Asian equities hit a record high on Monday as investors set aside fears about rising coronavirus cases and bought stocks, cheered by data showing a robust recovery in China and Japan.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 1.1% to hit its highest since its launch in 1987, with markets across the region making milestone peaks.
Japan’s Nikkei .N225 rose 2% to a 29-year high. South Korea’s Kospi .KS11 hit its highest since early 2018 and Australia’s ASX 200 .AXJO hit an eight-month top, before jamming there when a glitch halted trade.
Japanese economic growth, which beat records and forecasts to pull the world’s third-largest economy out of recession and better-than-expected industrial output in China added to the enthusiastic mood.
The announcement, a week ago, that Pfizer had developed a very effective vaccine has investors hoping for similar good news soon from rival Moderna (MRNA.O) and looking past a tough winter to a better spring and summer ahead.
EUR/USD remains on the front foot near 1.1850 starting out a fresh week, extending its winning streak into the third straight day on Monday. From a technical perspective, the spot has confirmed an inverse head-and-shoulders breakout on the hourly sticks, which calls for a test of the 1.1900 level.
Besides the virus, Brexit trade talks are chief among European investors’ concerns on Monday and hopes for a breakthrough have supported sterling against the dollar and the euro.
The departure of hardline adviser Dominic Cummings from Downing Street is seen as a positive, perhaps allowing more British concessions, but chief negotiator David Frost said on Twitter that talks “may not succeed”.
Despite this, London stocks are set to bounce into Monday picking up again on last week’s rally, propelled by some upbeat Chinese data.
Elsewhere the Aussie and kiwi made small gains, much of which they handed back late in the Asian day.
Bonds, which had sold off strongly on vaccine news last week, were steady with where they left off on Friday, with the yield on benchmark U.S. 10-year debt US10YT=RR at 0.8930%, down from last week’s high above 0.97%.
The economic events calendar is finally looking a little quieter. However, the ongoing Brexit negotiations, Trump refusing to go gently, COVID-19 case counts, and the vaccine status will be sensitive topics of interest this week.
US retail sales and sentiment data (UMich, Empire, Philly Fed) in the US, retail sales in Canada, unemployment data in Australia and retail sales data in China will be key. There’s a long list of central bank speakers taking the stage, in the US (Williams, Bullard, Clarida, Kaplan, Bostic, George), UK (Haskel, Bailey, Ramsden, Haldane, Tenreyro, Cunliffe), Europe (Villeroy) and Australia (Lowe, plus the RBA minutes) – though ultimately substantial announcements are not expected.
All these events and more have the potential to influence the markets which means there is plenty of trading opportunities.
Potential instruments to Trade: USD Crosses & Gold.
16.00 – BOE Gov. Bailey Speaks
Potential instruments to Trade: GBP Crosses.
Wednesday 18thNovember
00.00 – RBA Gov. Lowe Speaks
Potential instruments to Trade: AUD Crosses.
15.30 – Canada CPI m/m
Potential instruments to Trade: CAD Crosses.
19.15 – FOMC Member Williams Speaks
Potential instruments to Trade: USD Crosses.
Thursday 19th November
02.30 – Australia Employment Change & Unemployment Rate
Potential instruments to Trade: AUD Crosses.
15.30 – Canada ADP Non-Farm Employment Change
Potential instruments to Trade: CAD Crosses.
15.30 – Philly Fed Manufacturing Index & Unemployment Change
Potential instruments to Trade: USD Crosses.
17.00 – ECB President Lagarde Speaks
Potential instruments to Trade: EUR Crosses.
17.00 – U.S. CB Leading Index m/m & Existing Home Sales
Potential instruments to Trade: USD Crosses.
Friday 20thNovember
09.00 – U.K. Retail Sales m/m
Potential instruments to Trade: GBP Crosses.
10.15 – ECB President Lagarde Speaks
Potential instruments to Trade: EUR Crosses.
15.30 – Canada Core & Retail Sales m/m
Potential instruments to Trade: CAD Crosses.
Saturday 21st & Sunday 22nd November
Day 1 & 2 – G20 Virtual Meetings
Potential instruments to Trade: All Currencies.
The G20 comprises the world’s largest and fastest-growing economies and accounts for 85 per cent of the global GDP and two-thirds of its population. The summit of the grouping is taking place in the midst of the worst economic downturn the world is witnessing since the Great Depression of the 1930s. Will there be an economic stimulus programme to offset the impact of the pandemic? This will be an important event to watch!
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