The ECB Day & EU Summit
Markets expect the ECB on Thursday to unveil growth and inflation forecasts for the coming years and to deliver more monetary stimulus to support the Eurozone economy. The central bank left the door open for all possibilities such as increasing the pandemic Emergency Purchase Program (PEPP), to increase its open-ended quantitative easing program, to extend the Targeted Longer-Term Referencing Operations (TELTROs), or even to cut current interest rates.
Investors will keep an eye on the EU summit starting on Thursday to end the deadlock over the coronavirus aid package caused by Poland and Hungary’s veto.
More Talks
US stock markets retreated on Thursday from its highest level as the US legislators could not agree on all points of the US Treasury Secretary's proposal of $916 billion COVID-19 aid. Therefore, there will be more bipartisan talks to agree on issues like the business liability shield suggested by Republicans and the aid to state and local governments demanded by the Democrats.
On the other hand, the UK PM‘s visit to Brussels ended with pointing out “Large Gaps” that separate both sides. Nonetheless, they agreed on the need for more talks and gave themselves until Sunday to make or break. Major issues remain on fisheries, business competition, and deal compliance.
|
Stock Market |
Change % |
|
-0.8% | |
|
-0.3% | |
|
-2.2% | |
|
+0.4% | |
|
+0.3% | |
|
+0.1% | |
|
-0.3% |
Table source: Capex Webtrader
EUR/USD and Main FX Markets
The EUR/USD rebounded on Wednesday around the high end of the current trading zone 1.1909 – 1.2148 after multiple failures to climb to a higher trading zone. The Relative Strength Index (RSI) abandoned overbought territory highlighting a weaker bullish momentum. Therefore, the price could be on the way for a test of the low end of the current trading zone at 1.1909.
The GBP/USD closed on Wednesday with a Doji pattern indicating the market indecision. The price moves in the current trading zone 1.3185 – 1.3460. The (RSI) on the daily chart fell from 57 to 53 signaling that bulls were losing momentum. Thus, a daily close below the low end of the zone could send the pair even lower towards 1.2916 (September 2016 low).
Gold and Oil
The oil price was supported by rolling out the Coronavirus vaccine in the UK and the possible start of the vaccine campaign in the US as the FDA may approve Pfizer’s vaccine on Thursday.
Technically, we notice on the daily chart of the Brent Crude the price/RSI negative divergence as the former created a high with a higher high while the latter created a high with a lower high indicating a possible reversal of the current upward momentum. Therefore, a daily close below the low end of the current trading zone at 46.53 may send the price towards the weekly support level at $43.30 (June 20 high).
The RSI on the Gold daily price fell below 50 reflecting a possible start of bearish momentum. The precious metal price failed to test the 50-day moving average and retreated to a lower trading zone of $1,786- $1,861 eyeing a test of the low end of it.
Looking Ahead
Eyes will be on the ECB rate decision due at 1:45 PM (GMT time), the ECB president Lagarde’s press conference at 2:30, the US inflation rates numbers of November at 2:30, and the Bank of Canada member Beaudry’s speech at 07:30 PM.
Sources: Bloomberg, Reuters, BBC.
