% 0.50%
12:30 USD Durable Goods Orders ex Transport Sep 0.80% 0.40% 0.60%
13:00 USD S&P/CS Composite-20 Y/Y Aug 3.80% 3.90%
13:00 USD Housing Price Index M/M Aug 0.60% 1.00%
14:00 USD Consumer Confidence Oct 101.9 101.8

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