Key Points:

BTC surges towards $18,000

USD slightly weaker with DXY at 92.40

Risk sentiment sours and moves lower

Markets euphoria around further vaccine news tapered off during the US session with major indices closing in the red, the Russell the exception closing at a new all-time record high. The S&P500 closed down almost 0.5% despite a blip when the news that Tesla will be entering the S&P500 in December was released. This has in turn dragged on risk across the board with US yields and WTI lower amid some profit taking. Metals also back off their recent highs. The commodity currencies have been unable to hold their gains with AUD stretching to a high of 0.7340 before falling back to key support at 0.7290, NZD and CAD closing around their opening levels to be largely unchanged on the day. GBP and EUR both strengthened with EUR buoyed by news in some countries of a plateauing of Covid cases and GBP benefitting from a more positive headline crunch surrounding Brexit. For EUR the real hurdle is clearing 1.1900/20 where strong resistance lies before a clear path to test 1.20 whereas Cable closing above 1.3235/40 could provide support for the next leg higher with recent high of 1.3310 the next sticking point. Powell, Lagarde and Bailey all had their say but markets were unmoved by anything they said and US retail sales a disappointment at 0.3% from 0.5% may have contributed to the souring of risk. The biggest noise came from the Crypto market where BTC surged around 8% at its highest stopping just short of 17,900 with a real sense of FOMO once again as we saw back in 2017. Citibank’s recent suggestion that it could rise to $300,000 next year has got some quarters excited with bulls now eyeing the ATH of $19,500. The last two weeks has seen a real break away from Gold from which it has been tightly aligned in recent times. The precious metal can’t push back through 1900 at the moment so any slip in risk could see us look back at key support around 1848/50 once again. Below there it’s a clear drop to 1795/00. RBA’s Lowe is on the wires once again today following from DeBelle and Kent yesterday where the story remains the same so not expecting too much FX impact there. They want the currency lower but external factors are driving price more than domestic and there’s not much they can do about that. We will also see wage price data from Australia but that’s nothing to watch for. An inflation dump from the UK again is unlikely to move the pound too much, likewise the same for Canadian inflation out in the US session.