Black Friday will be closely watched by traders

The USD remained in a sideways movement against a number of its counterparts on a slow Thursday, also in part because of the Thanksgiving holiday. Due to the lack of high impact financial releases, we might see the market’s attention shifting to the fundamentals surrounding the markets. A sentiment risk due to Covid concerns could emerge, which could hurt U.S. stock markets. On the flip side, a drop in US yields could support equity markets, especially the high-tech focused Nasdaq. We note that today is Black Friday which could be seen in conjunction with Thanksgiving and Cyber ​​Monday (E-Retailers). This year’s Black Friday could also be affected by inflationary pressures in the United States and not just in the United States. One would expect that the main effect of the event would be on the stock markets and mainly felt by the actions of retailers (e.g. Walmart) and E-traders (like Amazon), but also producers (like Apple, Sony and Microsoft). If consumers actually increased their spending on Black Friday and retailers posted solid numbers, investors might be inclined to believe that the fourth quarter tends to be very profitable as the holiday season begins. On the other hand, if retailers don’t meet market expectations, we could see stock prices go down.

The Nasdaq fell back testing the 16285 (S1) support line during today’s Asian latte session. We tend to maintain a bias for a sideways movement of the index given its movement over the past three days. On the other hand, the RSI indicator below our 4 hour chart is below the reading of 50, implying an advantage for the bears. If the bears really take control of the direction of the index, we might see it aiming for otherwise breaking the 16130 (S1) support line. If the bulls say enough is enough, we might see the index cross the 16285 (R1) line and aim for the 16460 (R2) level.

The yen strengthens thanks to safe haven flows

The JPY strengthened against the dollar as it received safe haven inflows during today’s Asian session, also in part due to Covid concerns. It should be noted that a new African variant of the pandemic has hit the headlines as the disease also tightens its grip on Europe, heightening concerns for the recovery of the global economy. The new African variant is considered the most heavily mutated variant in the pandemic and scientists have mentioned that it has a big evolutionary leap and very different from other variants so far, according to the BBC. It should be noted that with us, Japan has become a success story with its high vaccination rates, while the number of new daily cases has fallen to minimal levels. On the monetary front, we maintain the view that the BoJ maintains its role of supporting the economy, while the Japanese economy continues to face challenges in the supply chain sector that are slowing its recovery. If concerns about the pandemic escalate further, we could see the JPY benefit from a larger safe-haven inflow, which could strengthen it further.

USD / JPY fell during today’s Asian session, breaking the 115.20 (R1) support line, which has now turned into resistance. To change our bias for a sideways move in favor of a bearish outlook for the pair, we would need a clear break out of the 114.45 (S1) support line. Please also note the downward slope of the RSI indicator below our 4 hour chart, which just fell below the 50 reading, also providing an advantage to the bears. If short interest intensifies, we could see the pair breaking the 114.45 (S1) support line and aiming for the 113.70 (S2) level. If the pair finds new buy orders in its path, we might see it reverse course, breaking the 115.20 (R1) line and aiming for the 116.00 (R2) level.

Other market highlights for today

Today we note the publication of the GDP rate of Switzerland for the third quarter. EUR traders can have a whole day today because despite the lack of EUR related financial releases, we have a large number of ECB policymakers including Lagarde making statements today and if a your easygoing prevailed, we could see the EUR go down.

US100 Cash H4 Chart

Supported: 16130 (S1), 15980 (S2), 15790 (S3)

Resistance: 16285 (R1), 16460 (R2), 16600 (R3)

USD / JPY H4 Chart

Support: 114.45 (S1), 113.70 (S2), 112.75 (S3)

Resistance: 115.20 (R1), 116.00 (R2), 117.10 (R3)


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