Global Overview
FAA Lifts Grounding Order on Boeing 737 Max
The Boeing 737max was placed on regulatory halt for 20 months after two crashes, with the Federal Aviation Administration requiring it to fix systems that went out of control in both crashes and to train new pilots for the aircraft. Until yesterday, the FAA announced that the Boeing 737 Max was once again safely back in service, marking the end of the longest sustained grounding of an airliner in U.S. history and laying the groundwork for airlines and other regulators around the world to resume flights of the aircraft.
Pfizer’s New Crown Vaccine Achieves 95% Efficiency in Final Analysis
American pharmaceutical company Pfizer and German biotechnology company announced that their jointly developed neocrown vaccine is 95% effective and causes no serious side effects. The vaccine was highly effective against infection 28 days after vaccination, and its effectiveness was the same across age and ethnicity. At this time, clinical trials show that the vaccine also appears to prevent the development of severe neo-crown pneumonia. Pfizer plans to apply for an emergency use authorization in late November, meaning that the vaccine could be available in the U.S. by the end of the year.
Gathering Times Hit by Muddy Waters Shorting
Well-known short-seller Muddy Waters is shorting the air-cap stock Huanjiao Times. Huanjui Times shares dived on the news, dropping nearly 30% in the session, as Hunshui’s investigation found that 90% of YY Live is fraudulent, that high-income live performers earn only a small fraction of the total reported revenue, that fan agencies are internal bots, and that more than 50% of gifts are controlled internally by Huanjui, and that the degree of fraud in Huanjui’s international live-streaming business Bigo is similar to that of YY Live. It’s the same with Baidu’s previous announcement that it would be acquiring YY Live, which may turn up these issues in a subsequent in-depth investigation.
[Market Review]
U.S. Dollar Index Drops for Fifth Straight Session. The U.S. Dollar Index fell for the fifth straight session, dropping to a one-week low. By this morning, the U.S. index had recovered slightly. Pfizer said the Neocrown vaccine showed 95% efficacy in the final efficacy analysis of the Phase 3 trial. Reports of the vaccine breakthrough were positive for global growth prospects and weighed on the U.S. dollar. However, expectations that U.S. fiscal stimulus may not be forthcoming in the near future may disrupt financial markets in the near term.
Gold continues to trade weakly. Gold was also affected by the vaccine news and was down nearly $7 in the short term. In addition, preliminary statistics show that gold ETF holdings fell by more than 1 million ounces in November, the first monthly decline this year, which also pressured gold prices. In addition, the United Kingdom and the European Union on the issue of Brexit negotiations, expected to make significant progress around the EU summit this week, which to some extent boosted the market risk sentiment, so that the previous anxiety due to the spread of the epidemic to regain calm, safe-haven gold suffered a sell-off wave.
Silver was flat. Silver’s trend is roughly similar to gold. Silver has been relatively flat over the past two days, trading mainly in a narrow range of $24-24.7 during the day and currently trading around $24.3 per ounce.
The euro is up then down. In non-US currencies. The neo-crown vaccine showed 95% efficacy, somewhat boosting risk-taking sentiment. In addition, the continued political stalemate in the U.S. led to continued capital outflows from the U.S. dollar, which also provided support for the euro. However, the global surge in infections in many countries again, and the increased intensity of epidemic blockade in many countries limited the upside of the euro against the U.S. dollar. On the economic stimulus front, Poland and Hungary vetoed the EU’s €1.8 trillion economic recovery plan. We can keep an eye on the development of this event.
FXSTREET VIEW: Risks in Europe and the US are skewed to the downside. In the 4-hour chart, EURUSD is above the 100-day and 200-day moving averages, but has broken below the 20-day moving average, according to FXSTREET. In the current situation, the risk is to the downside of the pair, and we could look at 1.1800 and 1.1760. If there is a rebound, we could look at 1.1885, 1.1920 and 1.1965. The GBP is up first, then down.
The British pound has been rising before depressing. Influenced by the weakness of the US dollar and the optimistic news of Brexit negotiations, the pound climbed sharply against the US dollar, breaking the 1.33 level. However, the U.S. dollar strengthened again and the pound gave back its previous gains.
UAE Considers OPEC+ Exit. Finally, let’s look at the oil market. US oil was up 2.5% at one point as more progress was made on the new crown vaccine, but gave back most of the gains after New York City announced school closures. In addition, EIA data showed that US crude oil supplies increased for the second week in a row, also limiting the gains in oil prices. According to sources, the UAE is unhappy with its own quota cuts and is even considering withdrawing from OPEC+. The intensification of relations between the UAE and OPEC+ has increased the uncertainty of oil production cuts.
In the Debt Market
Overnight, the yield on China’s 10-year Treasury note rose 1.01%, while the yield on the U.S. 10-year Treasury note rose 0.93% and the yield on the U.S. 3-month Treasury note fell 5.81%.
In the stock market
U.S. stocks closed down, with the S&P 500 down 1.16%, the Nasdaq down 0.83%, and the Dow Jones down 1.16%; by this morning, China’s stock market opened in the green, with the Shanghai Composite Index down 0.25%, the ChiNext Index down 0.22%, and Hong Kong’s Hang Seng Index down 0.32%.
[Risk Alert]
EUR If EUR breaks above 1.920 or up to 1.2011
Credit Suisse Bank pointed out that the dollar was hit by the U.S. political risks, the trend of continued weakness in the broader context, the euro continues to strengthen the trend. In the future, if the EU summit finalized further bailout funding arrangements, the EURUSD may break below 1.1920 and look to 1.2011. As long as the key support of 1.1834 is held, the upward trend will be maintained, the next support at 1.1808, only after the fall below 1.1746, the trend will reverse.
Yen Risk appetite improves but US-Japan may continue to fall
Some analysts have pointed out that the USD/JPY downtrend has resumed, and may follow it all the way down, retesting the early March lows at 101.85. Because of the dollar’s weakness, even if risk appetite improves, the USD/JPY downtrend may continue. Because of the dollar’s weakness, even if risk appetite improves, the USD/JPY downtrend is likely to continue. The pair recently tried to break through the 104.00 level, and once it breaks through, follow up with 103.18 and 103.
The New Zealand dollar may have a short-term correction, consider going long on a low basis.
Westpac says the New Zealand dollar could retrace to 0.68, but for several weeks, the bank has continued to see the New Zealand dollar rising above 0.70, and sees this retracement as a buying opportunity. Westpac expects the New Zealand economy to maintain its positive recovery momentum as vaccine research progresses, and investors’ risk appetite will continue to rise.
[Key Outlook]
16:00 Lagarde expected to reiterate that the ECB will adjust measures
First, let’s take a look at what ECB President Lagarde will say this afternoon. At a press conference at the end of last month, she said that the economic recovery is losing momentum faster than expected, and that she will assess the development of the epidemic and the effectiveness of fiscal policy, expanding emergency bond purchases earlier if necessary. The ECB will consider all instruments at its December meeting and will have to be flexible. At the beginning of the week, she again said that the ECB is ready to readjust its measures.
Based on this, we believe that Lagarde is likely to emphasize the economic impact of the contagion and reiterate that the ECB will take further action.
Overall, Lagarde’s remarks may raise market expectations for the ECB to expand its bond purchases next month, so keep an eye out.
21:30 U.S. initial claims are unlikely to drop significantly.
Next, let’s take a look at the initial jobless claims numbers that will be released in the United States. In the last five weeks, the number of initial claims released by the United States has continued to decline, with 709,000 claims recorded last week. Some agencies have commented that the decline in jobless claims was the largest in five weeks, indicating a gradual improvement in the labor market despite a surge in new crown infections.
At present, the market is expected, the United States to November 14 the week of initial jobless claims was 707,000, if the announced value is much higher than expected, the dollar index may be under pressure; on the other hand, if the announced value is less than expected, the dollar index may be stronger.
Be warned, the current surge in the number of new crowns diagnosed in the U.S., if this data increases significantly, the dollar index may be under significant pressure.
Also of note today are the following data.
15:00 Swiss October trade account: previous value of 3.279 billion Swiss francs.
17:00Eurozone Sep Quarterly Current Account: previous value 19.9bn EUR.
19:00UK Nov CBI industrial orders spread: previous value -34, forecast -39.
21:30 US Philly Fed Manufacturing Index for Nov: previous value 32.3, forecast 22.
21:30 Cleveland Fed President Mester speaks.
23:00Total U.S. home sales in October: 6.54 million, forecast 6.45 million.
23:00 US October Conference Board Leading Indicators: previous value 0.7%, forecast 0.7%.
23:30 US EIA Natural Gas Inventories for the week ending November 13: Previous 8 Bcf, Forecast 22 Bcf.
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