23/11/2020
General Comment
Financial markets keep on moving on the thin line between the 2nd wave of COVID-19 pandemic, which is extremely strong all over the planet and the vaccine hopes after the announcements of the pharmaceutical companies for a really impressive effectiveness. The volatility, in most of the assets that we monitor was very low since the investment community remains into this strange balance fear – hope, also waiting for the effect of the pandemic to the global economies.
USD had some losses but from the rest of the major currencies, the only one that took serious advantage of it was GBP, mostly due to expectations for a Brexit deal. The stock markets had consolidative–to–bearish movements, so did the gold price but oil price had remarkable profits.
The current week will also be affected by the του COVID-19 updates since the investors now, await the next step which is the licencing of the companies for starting producing the vaccines. The next big thing after COVID-19 in the global economies is the new Quantitative Easing (especially in USA) and the intentions of the new president Joe Biden for fiscal expansion and for the weakening USD.
On Monday there are the announcements of the PMIs in most of the major economies while on Wednesday it will be released the USA GDP as well as the Minutes from the Federal Open Market Committee (FOMC). Next Thursday is a public holiday in USA (Thanksgiving Day) and we may face low volatility.
EURUSD (Euro vs US Dollar)
Slightly bullish was the last week for EURUSD which opened at 1.1841 and closed at 1.1856 with very low weekly volatility. The pair moved throughout the whole week into the tight range between 1.1814 and 1.1894. The long-term trend is obviously bullish but it also obvious that the pair is not able for the moment to breakout the price of 1.19. Europe is plagued from COVID-19 while USA have also very big issues since only on Sunday 22/11, USA announced more than 136,000 new cases and 871 new deaths. In case of a bullish breakout above 1.19 then the road to 1.20 will be easier. It takes some attention on Wednesday due to FOMC in USA and on Thursday because as a public holiday (Thanksgiving Day) it may cause low volatility. We’ll keep on opening buy positions, especially above 1.19.
GBPUSD (Great Britain Pound – US Dollar)
Bullish week for GBPUSD with a weekly open at 1.3178 and a weekly close at 1.3287 since USD had some losses and because there were statements from EU officers that there is a progress regarding Brexit. In case of a Brexit deal announcement or even in case of a significant progress, the pair could reach the price area of 1.35, as USD keeps on being weak (at least for the moment). The only fundamental new that may affect the pair, beyond COVID-19 and Brexit, could be the PMI announcement on Monday. Buy positions is our selection for this week too.
USDJPY (US Dollar – Japanese Yen)
Clearly bearish week for USDJPY, with open price at 104.71 and close price at 103.84. The 10-year US treasury yield which has strong correlation with USDJPY, dropped to 0.82%. This Wednesday is an important day for announcements in USA as we’ll learn the GDP change and will be released the Minutes of FED (FOMC) but the rest of the days, the dominating effect will be the risk mood according to the COVID-19 updates. JPY is favoured in case of fears and concerns. The price area of 103.20 is a strong support for the pair but it may reach easily this price as the negative outlook of USD carries on. We’ll try sell positions this week.
EURJPY (Euro – Japanese Yen)
Bearish week for EURJPY which opened at the price area of 124 and closed at 123.13. The fears & concerns that have been caused from the pandemic, strengthen the safe–haven assets such as JPY and without any change on this, the pair could try the support at 121.60. Believing in this case, we’ll open sell positions this week on EURJPY.
EURGBP (Euro – Great Britain Pound)
It was a bearish week for EURGBP which opened at 0.8972 and closed at 0.8920, very close to its weekly low price. As long as the pair is moving below 0.90, the downtrend is favoured, since EUR is not strong enough and GBP could get stronger in case of a Brexit deal. There is a margin for a further drop, without technical obstacles, to 0.8860, so sell positions is our option for the current week.
USDCAD (US Dollar – Canadian Dollar)
Mild drop for USDCAD last week since the pair opened at 1.3136 and closed at 1.3092. USD was weak but the raised oil prices helped CAD too. Canadian dollar could make bigger profits but Canada is stroked by COVID-19 and there was an anxiety in the government with statements for increased number of cases and fears that the health system may not make it. As long as the pair approached the milestone price of 1.30, the probability of new buyers increases too because they’re looking for bullish reaction opportunities. Of course, until 1.30 there’s enough room for profits for the pair’s sellers so we’ll take our chances with sell positions as well.
USDCHF (US Dollar – Swiss Franc)
Without important change moved USDCHF which also had low volatility as it opened at 0.9124 and closed at 0.9110, having weekly range from 0.9088 to 0.9152. CHF could not take advantage enough from the weak USD but the weekly close below 0.91, creates expectations for re-approaching the price area of 0.90, so sell positions is what we’ll open this week.
AUDUSD (Australian Dollar – US Dollar)
Mildly bullish week for AUDUSD, which opened at 0.7266 and closed at 0.7303. USD was weak but AUD could not rise importantly because some commodities prices (especially gold price) moved bearishly. The pair approaches the 2.5 years highs (price area of 0.7410) and it makes perfect sense to face strong resistance but since the uptrend is still there, we’ll try buy positions for one more week.
SP500
With light losses like 0.85% closed the last week the Index SP500, at 3,551 points. The pandemic and its consequences on the economy, gave some points to the sellers even if the vaccine announcements seem very hopeful. Also, the new economic aid package from FED seems frozen for the moment, without new developments which would give fresh & new money in the markets. As we approach to the vaccine licencing announcements, we’ll see light at the end of the tunnel and the stock markets will keep on rising but for the moment we cannot exclude correction to the price area of 3,500 points as the picture remains negative due to increased number of new cases and the hundreds of deaths every day in USA. We’ll try some low-risk short positions this week but in case of reaching the resistance of 3,582 points we’ll try long positions.
DAX30
Consolidative behaviour had the DAX30 into the week that passed by, by closing at 13.128 points. The volatility of the Index was very low, about 60% compared to the average volatility of the last weeks. The markets may see the end of the pandemic through the new vaccines and the Index could move higher but the current situation may cause corrections and the critical price area of 13,000 points is a milestone for a further drop. Short positions, is what we’ll try this week.
FTSE100
With light profits like 0.35% and close price at 6,344 point, ended the week the British Index FTSE100. There is a hold mode in the Brexit issue, which could lead the Index even higher, to the resistance of 6,500 points) but the lockdown and its results on the British economy could correct the Index, so short positions, is our selection this week.
Gold
Bearish was the gold last week, closing near $1,869 and having losses like 1%. Some sunlight beams due to COVID-19 vaccines create a risk-on mood to the investors so gold, as a safe-haven asset, is not very favoured. The price area of $1,850 is critical for gold because a sold bearish breakout, may open the road for further losses. A possible recover above $1,900 though, is possible to drive many buyers in entering and we may see even higher prices. We’ll try range strategy between $1,850 and $1,900 but we also may try long/short positions, below/above these levels.
US Oil
Big rise for oil price during the last week since the next since the next month’s futures price closed at $42.42, performing profits that touched 6%. The demand is still very low as many economies are still in lockdown but the optimism, derived from the vaccines announcements creates expectation for better days in the global economies. All eyes of course are on OPEC, who is able to control the production by applying production cuts in case of serious price drops. If there is a solid breakout above $43.50, great expectations for recovery may occur, even for $50 but in case of dropping below $40, the concerns and fears may dominate. Of course, there is also the very obvious scenario of a sideways price movement in the range between $40 and $43.50 so a range strategy is what we will apply this week.
Bitcoin
The biggest percentage rise on a weekly basis of the last months, performed by Bitcoin during the last week as it closed at $18,435 with profits that surpassed 15%! The reasons that boost Bitcoin higher (uncertainty and inflation in the traditional currencies through QEs) keep on existing. Also, there is an increasing number of analysts voices that see Bitcoin much higher even if some of them go over the top by predicting supernatural prices. The price area of $20,000 where the all-time highs exist, is now very close but we should not forget that the latest profits are really huge and some investors will take it by liquidating Bitcoins. This fact may cause significant corrections, given the extremely high volatility of Bitcoin. We’d better stay out this week in order to find out how things are going to happen.
