FTSE -4 points at 7405 DAX -24 points at 13035 CAC -14 points at 5376 IBEX -21 points at 10032
The US dollar index eased to a two-month low on Friday. The greenback is better bid against its G10 peers in Asia, except the yen (+0.19%). Gold (+0.22%) consolidates near $1,290 level, as Asian stock markets opened the week on a negative note. The UK and the European stock markets are poised for a bearish weekly start as well.
The US stocks renewed record on Friday. The S&P 500 closed above the $2’600 level. Black Friday sales topped $5 billion for the first time according to Adobe Systems (NASDAQ:ADBE) and Cyber Monday will likely be the biggest online shopping day in the US history, with estimated $6.6 billion sales. US equity futures retraced a part of recent gains at the open, yet buyers could rapidly kick in and reverse the intra-day trend. There are no signs of anxiety in the market. The VIX index stands at 9.67%. The US Senate may vote for the tax reform bill as early as Thursday. There are still very important controversies among policymakers.
WTI crude advanced to $59/barrel. OPEC and its allies will meet in Vienna this week; they are expected to extend the output cut agreement from March 2018 (current deadline) to September 2018 the earliest. This is widely priced in, therefore deeper cuts or a longer engagement may be needed for a sustainable attempt above the $60 level.
Gold trades rangebound between mid-upper Bollinger bands ($1,280/1,295). Positive breakout could see more resistance by $1,300/1,306 (psychological resistance / Oct high). Buyers are eyed at $1,265 (lower Bollinger band and 200-day moving average).
The AUD/USD is offered, despite the ongoing recovery in iron ore futures. Without the support of carry traders, the pair may not avoid a slide toward the 0.75 level. The carry-less market is also reflected in other crosses. The USD/JPY remains capped by its 200-day moving average (111.71), the AUD/JPY consolidates losses below 85.00 level, the EUR/AUD advanced to the highest level since February 2016. The rate differential is not a key market driver at the moment. Risk-traders seek interest in equity and bond markets, rather than high-yielding money markets.
German Chancellor Angela Merkel is looking for alternatives to form a government. According to the latest news, she will meet with SPD's Martin Schulz on Thursday. The EUR/USD advanced to 1.1944 in Asia. Trend and momentum indicators are comfortably positive. Resistance is eyed at 1.20 (psychological level), before 1.2090 (2017 high). There are call options by 1.20, yet no option barriers at this level, suggesting that traders are mostly hedged against a further euro appreciation against the greenback.
Cable consolidates last week’s gains above its 50-day moving average (1.3249). The next natural target for GBP-longs is 1.3400. The Bank of England (BoE) Financial Stability Report could curb the pound appetite on Tuesday and trigger some profit taking. In the dirt of important economic data, the pound traders will shift their focus to the Brexit issue. The UK should submit its official offer for a Brexit settlement in less than a month to unlock talks regarding the future of the EU/UK trade relationship. Hence, pound traders will likely opt for short-term long positions, as longer duration bets are too risky and will not give traders a peace of mind before a concrete outcome on Brexit negotiations.
The stronger pound weighs on the FTSE stocks. The FTSE 100 is capped by its 100-day moving average (7423p).