Daily Market Outlook, November 21, 2022

Overnight

Asian markets traded down overnight, reports of a sharp increase in Covid deaths and soaring cases across China, have led to increased probabilities of a return to strict Covid restrictions in the country. More broadly, markets remain concerned about the global background of tighter monetary policy continuing to weigh on global growth. In the US Fed speakers remain firmly anchored to rate increases; the only question at this juncture is the rate of increases with 50-75bps on the table for the Fed’s meeting in December. In the US, Thanksgiving celebrations on Thursday will see markets closed before the all important Black Friday retail event, which marks the beginning of the Christmas shopping season in the US.

Day Ahead

The data slate for the day ahead is scant, however, there are a number of central bank speakers on deck today. In the UK, Bank of England member Cunliffe will make a speech at the University of Warwick on digital currencies. In the Eurozone, comments from Centeno, Vasle, Holzamnn and Simkus will be parsed for indications of the rate path ahead for the European Central Bank, with markets leaning towards a 75bps move at their next meeting. In the US Fed member and voter Daly is due to make remarks on ‘price stability at a Business Council event in California, in previous remarks Daly has been of the opinion that the Feds terminal rate should be in the 4.75-5.25% range, traders will pay attention to any adjustment to this view. For a more detailed overview of the fundamental and technical drivers for the week ahead please review my Weekly Market Outlook analysis here.

Overnight Headlines

Asian Stocks Drop Amid Doubts Over China Reopening, Fed Policy
Fed's Bostic: He Is Ready To 'Move Away' From Large Rate Increases
Oil Sinks As China’s Struggle With Covid Blights Demand Outlook
Chinese Banks Maintain Lending Rates As PBoC Signals Caution
Beijing Reports Two More Covid Deaths, Stoking Fears Of Curbs
RBNZ Shadow Board Majority Favours 75BPS Rate Rise - NZIER
S.Korea Nov 1-20 Exports Tumble On Weak Demand For Chips, China Woes
Rishi Sunak Won’t Seek Swiss-Style Relationship With Brussels - Times
Ukraine Nuclear Plant Shelled, U.N. Warns: 'You're Playing With Fire!'
China's Yuan Touches 10-Day Low As Covid-19 Numbers Hurt Sentiment
Collapsed FTX Owes Nearly $3.1 Billion To Top 50 Creditors
UK Debt Binge Threatens Its UK Bond Markets For Years Ahead
Goldman Cuts Brent Crude Forecast As China Lockdowns May Spread
Buffett's Berkshire Boosts Stakes In Japan's Five Biggest Trading Houses
Bob Iger Returns As Disney CEO Effective Immediately, Replacing Chapek

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 3900

Technicals

Primary support is 3850
Primary upside objective is 4120
Next pattern confirmation, acceptance above 4050
Failure below 3900 opens a test of 3990
20 Day VWAP bullish, 5 Day VWAP bearish

EURUSD Bias: Bullish Above Bearish below 1.0250

Technicals

Primary support is 1.0250
Primary upside objective is 1.0620
Next pattern confirmation, acceptance above 1.04
Failure below 1.0230 opens a test of 1.0180
20 Day VWAP bullish, 5 Day VWAP bearish
Today’s New York Cut Option Expiries: 1.0100 (543M), 1.0115-20 (313M), 1.0200-05 (853M), 1.0225 (638M), 1.0280 (486M)

GBPUSD Bias: Bullish Above Bearish below 1.1730

1.20 Target Achieved, New Pattern Emerging

Technicals

Primary support is 1.1730
Primary upside objective 1.2050
Next pattern confirmation, acceptance above 1.1970
Failure below 1.17 opens a test of 1.1640
20 Day VWAP bullish, 5 Day VWAP bullish
Today’s New York Cut Option Expiries: EUR/GBP: 0.8650 (251M), 0.8730 (200M), 0.8770 (210M), 0.8800 (248M), 0.8850 (299M)