Asian Open: Santa’s rally back on track?

With Omicron concerns clearly abating traders were happy to take on risk yesterday with oil, stocks, yields and commodity FX all rising in tandem.

Charts (1)

Asian Futures:

  • Australia's ASX 200 futures are up 22 points (0.3%), the cash market is currently estimated to open at 7,335.90
  • Japan's Nikkei 225 futures are up 310 points (1.09%), the cash market is currently estimated to open at 28,765.60
  • Hong Kong's Hang Seng futures are up 62 points (0.26%), the cash market is currently estimated to open at 24,045.66
  • China's A50 Index futures are up 13 points (0.08%), the cash market is currently estimated to open at 15,800.21

UK and Europe:

  • UK's FTSE 100 index rose 107.62 points (1.49%) to close at 7,339.90
  • Europe's Euro STOXX 50 index rose 139.09 points (3.36%) to close at 4,276.20
  • Germany's DAX index rose 433.15 points (2.82%) to close at 15,813.94
  • France's CAC 40 index rose 199.61 points (2.91%) to close at 7,065.39

Tuesday US Close:

  • The Dow Jones Industrial rose 492.4 points (1.4%) to close at 35,719.43
  • The S&P 500 index rose 95.08 points (2.08%) to close at 4,686.75
  • The Nasdaq 100 index rose 479.503 points (3.03%) to close at 16,325.66
20211208moversFX

Santa’s rally back on track?

More data is flowing through that, whilst Omicron is more easily transmissible, its symptoms may be less severe than Delta. The usual risk-on pattern ensued with global equity markets extending gains, bond yields rising (as investors sold their bonds to take on higher risk) and the VIX falling to an 8-day low of 22. Furthermore, reports surfaced near the end of the US session than Republican Leader Mitch McConnell says a deal has been reached with Chuck Schumer to raise the debt ceiling.

Tech stocks were the clear leaders with the Nasdaq 100 rising around 2.7%, the S&P 500 up around 2% and the Dow Jones up by 1.3%. Futures markets point to another positive session today in Asia and, dare we say, Santa’s rally could be set to kick off as we head towards Christmas now the covid clouds are receding.

 

Commodity currencies ruled the overnight session

With the easing of coronavirus fears, commodity currencies continued to rebound with AUD, CAD and NZD the only FX major currencies to rise on the day. Several CAD pairs broke key levels highlighted in yesterday’s video, which we suspect are all part of much larger moves.

Given the risk-on vibe and inflationary signs in US data overnight, we would have expected USD/JPY to perform better than it did. Still, whilst it remains above the 112.53 low our bias remains bullish, but perhaps we’ll need to see a hotter CPI print on Friday to get its juices flowing. USD/CHF printed a spinning top Doji but we’re hoping a higher low can now for, above 0.9200 before its next leg higher towards 0.9300.

 

Strong Ivey PMI aids CAD ahead of today’s cash rate decision

Markets are currently pricing five hikes next year, making them the most hawkish central bank among the FX majors. Whilst Omicron fears are abating we do not think they will decide to hike today, but that’s not reason to not be on guard for one as it could still come as quite the surprise. So we’re interested to hear their take on the new variant and what impact (if any) it may have on policy next year because if they brush those concerns aside then it could be as good as a hike.

 

Potential bear-flag on AUD/CAD

There is a potential bear-flag on AUD/CAD

Whilst there were some great moves on CAD pairs we have selected AUD/CAD for today’s chart as it was the only pair not to look over-extended over the near-term. This has allowed prices to coil up with a potential bear-flag pattern after it broke through key support levels in line with our bias from November 26th. With such a strong bearish trend on the daily chart we prefer to either fade into minor rallies below 0.9060 or wait for a break of its recent lows and keep an open downside target.

 

ASX 200 Market Internals:

The ASX 200 hit a 5-day high yesterday and closed within the 7311 – 7337 resistance zone and is expected to open near the top of this zone today. Today’s vias is bullish in line with yesterday’s sentiment, whilst prices hold above 7270.

Energy (2.07%) was the strongest sector and Utilities (-0.08%) was the weakest

ASX 200: 7313.9 (0.95%), 07 December 2021

  • Energy (2.07%) was the strongest sector and Utilities (-0.08%) was the weakest
  • 10 out of the 11 sectors closed higher
  • 5 out of the 11 sectors outperformed the index
  • 159 (79.50%) stocks advanced, 37 (18.50%) stocks declined
  • 57.5% of stocks closed above their 200-day average
  • 42.5% of stocks closed above their 50-day average
  • 39% of stocks closed above their 20-day average

Outperformers:

  • + 9.92% - Pointsbet Holdings Ltd (PBH.AX)
  • + 9.91% - Zip Co Ltd (Z1P.AX)
  • + 7.66% - Polynovo Ltd (PNV.AX)

Underperformers:

  • -6.37% - Magellan Financial Group Ltd (MFG.AX)
  • -4.30% - Nickel Mines Ltd (NIC.AX)
  • -3.15% - Lynas Rare Earths Ltd (LYC.AX)

 

Up Next (Times in AEDT)

20211208calendarAEDT

 

 

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

  1. Open a Forex.com account, or log in if you’re already a customer.
  2. Search for the pair you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.