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UK Prime Minister Theresa May hailed the draft declaration of future relationship with the EU as she spoke to reporters in Downing Street. She added, "The British people want this to be settled, they want a good deal that sets us on course for a brighter future ... That deal is within our grasp and I am determined to deliver it."

She said "The agreement we've reached is between the UK and the European Commission. It is now up to the 27 leaders of the other EU member states to examine this agreement in the days leading up to the special EU council meeting on Sunday."

Regarding Gibraltar, May is confidence after speaking to Spanish Prime Minister Pedro Sanchez. She added "I am confident that on Sunday we'll be able to agree a deal that delivers for the whole UK family, including Gibraltar."

Cable jumped around 130 pips on Thursday on news that EU and UK Brexit negotiators reached an agreement on draft text of post-Brexit ties between the European Union and United Kingdom.

Eventual deal after Brexit talks repeatedly stalled, provides temporary relief, however, today’s rally that initially broke above pivotal barriers provided by 10SMA (1.2866); Fibo 38.2% of 1.3174/1.2722 (1.2895) and 20SMA (1.2903) needs confirmation on daily close above, which would signal further recovery.

Stronger bullish acceleration on close above 20SMA could be also attracted by twist of daily cloud (1.30) next week.

Momentum studies are turning up on daily chart and support recovery, as the sentiment improves on positive news.

Bearish scenario, on the other side, sees downside risk remaining if recovery rally stalls and today’s action closes below 10SMA.

Res: 1.2866; 1.2895; 1.2903; 1.2948
Sup: 1.2823; 1.2764; 1.2722; 1.2695

The DAX index has lost ground in the Thursday session. Currently, the DAX is trading at 11,171, down 0.38% on the day. On the release front, The ECB will release the minutes of its policy meeting in October and Eurozone consumer confidence is expected to come in at -3 points for a third straight month. On Friday, Germany releases Final GDP for the third quarter, with the markets braced for a decline of 0.2 percent. As well, the eurozone and Germany will release services and manufacturing PMI reports.

The DAX continues to show volatility this week. After sharp losses early in the week, the index posted gains on Wednesday, but has again headed lower in Thursday trade. The slide was caused by a sharp fall in technological stocks, which sent U.S markets nosediving and spread to the Asian and European markets. The DAX has had a dismal fourth quarter, losing 6.67% in October and 2.1% in November. This is reflective of sharp losses in global equity markets, as nervous investors fret over the economic ramifications from the escalating trade war between the U.S. and China. The trade war has already caused a slowdown in the Chinese economy, and analysts are expecting the U.S economy to slow, with talk of a recession being bandied about. With no signs that the U.S or China will back down, traders can expect more headwinds for global stock markets, many of which have given up their year-to-date gains.

Who will blink first over the contentious Italian draft budget? On Wednesday, the European Commission rejected Italy’s draft 2019 budget, saying it was in breach of EU deficit and debt rules. Italy’s debt stands at a staggering 132% of GDP, and the EU is concerned that the high-spending budget could cause another debt crisis in the eurozone. The EU could impose severe financial sanctions on Italy, with fines of up to 0.2% of the country’s GDP. Senior Italian officials have vowed not to bend on the budget, but the EU will risk its credibility if it does not take follow up its scolding of the Italian government with some firm action. At the same time, the European Commission has yet to sanction a member for flouting fiscal rules and will be hesitant to do so at a time of economic uncertainty in the eurozone.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13648
Open: 1.13870
% chg. over the last day: +0.16
Day's range: 1.13948 – 1.14020
52 wk range: 1.1299 – 1.2557

The EUR/USD currency pair is in a sideways trend. The technical pattern is ambiguous. Investors expect additional drivers. At the moment, the key support and resistance levels are 1.13800 and 1.14150, respectively. Positions should be opened from these marks. Today, trading volume and liquidity will be reduced due to Thanksgiving Day. We recommend reducing the risks when opening positions.

Investors expect the minutes of the ECB monetary policy meeting at 14:30 (GMT+2:00).

Indicators do not send accurate signals: the price has crossed 50 MA.

The MACD histogram is near the 0 mark.

Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.13800, 1.13400, 1.13000
Resistance levels: 1.14150, 1.14500, 1.14800

If the price fixes above the resistance level of 1.14150, it is necessary to consider purchases of EUR/USD. The movement is tending to 1.14500-1.14800.

An alternative may be a drop in the EUR/USD quotes to the level of 1.13400-1.13000.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.27834
Open: 1.27710
% chg. over the last day: -0.09
Day's range: 1.27791 – 1.27908
52 wk range: 1.2662 – 1.4378

The technical pattern on the GBP/USD currency pair is ambiguous. At the moment, the trading instrument is consolidating. Investors expect additional drivers. The key range is 1.27600-1.28100. Positions should be opened from these marks.

Today the publication of important economic reports from the UK is not planned.

The price has fixed below 50 MA and 200 MA, which indicates the power of sellers.

The MACD histogram is located near the 0 mark. There are no accurate signals at the moment.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations

Support levels: 1.27600, 1.27200
Resistance levels: 1.28100, 1.28600, 1.29000

If the price fixes below the support level of 1.27600, the GBP/USD quotes are expected to fall. The movement is tending to 1.27200-1.27000.

An alternative may be the GBP/USD currency pair growth to 1.28400-1.28600.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32920
Open: 1.32314
% chg. over the last day: -0.59
Day's range: 1.32314 – 1.32452
52 wk range: 1.2248 – 1.3387

Yesterday, a technical correction was observed on the USD/CAD currency pair after a significant increase on Tuesday, November 20. Quotes fell by more than 80 points. At the moment, the loonie is consolidating in the range of 1.32250-1.32500. Positions should be opened from these marks. The trading instrument is tending to recover.

The news feed on the economy of Canada is calm.

The price has fixed between 50 MA and 200 MA, which are dynamic support and resistance levels.

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell USD/CAD.

Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates the bullish sentiment.

Trading recommendations

Support levels: 1.32250, 1.32000, 1.31750
Resistance levels: 1.32500, 1.32800, 1.33000

If the price fixes above the resistance level of 1.32500, it is necessary to consider purchases of USD/CAD. The movement is tending to 1.32800-1.33000.

An alternative may be a further correction of the USD/CAD currency pair to 1.32000-1.31750.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 112.744
Open: 113.056
% chg. over the last day: +0.23
Day's range: 112.885 – 112.928
52 wk range: 104.56 – 114.74

The technical pattern on the USD/JPY currency pair is ambiguous. At the moment, quotes are consolidating. The key support and resistance levels are 112.800 and 113.100, respectively. We recommend paying attention to the dynamics of the US government bonds. Positions should be opened from the key levels. The trading instrument is tending to decline.

Publication of important economic reports from Japan is not planned.

Indicators do not send accurate signals: the price has fixed between 50 MA and 200 MA.

The MACD histogram is located in the positive zone, but below the signal line, which gives a weak signal to buy USD/JPY.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations

Support levels: 112.800, 112.500, 112.300
Resistance levels: 113.100, 113.400, 113.650

If the price fixes below the support level of 112.800, the USD/JPY quotes are expected to fall. The movement is tending to 112.500-112.300.

An alternative may be the USD/JPY currency pair growth to 113.400-113.600.

EURGBP is recording strong losses today after the pair found strong resistance obstacle near the 0.8930 barrier. Negative risks remain in the background as the RSI increases momentum to the downside in the positive region, while the %K line of the stochastic oscillator posted a bearish cross with the %D line above the 80 level.

A decline in the price may retest the 20- and 40-simple moving averages (SMAs), which hold near the 0.8800 handle. Further down, the next stop could be at the 0.8770 support, taken from the inside swing on November 12, where any violation would resume the downleg from 0.9100 towards the 0.8655 support.

Should the market stretch north, immediate resistance is expected to come from the 0.8930 hurdle. A break higher would shift focus to 0.8995, registered on September 21, which tried to halt upside movements several times in the past. Above that, investors would be interested to see whether bullish dynamics can overcome the previous peak and meet the one-year high of 0.9100.

Overall, both the short- and medium-term outlooks are looking predominantly neutral at the moment.

The US dollar has continued to reverse lower from key resistance against the Japanese yen during the European trading session. The MACD indicator on the one-hour time frame is also trending lower placing additional selling pressure on the USDJPY pair. A clear break below the 112.79 support level exposes further intraday losses towards the current weekly low.

The USDJPY pair is only bearish while trading below the 112.79 level, key technical support is found at the 112.39 and 111.92 levels.

If the USDJPY pair trades above the 113.15 level, buyers will likely test the 113.40 and 113.88 resistance levels.

The British pound is currently consolidating around the weakest trading levels of the week against the US dollar so far, as British PM Theresa May attempts to save her Brexit plan in Brussels. The GBPUSD pair is also suffering from low volatility, as US markets are away observing Thanksgiving holiday. A clear break below the 1.2732 support level will likely prompt a test of the November trading low, at 1.2695.

The GBPUSD pair is intraday bearish while trading below the 1.2750 level, key technical support remains at the 1.2732 and 1.2695 levels.

If the GBPUSD pair trades above the 1.2790 level, key intraday resistance is now found at the 1.2839 and 1.2882 levels.

EUR/USD

Current level - 1.1403

Yesterday's test of 1.1420 failed, but due to the significance of 1.1360 support I favor a break on the upside, towards the upper boundary at 1.1470.

USD/JPY

Current level - 112.90

I favor a slide through 112.60, towards 112.30 low. A violation of the latter will allow a dip to 111.40 area.

GBP/USD

Current level - 1.2781

The outlook remains rather positive, for a break though 1.2880, towards 1.3040 area.

Dow stands holds in red on Thursday and hit new marginally lower three-week low at 24323, signaling that this week’s steep fall which paused on Wednesday, is going to continue.

Brief consolidation on Wednesday, ended in strong upside rejection, marked by daily candle with small body and long upper shadow.

Daily techs maintain strong bearish momentum, with formation of 10/200SMA death cross, adding to negative outlook.

Fundamentals are also weak as concerns about US/China trade conflict and rising fears about global growth slowdown, keep stock markets in red.

The action on Thursday is expected to be limited as Wall Street will be closed for Thanksgiving day, but overall negative outlook sees risk of final push towards key short-term support at 24085 (29 Oct spike low), violation of which would open way towards next key point at 23895 (weekly cloud base).

Friday’s close below 24530 (broken weekly cloud top) is needed to confirm strong bearish stance, as Dow is on track for the second strong bearish weekly close.

Res: 24530, 24658, 24782, 24890
Sup: 24323, 24085, 23978, 23895

Asia:

• Japan Oct National CPI Y/Y: 1.4% v 1.4%e; CPI Ex-Fresh Food (core) Y/Y: 1.0% v 1.0%e; CPI Ex-Fresh Food/Energy (core-core) Y/Y: 0.4% v 0.4%e
• Singapore Q3 Final GDP Q/Q: 3.0% v 4.0%e; Y/Y: 2.2% v 2.4%e

Europe:

• PM May stated that she made progress in talks with EU's Juncker and given direction to Brexit negotiators who could now resolve the remaining Brexit issues; To return to Brussels on Saturday, Nov 24th ahead of the EU Leader Summit
• Northern Ireland's DUP Leader Foster: confidence and supply agreement with Tories is still very much in existence
• Ireland PM Varadkar proposes motion asking his parliament to support draft Brexit withdrawal agreement (ahead of Sunday summit)
• Spain PM Sanchez reiterated view that if no solution reached on Gibraltar, would say no to Brexit deal on Sunday. Spain's Gibraltar demands are not reflected in the current wording of the Brexit agreement. There's been a positive, constructive tone on Gibraltar
• Approx 84 Tory MPs said to have publicly indicated that they would not vote for PM May's Brexit deal
• German Finance Ministry Monthly Report saws domestic economy continuing to grow but at a slower pace

Americas:

• USTR report on China IP and tech transfers stated that China had not modified its unfair practices

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.70% at 352.76, FTSE -1.04% at 6,976.85, DAX -0.64% at 11,172.71, CAC-40 -0.60% at 4,945.84, IBEX-35 -0.55% at 8,910.95, FTSE MIB -0.51% at 18,636.50, SMI -0.69% at 8,781.20, S&P 500 Futures -0.23%]

Market Focal Points/Key Themes:

Equities

• European Indices trade lower across the board following a mixed Asian session and negative US futures. New York Stock exchange is closed because of nationwide Thanksgiving Day. Focus is on Italy and U.K. with the FTSE MIB and FTSE 100 underperforming due to continued negotiations of country leaders on Italian budget plan and PM May Brexit deal proposition, respectively. On the corporate front Imperial Brands and British American Tobacco trades lower following press speculation that UK Top court said to rule that ban on oral tobacco is legal and in-line with EU rules; Standard Chartered trade slightly higher on FT report that bank plans buyback program. Telecom Italia trades slightly lower after news that Italy govt reportedly mulls transferring state assets to new fixed-line network company and transferring to new entity 30,000 company's stuff. On the earnings front, Remy Cointreau trades higher after earnings, while Centrica trades notably lower in the U.K. after providing trading update; Rotork and Altice also falls after their earnings and followed comments of executives. Delivery Hero in Germany trades higher after analyst upgrade. On M&A front, Kotipizza Group trades 39% higher in Finland after takeover proposition made by Orkla. Looking ahead notable earners include Lundbergforetagen B and Eurobank Ergasias SA after European markets close.
• Consumer discretionary: Remy Cointreau [RCO.FR] +1.5% (earnings; affirms outlook), Equiniti [EQN.UK] +3.5% (trading update), Kotipizza Group [PIZZA.FI] +39%, Orkla ASA [ORK.NO] n/c (Orkla ASA proposed to acquire Kotipizza), Delivery Hero AG [DHER.DE] +3% (analyst action), Majestic Wine [WINE.UK] -13% (earnings; following analyst action), Mothercare [MTC.UK] -5% (earnings)
• Consumer staples: Imperial Brands [IMB.UK] -4%, British American Tobacco [BATS.UK] -2% (UK Top court said to rule that ban on oral tobacco is legal and in-line with EU rules)
• Energy: Centrica PLC [CNA.UK] -9% (trading update)
• Financials: Standard Chartered [STAN.UK] +0.5% (share buyback program speculation), Intu Properties [INTU.UK] -0.5% (Granted extension till Nov 30 for consortium to either announce a firm intention to make offer for intu or announce that it does not intend to make an offer)
• Industrials: Rotork [ROR.UK] -7.5% (trading update)
• Technology: Keller Group [KLR.UK] -2% (trading update)
• Telecom: Altice [ATC.NL] -14% (earnings), Telecom Italia [TIT.IT] -1% (Italy govt reportedly mulls transferring state assets to new fixed-line network company valued at €15B)

Speakers

• EU-UK declaration on future relationship draft said to foresee equivalence for UK banks and commit to deep customs cooperation and build on single customs territory. It also stated a determination to replace backstop in the future. EU to recognize UK independent trade policy
• Italy President Mattarella said to want PM Conte to reach deal with EU's Juncker over budget
• Italy PM Conte to address Parliament on budget and said to present an urgent report on dispute with EU
• Italy PM Conte: Govt acting responsibly on budget; confident that bond spread will narrow
• Italy Dep PM Di Maio said to see possible budget modifications during the Parliament process but opposed cuts in resources for reforms
• Italy Dep PM Di Maio and Italy Dep PM Salvini reportedly did not want to negotiate with EU over next year budget
• Italy Dep PM Salvini: Concerned about bond spreads but they couldnot be controlled by government
• EU's Moscovici: Commission was prudent on Italy, need mutual respect in talks on budget. Further steps on Excessive Deficit Procedure were not yet set (included the pace and trajectory of debt and deficit reduction)
• Austria Fin Min Loeger: Italy could pose stability risks for all
• Swiss govt said to plan to restrict the use of bearer shares
• Sweden Central Bank (Riksbank) Dep Gov Skingsley: To weight incoming data ahead of the Dec policy meeting in regards to 1st potential rate hike. Had not seen anything worrying in regards to inflation and would need to see if there was value in waiting in December
• Norway Central Bank (Norges) Q4 Expectation Survey saw Households cut 12-month inflation from 2.4% to 1.9%
• Sweden Center party leader Loof stated that the will to compromise was not strong enough; gridlock remains
• Turkey Fin Min Albayrak: Lead indicators point toward a slowdown and balancing economy in H2 2018. Tight fiscal policy to provide key support for fight against inflation
• South Africa President Ramaphosa said to announce changes to Cabinet
• BOJ Gov Kuroda testified in parliament that needed to persistently continue with current policy and would need to reduce balance sheet once prices rose. Should not take additional easing measures as economy and prices are improving
• Japan Cabinet Office Nov Monthly Economic Report: Maintained its overall economic assessment, economy was recovering at moderate pace
• China PBoC stated that ot would support funding to private companies via bill financing. To support debt issuance by private companies using credit risk mitigation tools

Currencies/Fixed Income

• FX markets were subdued with no major expected data released and US markets closed for its Thanksgiving holiday.
• The USD still exhibiting a soft tone as a string of recent soft US data has raised speculation the Fed might take a pause in hiking rates as early as next spring
• EUR/USD hovering around the 1.14 level as the struggle between Italy and the European Union rumbled on after the EU Commission released its final opinion of the 2019 fiscal budgets.
• GBP/USD was initially steady as PM May planned last minute Brexit talks ahead of Sunday's EU Leader Summit. Pair at 1.2790 but then popped 100 pips higher on reports of a EU-UK Draft document on future relationship foreseeing equivalence for UK banks and EU to recognize UK independent trade policy

Economic Data

• (DK) Denmark Nov Consumer Confidence Indicator: 4.3 v 5.1 prior
• (TR) Turkey Nov Consumer Confidence Index: 59.6 v 57.3 prior
• (MY) Malaysia mid-Nov Foreign Reserves: $102.1B v $101.7B prior
• (FR) France Nov Business Confidence: 104 v 104e; Manufacturing Confidence: 105 v 103e; Production Outlook Indicator: 4 v 7 prior; Own-Company Production Outlook: 14 v 10 prior
• (HU) Hungary Sept Average Gross Wages Y/Y: 10.4% v 10.0%e
• (TW) Taiwan Oct Unemployment Rate: 3.7% v 3.7%e
• (CH) Swiss Q3 Industrial Output Y/Y: 1.4% v 6.2%e; Industry & Construction Output Y/Y: 1.1% v 7.9% prior;
• (SE) Sweden Q3 Total Number of Employees Y/Y: 2.8% v 2.6% prior
• (PL) Poland Oct Retail Sales M/M: 7.4% v 5.2%e; Y/Y: 9.7% v 7.6%e; Real Retail Sales Y/Y: 7.8% v 5.8%e
• (IS) Iceland Oct Wage Index M/M: 0.4% v 0.6% prior; Y/Y: 6.2% v 5.9% prior

Fixed Income Issuance

• (ES) Spain Debt Agency (Tesoro) sold total €3.146B vs. €2.5-3.5B indicated range in 2022, 2028 and 2033 Bonds
• Sold €831M in 0.45% Oct 2022 SPGB; Avg yield: 0.310% v 0.270% prior, Bid-to-cover: 4.63x v 2.60x prior
• Sold €1.305B in 1.40% July 2028 SPGB; Avg yield: 1.607% v 1.644% prior, Bid-to-cover: 1.57x v 2.08x prior
• Sold €1.01B in 2.35% July 2033 SPGB; Avg Yield: 2.116% v 1.798% prior; Bid-to-cover: 1.45x v 1.37x prior
• (FR) France Debt Agency (AFT) sold total €7.317B vs. €6.5-7.5B indicated range in 2022, 2023 and 2024 Bonds
• Sold €2.352B in 0.00% May 2022 Oat; Avg yield: -0.29% v -0.04% prior; Bid-to-cover: 2.08x v 1.91x prior
• Sold €2.555B in 0.0% Mar 2023 Oat; Avg Yield: -0.13% v +0.10% prior; bid-to-cover: 2.06x v 2.42x prior
• Sold €2.41B in 0.00% Mar 2024 Oat; Avg Yield: 0.06% v 0.16% prior; Bid-to-cover: 2.37x v 1.81x prior
• (SE) Sweden sold SEK500M vs. SEK500M indicated in 0.125% Jun 2032 I/L bond; Avg Yield: -0.9946% v -0.8752% prior; Bid-to-cover: 3.77x v 2.69x prior
• (IT) BTP Italia (retail bond) institutional order book said to be over €1.0B

Looking Ahead

• (NG) Nigeria Central Bank Interest Rate Decision; Expected to leave Interest Rates unchanged at 14.00%
• (BR) Brazil Nov CNI Industrial Confidence: No est v 53.7 prior
• (PT) Portugal Sept Current Account Balance: No est v €0.5B prior
• (AR) Argentina Nov Consumer Confidence Index: No est v 32.6 prior
• (GR) Bank of Greece expected to announce bad loan plan
• 05:30 (HU) Hungary Debt Agency (AKK) to sell 2021, 2024 and 2038 bonds
• 05:50 (FR) France Debt Agency (AFT) to sell €0.75-1.0B in 2024, 2028 and 2030 Inflation-linked bonds (Oatei)
• 06:00 (IE) Ireland Oct PPI M/M: No est v -2.3% prior; Y/Y: No est v -2.6% prior
• 06:00 (RO) Romania to sell Bonds
• 07:30 (EU) ECB Account of Policy Meeting
• 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 16th: No est v $461.5B prior
• 08:00 (PL) Poland Central Bank Nov Minutes
• 08:00 (ZA) South Africa Central Bank (SARB) Interest Rate Decision: expected to raise Interest Rate by 25bps to 6.75%
• 08:10 (UK) Baltic Dry Bulk Index
• 09:00 (IT) Italy Fin Min Tria in Parliament (Upper House)
• 10:00 (EU) Euro Zone Nov Advance Consumer Confidence: -3.0e v -2.7 prior
• 11:30 (DE) ECB's Weidmann (Germany) with members Knot (Netherlands) and Visco (Italy) in Florence
• 15:55 (UK) BOE's Saunders at CBI dinner
• (IT) Italy Debt Agency (Tesoro) details CTZ/BTPei auctions for Nov 27th