The FX markets are certainly pricing in a very close US Presidential Election. The dollar has come under some very intense pressure over the last few days. There seems to be a flight to safety and the Yen, Euro and the Pound have been beneficiaries. Remember, margins will be increasing over the weekend as a precaution!
Dean's Daily FX Update – 04 November 2016
In the Zone
- EURUSD
- AUDUSD
- NZDUSD
Noteworthy News
- A British Court ruled that PM May has to consult with Parliament before triggering Article 50. This will be appealed in the Supreme Court and will be very keenly followed. The basic take away here is that in theory British Parliament could decide to ignore the Brexit referendum result and decide to stay in the EU. This is a long shot, but any chance that we don’t get a Brexit will support the GBPUSD.
Recap
The last time that the US Equity Market had 8 consecutive down days it was the year 2008, it was also the start of the market crash. Before we all have flash backs to the subprime market crash it is important to put it into context – in 2008 the market lost well over 20% in those 8 days, this time round it is a mere 3%. The reason is not entirely clear at this point but as we discussed this week, this market does seem to be squeezed a little too high, and you may find traders taking some meat off the table leading into US Elections.
For those of you brave enough to take GBPUSD longs last week – WOW, you were certainly rewarded for your bravery! It had the benefit of a “double whammy” yesterday, first was the news of a court ruling that Article 50 needed parliamentary approval and secondly BOE Governor Carney was very hawkish in his statement. This was the strongest the GBPUSD has traded since the flash crash in October. The key level to watch today is 1.2475, sustained trading above this level could mean the pair is off to the races again. I am more inclined to think that traders may fade this move though (we discuss fading briefly in the video today.)
As discussed yesterday the equity markets are leading the USDJPY, this pair is going to see some choppy sessions leading to 8 November and will be most affected by US Election coverage – I will write up a “US Election cheat sheet” for you this afternoon. The key levels here today is 102.80, this is confluence of our 50% Fib and major support, we need to hold support here otherwise this pair will come under pressure leading into the weekend.
Likewise, the EURUSD will experience some choppy sessions, it lost some of its gloss last night but keep an eye on the 1.1085. We need to hold support there if we are to have another leg higher.
The USDCAD is in a frustrating range at the moment, even a desperately under siege oil price can’t push this pair higher and the market is seeking answers other than oil to push this pair either higher or lower. Coupled with US NFP data today we also have the Canadian employment report and maybe this can lead the market today?
The NZDUSD as anticipated was strong for the most part of the day – we spotted a potential head and shoulders pattern forming yesterday and in today’s video we will monitor if we found resistance for this pattern to materialize.
All eyes this afternoon will be on the US NFP data release, as usual I am not in the market today and with US Elections on Tuesday I have even more incentive to sit out as I don’t want to be holding any positions as we go into the weekend.
Daily FX Ranges
EURUSD
Resistance 1.1120 – 1.1140
Support 1.1075 – 1.1050
GBPUSD
Resistance 1.2470 – 1.2500
Support 1.2357 – 1.2340
AUDUSD
Resistance 0.7691 – 0.7710
Support 0.7650 – 0.7626
NZDUSD
Resistance 0.7330 – 0.7350
Support 0.7295 – 0.7280
USDCAD
Resistance 1.3400 – 1.3420
Support 1.3360 – 1.3330
USDJPY
Resistance 103.30 – 103.50
Support 102.80 – 102.35
USDCHF
Resistance 0.9768 – 0.9780
Support 0.9700 – 0.9670
USDZAR
Resistance 13.5675 – 13.7000
Support 13.3800 – 13.3000
Important Economic Data out today
- 14:30 CAD Employment Change
- 14:30 CAD Unemployment Rate
- 14:30 USD Average Hourly Earnings
- 14:30 USD Non-Farm Employment Change
- 14:30 USD Unemployment Rate
High Risk Investment Warning: Trading foreign exchange and/or contracts for difference on margin carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. Before deciding to trade the products offered by BlackStone Futures you should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin. BlackStone Futures provides general advice that does not take into account your objectives, financial situation or needs. The content of this Website must not be construed as personal advice. BlackStone Futures recommends you seek advice from a separate financial advisor. Please take the time to read our Risk Disclosure Notice.
