Market Quick Take - November 16, 2020 Market Quick Take - November 16, 2020 Market Quick Take - November 16, 2020

Market Quick Take - November 16, 2020

Macro 6 minutes to read
John Hardy

Head of FX Strategy

Summary:  Markets are starting off the week in a chipper mood after a strong close on Friday, with even recent laggard China pulling well off the Friday lows overnight. The US dollar is weak, and gold is trying to rebound to the 1,900 area, while oil is trying to find support after US president-elect Biden indicated he does not favour national lockdowns as a policy for dealing with the Covid-19 resurgence.

What is our trading focus?

  • Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equity markets are starting the week off on an optimistic footing after a solid, if low energy, session on Friday. The S&P 500 index posted its highest ever daily close on Friday and is trading another 30 points higher overnight, with only the intraday spike last Monday on the initial results of the Pfizer Covid-19 vaccine candidate way up at 3,668 as the last level of note to the upside. For the somewhat lagging Nasdaq 100 Index, the highest daily close for the Nasdaq 100 since mid-October came just before the US election at 12,076, making the 12,000 level a sort of near-term objective for now, with last week clearly marking out the 11,500 area as the important range support.

  • Nikkei 225 (JP225.I) - strong reaction overnight up 2.6% driven by positive sentiment in Asia on China macro numbers and a rotation into high beta industries such as financials, consumer discretionary and industrials. Nikkei 225 futures closed at 25,990 the highest level since 1991 setting Japanese equities up for an interesting breakout and momentum into new territory.

  • EURUSD – despite ECB President Lagarde trying to warm up the market for a significant easing move in December and even bringing the level of the euro into the conversation, EURUSD has bobbed back higher toward the 1.1900 area, which it needs to take out for an attempt at 1.2000 and beyond. The pair found resistance ahead of 1.1750 last week and therefore above the last-ditch technical support near 1.1725. We watch EURUSD for the broader USD status within the G10.

  • USDCNH – the Chinese currency continues to trade toward the strong side versus the US dollar, as no real further consolidation set in last week even as the broader CNY “reference basket” has reached a major resistance level. Notably, the CNH continues to trade near its strongest levels versus the Euro and Japanese yen as well. The next major technical areas of note for USDCNH are the 6.50 round number and then the rising trendline from the early 2014 lows that comes in below 6.40 currently.

  • HG Copper (COPPERUSMAR21) surged to $3.2695/lb, a near 30-month high overnight on supportive news from China where industrial output and fixed-asset investment both beat expectations. The latter an indication that strong infrastructure spending may continue to underpin the market into 2021. In addition, the PBoC injecting liquidity via its one-year facility and kept rate unchanged while 15 Asian countries signed a trade deal (see below). Finally, Covid-19-related supply disruptions, the weaker dollar and vaccine hopes did the rest to ensure a session where buy stops triggered a domino effect. Next resistance at $3.322, the June 2018 high.

  • Treasuries mixed as reflation story and vaccine development push yield higher, but a surge in Covid-19 cases hinders economy (10YUSTNOTEDEC20). Last week, the 5s30s part of the yield curve widened substantially on the way to reach 2016 highs, however as a surge of coronavirus cases seemed to be poised to arm the economy further, yields fell. This week Treasury yields will remain volatile. It will be key to understand how the market feels about inflation, and the 20Y government bond auction might give some insight into that.

  • Brexit uncertainty and a surge of Covid-19 cases might benefit Gilts (GILTLONGDEC20). The long-term credit rating for the United Kingdom was downgraded to AA from AAA by DBRS Morningstar last Friday. This is the second downgrade in a month since Moody’s downgraded the country from Aa2 to Aa2 in October. Rating agencies are concerned about Covid-19 impact on the economy, which could benefit Gilts in the mid-term.

What is going on?

  • The preliminary US University of Michigan sentiment reading for November dropped sharply - This survey was released Friday and showed the current conditions index steady at just below 86, although an improvement to 88 or higher was expected, but the expectations component dropped almost eight points to 71.3, its worst reading in three months. This may be due to the unfolding Covid-19 disaster in the US.

  • China and 14 other Asian nations, including South Korea, Japan, Australia and New Zealand, sign trade deal - Billed the Regional Comprehensive Economic Partnership (RCEP) and a successor to the TPP trade deal that US President Trump refused to sign, the RCEP is seen as less comprehensive, but would reduce tariffs, and covers provisions on intellectual property, telecommunications, financial services, e-commerce and more. It is the first time China has signed on to a regional multi-lateral trade agreement.

  • Natural gas (NATGASDEC20), down 7% since Friday’s peak after a surprise inventory rise was followed up by NOAA’s weekend forecast for warmer November weather for most of the U.S. Crude oil meanwhile trades higher in response to the China news (see copper) and President-elect Biden ruling out a national lockdown to curb the current surge in Covid-19 cases. On Thursday OPEC+’s JMMC meets to review compliance to current production cuts. Traders will most of all be looking for signs that the planned January production hike is going to be delayed.

What we are watching next?

  • Brexit: if last week wasn’t the week, will this finally be the week we know more? - the supposed November 15 deadline for an agreement on the post-Brexit landscape came and went and now this week is being billed as the crunch week for negotiations, although some sources suggest the talks could stretch out longer still. UK Prime Minister Boris Johnson has been distracted with the exit of key advisors and had to self-isolate this weekend due to exposure to someone who later tested positive for Covid-19. GBP doesn’t seem to mind the latest extension of the uncertainty as EURGBP remains below the key 0.9000 level, but it is time for a breakthrough soon.

  • Trump concession and moves during lame duck period... At the weekend, lame duck President Trump countered speculation that his stance on the US Election is softening by declaring that “I concede nothing”.  Perhaps more importantly, Trump appears set to make a string of moves in his lame duck period before Biden’s inauguration on January 20 that could be an effort to force Biden into an awkward position in the early days of his presidency on everything from relations with China to the situation in the Middle East, especially Iran.

Q3 earnings season continues this week. Below list shows the largest companies reporting this week:

  • Today: Vodafone Group, Recruit Holdings, KE Holdings, Baidu, iQIYI,, Palo Alto Networks, Tyson Foods
  • Tuesday: Experian, Fortum, NIO, Walmart, Home Depot, Sea Ltd
  • Wednesday: AP Moller – Maersk, SSE, NVIDIA, Copart, ZTO Express Cayman, Keysight Technologies, Lowe’s Cos, Target, TJX Cos
  • Thursday: Tokio Marine Holdings, NetEase, Ross Stores, Intuit, Workday, Knorr-Bremse

Economic Calendar Highlights for today (times GMT)

  • 0840 – Australia RBA’s Lowe to Speak
  • 1300 – ECB President Lagarde to Speak
  • 1330 – US Nov. Empire Manufacturing
  • 1845 – US Fed’s Daly (Voter in 2021) to speak
  • 1900 – US Fed’s Clarida (Voter) to Speak on Economic Outlook
  • 0030 – Australia RBA Minutes

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.