The State Capture report dominated proceedings in South Africa. Forex traders were also focused on the FOMC meeting and unsurprisingly they did not raise rates in the US. We expect more volatility as we approach the US Elections so please take care and adjust your position size accordingly.
In the Zone
- If President Zuma was under pressure yesterday morning, today could be even tougher. The more you read of the State Capture Report, the more you shake your head. The President is in a bit of a corner at the moment and developments could affect the ZAR going forward.
The worst kept secret in the market materialized last night as the FOMC decided to leave rates on hold, this year’s US Presidential Election has been extraordinary and the last thing the Fed wanted to do was hike mere days before. They did leave the door open for a hike in December, the next 5 days will be tough trading. Rumour is that the markets fear for a Trump victory, simply because he is an unknown, it is for that reason that I will sit on the side-lines from now until Wednesday next week because as Brexit illustrated – the unknown can happen.
The Dollar spent the majority of the day where it left off on Tuesday – firmly on the back foot, although not at the same magnitude. We made the conscious decision to move into a “defensive” mode yesterday and instead take our cues off the daily chart.
Due to the “safe haven” element in both the EURUSD and USDCHF, we have seen some nice action in both pairs and will cover this a little bit more in this morning’s video. The USDJPY is in the same boat and on the back of election anxiety, and also in part to weaker Indices the JPY was once again able to make some inroads. Solid support looked to be building at around 103.00 and I was anticipating a real battle at these levels, for now the sellers are prevailing with price trading this morning lower at 102.70. The USDJPY will be influenced by what the equity market does today – US Indices have been had 6 consecutive down days and so there may be a relief rally brewing. Any bounce in the indices will bring with it a bounce in the USDJPY, something to keep an eye on today.
Both the AUDUSD and USDCAD were largely unchanged on the day, both in their weekly trading zones, but as I mentioned earlier I am not looking to take any positions with a NFP release tomorrow and an election on Tuesday. South Africa showed the world yesterday that we have a fully independent Justice System, and the market liked it!! The USDZAR had another bumper day yesterday, technical support at 13.3000 is still very strong though and we immediately bounced off that level.
The NZDUSD was definitely the recipient of the “play of the day” yesterday. Coupled with the weak USD, there was really strong employment and inflation data out of New Zealand and this was the catalyst for the Kiwi to trade 1.50% stronger against the USD. We are nearing key resistance levels now and so another one to keep an eye on.
Daily FX Ranges
Resistance 1.1120 – 1.1160
Support 1.1075 – 1.1050
Resistance 1.2320 – 1.2364
Support 1.2250 – 1.2240
Resistance 0.7670 – 0.7700
Support 0.7634 – 0.7626
Resistance 0.7292 – 0.7320
Support 0.7230 – 0.7220
Resistance 1.3400 – 1.3415
Support 1.3330 – 1.3310
Resistance 103.50 – 103.75
Support 102.80 – 102.35
Resistance 0.9758 – 0.9770
Support 0.9700 – 0.9670
Resistance 13.5675 – 13.7000
Support 13.3800 – 13.3000
Important Economic Data out today
- 11:30 GBP Services PMI
- 14:00 GBP BOE Inflation Report
- 14:00 GBP MPC Official Bank Rate
- 14:00 GBP Monetary Policy Summary
- 14:00 GBP Official Bank Rate
- 14:30 GBP BOE Governor Carney Speech
- 14:30 USD Unemployment Claims
- 16:00 USD ISM Non-Manufacturing PMI
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