Black Friday To Be Closely Watched By Traders

Nov 26 21, 10:10 GMT

The USD remained in a sideways motion against a number of its counterparts on a slow Thursday also partially due to the Thanksgiving holiday. Due to the lack of high impact financial releases we may see the market’s attention turning to the fundamentals surrounding the markets. A risk off sentiment due to Covid worries could emerge which could hurt US stockmarkets. On the other hand a drop of the US yields could support stockmarkets especially the high tech driven Nasdaq. We note that today its 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 the inflationary pressures in the US and not only the US, as well. We could expect the main effect of the event to be on the stock markets and primarily felt by shares of retailers (e.g. Walmart) and E-Retailers (such as Amazon), but also producers (such as Apple, Sony and Microsoft). Should consumers actually increase their spending on Black Friday and retailers show strong numbers, investors might be inclined to believe that Q4 tends to be a very profitable one, as the holiday season kicks in. On the flip side, should retailers not meet market expectations, we could see share prices declining.

Nasdaq retreated testing the 16285 (S1) support line during today’s latte Asian session. We tend to maintain a bias for a sideways motion for the index given its movement for 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. Should the bears actually take control over the index’s direction, we may see it aiming if not breaking the 16130 (S1) support line. Should the bulls say enough is enough, we may see the index breaking the 16285 (R1) line and aim for the 16460 (R2) level.

JPY strengthens by safe haven flows

JPY strengthened against the USD as it received some safe haven inflows during today’s Asian session also partially due to Covid worries. It should be noted that a new African variant of the pandemic has hit the headlines while the disease also firms its grip around Europe, intensifying worries for the recovery of the global economy. The new African variant is considered to be the most heavily mutated variant of the pandemic and scientists have mentioned that it has a big jump on evolution and very different that other variants so far, as per the BBC. It should be noted that back home, Japan has turned into a success story with its high inoculation rates, while the number of new daily cases has dropped to minimal levels. On the monetary front we maintain the view of BoJ maintaining its supportive role for the economy, while the Japanese economy continues to find difficulties in the supply chain sector slowing its recovery. Should worries for the pandemic intensify further we may see JPY enjoying more safe haven inflows which could strengthen it further.

USD/JPY dropped during today’s Asian session breaking the 115.20 (R1) support line, now turned to resistance. To switch our bias for a sideways movement in favour of a bearish outlook for he pair though we would require a clear breaking of the 114.45 (S1) support line. Please also note the downward slope of the RSI indicator below our 4-hour chart, which has just crossed below the reading of 50 also providing an advantage for the bears. Should the selling interest be intensified, we may see the pair breaking the 114.45 (S1) support line and aim for the 113.70 (S2) level. If the pair finds fresh buying orders along its path we may see it reversing course, breaking the 115.20 (R1) line and take aim for the 116.00 (R2) level.

Other market highlights for today

Today we note the release of Switzerland’s GDP rate for Q3. EUR traders may have a full day today as despite no EUR related financial releases, we have a high number of ECB policymakers, including Lagarde making statements today and should a dovish tone prevail we may see EUR sliding lower.

US100 Cash H4 Chart