Weekly Market Outlook: OPEC, RBA and NFPs in focus
Economic data ramps up this week with the Reserve Bank of Australia Rate Statement and US Manufacturing PMI data on Tuesday, Australian GDP on Wednesday and US and Canada Employment figures on Friday. Of course, all eyes will also be on the progression of Brexit talks with only five weeks to go before the UK leaves the EU.
It is also the start of the OPEC (Organisation of Petroleum Exporting Countries) meetings on Monday. Oil prices have been flying higher in recent weeks, along with other risk-assets, triggered by news from Pfizer/BioNTech, Moderna and AstraZeneca/Oxford University of a coronavirus vaccine.
Will the risk rally continue this week? Traders may be focused on retail and e-commerce stocks after a 22% year-on-year surge in online Black Friday shopping to a record $9 billion. Maybe the optimism could continue into the Santa Claus rally at the end of the year.
There are some big themes happening in the market right now. You can learn more about them and how to capitalise on what's happening in the markets through this selection of recent education articles:
- What Is The Santa Claus Rally And the Exact Dates For It?
- What Are The Best Retail Stocks to Invest In For the Holiday Season?
- How To Invest In The UK Stock Market After Brexit
- AstraZeneca/Oxford University announce new vaccine trial after criticism of previous results.
- Record online shopping for Black Friday helps to boost online retail and e-commerce stocks.
- Slack shares jump 38% on news that Salesforce in advanced talks to acquire it.
- HSBC shares and other banking stocks rally higher as regulators set to remove dividend payout restrictions.
- Germany's DAX set to undergo a huge transformation to 40 members instead of 30.
Source: Forex Calendar provided by Admiral Markets UK Ltd.
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Trader's Radar - US Non-Farm Payroll figures
US employment figures are the most widely-watched economic number release of every month. After all, the health of the US economy not only affects the US dollar but also has ramifications for the rest of the world. On Friday 4 December at 1.30 pm GMT, the Bureau of Labor Statistics is due to release the following:
- Average Hourly Earnings m/m - expected 0.1%
- Non-Farm Employment Change - expected 500k
- Unemployment Rate - expected 6.8%
While the Fed has already said that the economy needs both monetary and fiscal support, they will be watching economic numbers closely before deciding their next move. Any huge changes from these numbers could get the Fed acting quicker.
It's likely to be a market moving report as the US dollar has been one of the weakest currencies over the past few months. The chart below shows the long-term, monthly price chart of the US Dollar Index which shows the value of the US dollar against a basket of different currencies. You can learn more about this in the 'How to Trade the US Dollar Index' article.
Source: Admiral Markets MetaTrader 5, USDX, Monthly - Data range: from Nov 1, 2004, to Nov 29, 2020, performed on Nov 29, 2020, at 10:00 am GMT. Please note: Past performance is not a reliable indicator of future results.
After rejecting the 103.00 price level (red horizontal line), the US dollar index has been in free fall. This has helped the likes of the Australian dollar, New Zealand dollar, Euro and British pound to all surge higher against the US dollar.
Price only found support around the 92.00 level (green horizontal line). However, buyers failed to push the US dollar higher from this level and it seems like the month could end as a bearish engulfing candlestick pattern which suggests further downside could be likely. Price may move lower towards the next major level of support - which also completes the long-term trading range of the index - around the 89.00 level (blue horizontal line).
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Corporate trading updates and stock indices
Global stock market indices have continued to soar higher and are on track to record a huge months worth of gains. News of a potential coronavirus vaccine that can be rolled out as early as next month has helped investors pile back into risk-assets.
European and Asia indices have led the way higher as fund managers see long-term opportunities in these markets which were already underweight in most institutional portfolios before the pandemic.
However, while global stock market indices have surged higher, investment flows have been centred around value based stocks that were unloved during the pandemic. For example, some of the best performing sectors last week were travel, leisure, energy and banks. Although the latter is largely due to dividend restrictions being lifted.
Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from March 13, 2020, to November 29, 2020, performed on November 29, 2020, at 10:30 am GMT. Please note: Past performance is not a reliable indicator of future results.
Last five-year performance of the S&P 500 circa: 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%, 2014 = +12.32%
The daily chart of the S&P 500 stock market index above still shows a clear uptrend. This is confirmed by the 50-period, 100-period and 200-period exponential moving averages all moving higher and separating away from each other.
With price currently flirting with all-time high levels, traders may well look for breakouts beyond the all-time high price level of circa. 3672. However, traders will also be eyeing the moving average levels as support for a bounce higher if price does retrace and fail at breaking through the all-time high.
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For example, the below screenshot shows all the technical events that have developed on the US Dollar Index:
A screenshot of the Technical Insight Lookup indicator from the MetaTrader Supreme Edition platform provided by Admiral Markets.
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