Market Update – November 19 – Technicals dominate for now

USDIndex at 95.80
Prime Minister Kishida confirmed the new stimulus package has a size of 79 tln yen.
China is looking into way to cut taxes and government fees by up to 500 bln yuan.
Yields:  Treasuries continue to correct from some of the heavy selling pressures this month as angst over rising inflation and fear of aggressive Fed tightening next year abate slightly. Technicals have capped the upside in rate for now too. Treasury yields were generally in the green most of the session, with the benchmark 2-year just south of 0.50%, with the 10-year holding in the 1.58% vicinity, while the bond traded narrowly around 1.97%
Equities: All of the major indexes hit new historic highs Thursday, but only the USA100 and USA500 closed at fresh peaks with the former advancing 0.45% to 15,993 and the latter rising 0.34% to 4706, while the USA30 slipped -0.17% to 35,870. Nikkei and Topix rose 0.4% and 0.5%. GER30 and UK100 futures are up 0.5%
#Alibaba Group Holding LTD weighed as the company slashed its outlook for fiscal revenue next year amid increased competition and China’s regulatory crackdown.
Strong retail profits from #Macy’s and #Kohl’s helped sentiment, as the companies indicated strong consumer demand. On the tech side, #NVIDIA led the sector, rising 7% after upgrading guidance. The consumer discretionary and tech sectors led gainers, while utilities lagged.
German PPI inflation jumped to 18.4% y/y
UK retail sales stronger than expected.
USOil rose slightly to $78.44.
Gold holds at $1,855 lows.
FX markets – Yen sell off continues and USDJPY lifted to 114.40 again. AUD and NZD supported.  EURUSD holds at 1.1330 area, GBPUSD steady below 1.3500.

UK retail sales stronger than expected with the figure including fuel up 0.8% m/m in October, while sales excluding fuel jumped 1.6% m/m. At the same time September data was revised higher to show steady sales including fuel and a drop of -0.4% m/m in the ex-fuel number. GfK consumer confidence also improved unexpectedly suggesting that the sharp rise in fuel and energy prices, as well as shortages in some areas haven’t dented sentiment. Still, the retail sales numbers may also be inflated by people hitting the shops early for their Christmas purchases amid warnings of low supply. That means the usual pattern of seasonal spending may be different to previous years, which could overstate the numbers. Covid-19 case numbers are also still very high and PM Johnson hasn’t ruled out a lockdown over Christmas.

Focus today: The data calendar includes the Canadian Retail Sales and ECB lagarde and German Buda Pres. Weidmann speech.

Biggest FX Mover @ (07:30 GMT) EURAUD (-0.32%) dips to 1.5559 below all hourly SMAs. Faster  still aligned lower, MACD lines zeroed, while RSI and Stochastic are at OS area and falling. H1 ATR 0.00147, Daily ATR 0.01063.

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Andria Pichidi

Market Analyst

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