Confirmation that Fed Chairman Jay Powell was getting the green light for another 4-year term as head of the US Federal Reserve was the catalyst that successfully pushed European stocks back from their daily lows. ‘yesterday.

While it wasn’t enough to tip the DAX and CAC40 into the green, it was still good news for a market that craves continuity and a familiar way of doing things.

If Lael Brainard, who has secured the post of Vice President, is also a more than capable candidate, his appointment would have introduced a new level of uncertainty in a market which watches with growing concern the events unfolding in parts of Europe. When Powell first replaced Janet Yellen in 2018, it took some time for the markets to get to grips with the new Fed chairman and the new Fed chairman to get to grips with the markets.

Powell’s rollover signals a steady approach, causing US yields to rise sharply, as well as the US dollar, as gold prices have plunged.

US stocks also reacted positively at first, but yields continued to rise, as the S & P500 and Nasdaq closed, but not before hitting new highs.

It also means that the direction to take with regard to the Fed’s future policy over the next few months is unlikely to stray from what is currently expected when it comes to reviewing the data, a accelerating the reduction program, as well as advancing expectations about the timing of a possible rate hike, a policy that may not have been the case with a Brainard appointment.

As a result of the late turnaround in US stocks last night and a weaker finish, today’s European market appears to be slightly weaker.

Civil unrest, renewed covid restrictions and rubber bullets are not the look EU leaders envisioned when they slowly started easing restrictions just a few months ago. The real fear now is that the tighter restrictions implemented now will eventually turn into harsher measures as Christmas draws closer, with all the risks such measures could pose for populations jaded by multiple lockdowns.

We know only too well, from the events of a little over a year ago, how half-hearted measures only delay the inevitable, and although vaccination rates are higher than ‘they were not then, the real fear is that this may not be enough. The biggest concern is rising rates in Germany, where the lack of a central government has prompted a fragmented state-level response.

The risk of a return to economic contraction increases with each passing day, and this in itself fuels a weaker euro, and while today’s flash PMIs of Germany and France are likely to point to still fairly decent levels of economic activity, they have been heading in the wrong direction for several months now.

In manufacturing, economic activity in France and Germany is expected to slow down to 53.1 and 56.9 respectively, while in services we can also expect a similar slowdown to 55.5 for France and 51 , 5 in Germany.

The UK, on ​​the other hand, by opening up earlier and seeing infections remain constant at a higher level throughout the summer, may well have played a bigger role in building a more resistant immunity wall, as well as the booster program, as the weather becomes colder. That’s not to say the strategy might not be pear-shaped yet, but in terms of economic activity, we haven’t seen the kind of decline seen in Europe.

Today’s flash PMI numbers are expected to see manufacturing slowing slightly to 57.3 from 57.8, while services, which rebounded well in October to 59.1 from 55.4, are expected to fall back to 58.5.

If the United States hoped that announcing the prospect of a release of SPR oil reserves would further accelerate the decline in the price of oil over the past four weeks, it counted without OPEC. After spending the last few weeks harassing the cartel for not increasing production fast enough, they took their revenge yesterday by saying that any exit from SPR could force them to reconsider their current strategy of increasing production by 400,000. barrels per day at the start of each month. . This intervention helped pull oil prices from their lowest levels in 7 weeks and end the day high.

EURUSD – Continues to sink against the resurgence of the US dollar and awaits a test of the lows of June 2020 and the 1.1160 / 70 area. For the downward pressure to ease we would need a return above the 1.1400 area.

GBPUSD – Looks ready for another test of last week’s lows at 1.3350. A break below 1.3350 has the potential to target further declines towards 1.3160. We need to gain a foothold above the 1.3500 area and cross the 1.3520 area to open up the 1.3600 area.

EURGBP – Continues to maintain above the 0.8380 zone, the bias remaining for a movement towards the 0.8280 zone. Only a movement through the 0.8470 area opens a return to the 200 day MA and the 0.8580 area.

USDJPY – Retested the 115.00 area, with a break above 115.20 targeting a potential move towards the 116.00 level. Withdrawals currently have support at last week’s low of 113.60.

FTSE100 should open 20 points lower at 7,235.

DAX should open 65 points lower at 16,050.

CAC40 should open 20 points less at 7,085.