EURUSD – technical overview
The latest break below the 2016 low at 1.0711 now opens the door for a deeper drop into longer-term support in the 1.0400s further down. Any rallies should remain well capped below 1.1200, with a only a break above this figure to take the immediate pressure off the downside.
- R2 1.1000 – 14Nov high – Strong
- R1 1.0800 – Figure – Medium
- S1 1.0709 – 14Nov/2016 low – Medium
- S2 1.0600 – Figure – Medium
EURUSD – fundamental overview
The Euro has managed to find some support on dips after breaking down to a fresh 2016 low on Monday. HFT accounts are said to be supporting the market, while leveraged funds are looking to buy dips below 1.0700. The Euro has come under pressure on the back of ramped up Fed rate hike odds and ongoing worry over the Italian referendum and European banking sector. Looking ahead, the market will get a healthy distraction of first tier economic data, with German GDP, German ZEW, Eurozone ZEW, Eurozone GDP and US retail sales all due. We also get Fed speak from Fed’s Rosengren and Fischer.
GBPUSD – technical overview
The market has broken out of a multi session consolidation off the multi-year low, which could now open the door for a more significant correction higher in the days ahead. Ultimately, there is room to run towards 1.2800 without compromising the intense downtrend, with a lower top sought out in favour of a bearish resumption back towards 1.2000. Only a weekly close above 1.2800 would compromise the structure.
- R2 1.2674 – 11Nov high – Strong
- R1 1.2592 – 14Nov high– Medium
- S1 1.2444 – 14Nov low – Medium
- S2 1.2353 – 9Nov low – Strong
GBPUSD – fundamental overview
The Pound could not avoid the broad based surge in the Buck on Monday, despite its post US election outperformance. It seems with Fed odds ramping up to a near certainty, there was little else the UK currency could do but relent to USD demand. Still, with the Buck running quite a bit and with some first tier data out of the UK and US on tap, there is risk for another bounce. The market will be expecting a hot UK inflation reading given the weakness in the Pound, while US retail sales could shake things up. We also get Fed speak from Fed’s Rosengren and Fischer.
USDJPY – technical overview
A strong bullish performance in the previous week, with the pair initially pulling back dramatically before surging higher to clear the multi-day range high at 105.53. This should now set the stage for the next major upside extension towards next key resistance at 111.45 in the days ahead. Any setbacks from here should be very well supported above 103.00.
- R2 109.14 – 3Jun high – Strong
- R1 108.54 – 14Nov high – Medium
- S1 106.73 – 14Nov low – Medium
- S2 106.03 – 11Nov low – Strong
USDJPY – fundamental overview
The Yen continues to take its hits on ramped up Fed rate hike odds and well bid equities, though we are starting to see some demand from exporter and leveraged accounts. The focus has also shifted today to JGBs, with yield on the 10s edging up to 0% and the market wondering if the BOJ will allow this to cross into positive territory as the central bank’s yield curve control strategy is put to the test. Looking ahead, we get US retail sales and Fed speeches from Fed’s Rosengren and Fischer.
EURCHF – technical overview
The latest daily close below 1.0738 strengthens the bearish outlook and opens the door for an acceleration of declines towards the 2016 low at 1.0624. At this point, a daily close back above 1.0865 would now be required to take the immediate pressure off the downside and suggest the market is once again looking settle back into the previous range.
- R2 1.0865 – 28Oct high – Medium
- R1 1.0832 – 9Nov high – Strong
- S1 1.0688 – 14Nov low – Medium
- S2 1.0624 – 24Jun/2016 low – Strong
EURCHF – fundamental overview
The SNB has unquestionably had a difficult time of late, with the central bank forced to contend with an intense wave of demand for the Swiss Franc. The central bank has been committed to its mandate of ensuring the Franc does not appreciate further through monetary policy and intervention tools. Though despite all efforts, the Franc continues to want to appreciate against the Euro. It seems the strategy has been to buy Euro when risk comes off and to do nothing when risk is back on and natural flows should be CHF bearish. But the trouble is, when risk comes back, the Franc is still appreciating which is a major headache for the SNB and ultimately, could open more unwanted appreciation in the Franc going forward.
AUDUSD – technical overview
The market has struggled on rallies above 0.7700 and this suggests the rate could be looking to carve a lower top below the 2016 high at 0.7835 in favour of the next major downside extension. Look for a break back below 0.7421 to strengthen this outlook and accelerate declines towards 0.7000 in the days ahead. Ultimately, only a daily close back above 0.7758 will negate the bearish outlook and invite a retest of the 2016 highs.
- R2 0.7700 – Figure – Medium
- R1 0.7630 – 11Nov high– Medium
- S1 0.7524 –14Nov low – Medium
- S2 0.7507 – 13Oct low – Strong
AUDUSD – fundamental overview
Aussie setbacks have been supported by leveraged accounts and carry traders into Tuesday. The RBA Minutes highlighted underlying inflation was expected to return to normal but that a stronger Aussie could complicate the economic adjustment. Impressive iron ore and copper rallies have also helped to support Aussie, though overall, it’s Fed yield differentials that ultimately should keep the balance tilted in the US Dollar’s favour. Looking ahead, we get US retail sales and some Fed speak from Fed’s Rosengren and Fischer.
USDCAD – technical overview
This market looks to be in the process of carving out a longer-term base off the 1.2461, 2016 low. Look for any additional weakness to be supported ahead of 1.3000 in favour of the next major upside extension towards a measured move objective into the 1.4000 area. Ultimately, only back below 1.2764 would delay the constructive outlook.
- R2 1.3654 – 18Feb low – Strong
- R1 1.3589 – 14Nov high – Medium
- S1 1.3457 – 11Nov low – Medium
- S2 1.3387 – 10Nov low– Strong
USDCAD – fundamental overview
The Canadian Dollar continues to take its hits despite some broad based risk on trade post Trump, with the Loonie clearly more focused on US yield differentials and falling OIL. The market has done a 180 on pricing the Trump presidency and is now looking for Trump to push the Fed into a more aggressive position of normalising monetary policy given Trump’s higher inflation policies. Canadian Dollar bulls are also worried about what Trump means for existing trade deals and any hiccups that may come from a possible renegotiation of these deals. Meanwhile, OIL prices continue to slump and this only adds to the downside pressure on the commodity currency. Looking ahead, we get Canada existing home sales, US retail sales and some Fed speak from Fed’s Rosengren and Fischer.
NZDUSD – technical overview
The pressure has shifted back to the downside with the market now expected to be very well capped on rallies. Look for a fresh lower top at 0.7403 in favour of the next major downside extension below 0.7000 and towards medium-term support at 0.6675 further down.
- R2 0.7229 – 11Nov high – Strong
- R1 0.7177 – 10Nov low – Medium
- S1 0.7070 – 14Nov low – Medium
- S2 0.7035 – 13Oct low – Strong
NZDUSD – fundamental overview
The New Zealand Dollar hasn’t been able to catch much of a break of late, with increased Fed rate hike odds, a New Zealand earthquake and softer Monday China data all weighing on the commodity currency. Perhaps the only supportive driver at the moment has been the ongoing demand for global equities, which serve as a prop to the risk correlated Kiwi. Looking ahead, all eyes will be on today’s GDT auction result and US retail sales. We also get Fed speak from Fed’s Rosengren and Fischer.
US SPX 500 – technical overview
While this latest surge back towards the record high could compromise what has been the possibility for a toppish structure, the risk is still tilted to the downside if the market fails to establish above the record high from August just shy of 2200. But ultimately, at this point, any topside failure will also need to be met with a break back below 2100 to once again encourage the possibility for a bearish structural shift.
- R2 2194.00 – 23Aug/Record high – Strong
- R1 2185.00 – 10Nov high – Medium
- S1 2148.00 – 8Nov high – Medium
- S2 2100.00 – Psychological– Strong
US SPX 500 – fundamental overview
Reaction to last week’s US election has been dominated flow with stocks shockingly surging back to record highs despite Donald Trump emerging as the next President of the United States. But overall, once the election volatility is out of the way, the market will need to once again think about the bigger, more worrying issue at hand, which is an exhaustion of global monetary policy tools and an inability for central banks to continue to support and stimulate the global economy. This leaves financial markets vulnerable to any shocks and exposed to intense periods of additional risk liquidation going forward. US retail sales and Fed speak from Fischer and Rosengren on tap.
GOLD (SPOT) – technical overview
Despite a major setback, the overall structure remains highly constructive with the market in the process of carving out a longer-term base. Look for any weakness to be very well supported above 1200, with only a close back below this level to delay the bullish outlook and give reason for pause. Back above 1300 strengthens the outlook and should accelerate gains towards a retest of the 2016 peak at 1375.
- R2 1337.30 – 9Nov high – Strong
- R1 1265.50 – 11Nov high – Medium
- S1 1211.60 – 14Nov low – Medium
- S2 1199.90 – 30May low – Strong
GOLD (SPOT) – fundamental overview
Overall, GOLD has been very well supported in 2016, with the yellow metal finding solid demand from medium and longer-term players on the back of fears over the limitations of exhausted monetary policy, extended global equities, systemic risk and a bet that record low inflation will eventually start to turn up. All of this will almost certainly continue to keep the commodity in demand, even if the Buck is propped, with many market participants fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax. Dealers cite strong demand in the $1200 area.
Feature – technical overview
USDMXN has raced to a fresh record high with the market surging through critical psychological barriers at 20.000. The break to new highs now opens the door for a measured move upside extension towards 22.0000 in the sessions ahead, following a period of consolidation roughly between 18.0000 and 20.0000. At this point, only back below 18.000 would compromise the highly constructive outlook.
- R2 22.0000 – Measured Move – Strong
- R1 21.3950 – 11Nov/Record High – Medium
- S1 19.5490 – 3Nov high – Medium
- S2 18.1600 – 9Nov low – Strong
Feature – fundamental overview
The danger of a Trump Presidency to the Mexican economy has become a reality, with Trump emerging victorious in last week’s US election. This has opened a dramatic collapse in the Peso, with the currency sinking to a fresh record low against the Buck and down some 10% post election. This will make the Banxico’s job extremely difficult going forward, with some expecting the central bank announce as much as a 100 basis point rate hike as soon as this Thursday. And while a hike of this magnitude may slow the pace of the Peso depreciation, it will also act as a major strain on the local economy and Mexico’s growth prospects. Still, for now, the Banxico has preferred to hold off making any immediate decisions and this has proven somewhat effective, with the central bank getting help from the surprising surge in risk assets which is supportive of the emerging market FX bloc.