- AUD was broadly weaker yesterday following the release of RBA’s minutes, as it appears increasingly likely the RBA will cut rates to 0.1% at their November meeting. Having discussed lowering the Australian dollar and yields by purchasing long-term debt, markets are now pricing in an 82% chance of a cut at their next meeting.
- Commodity crosses accounted for most of the volatility among the 28 currency pairs we track, with AUD/CAD and NZD/CAD producing the most bearish returns yesterday and EUR/AUD the most bullish.
- It was a flat session for US indices, with hopes of stimulus initially supporting stocks yet news that the US Government may try and break up Google to reduce their industry dominance weighed on sentiment.
Today’s Calendar Events (Time are GMT+10 Sydney)
- No major economic data is scheduled for the Asian session today.
- Inflation for UK and Canada are the main events in the later sessions, placing GBP and CAD pairs into focus.
EUR/GBP: Potential Breakout of Bullish Wedge
- In recent weeks we have tried to partake in EUR/GBP but price action proved too messy. A recent burst of bullish momentum has put it back onto our radars.
- The daily chart has failed to close beneath the 61.8% Fibonacci retracement to show demand above 0.9000.
- A bullish hammer ahead of the breakout was followed with a break above the wedge’s descending trendline
- If successful, the wedge projects a target around the 0.9290 highs. Bulls could consider bullish setups above yesterday’s low or wait for a break above yesterday’s high to assume bullish continuation.
Copper (XCUUSD): Close to a 28-Month High
- Industrial metals have rallied following stronger than expected construction and industrial data for China this week, taking Copper prices to a 28-month high.
- With the next major resistance near the 331 highs, we would prefer an open target as long as prices remain above prior resistance (around 309).
- Bias remains bullish above 309 although, if targeting the 331 highs then 300 could also be considered to aid with longer-term risk management.
Nasdaq 100 (USTEC): Bears Eye and Break of 11,600 Support
- A bearish engulfing candle appeared on H4 near the end of the US session, after resistance around 11,805 was reaffirmed.
- A break beneath 11,600 assumes bearish continuation. Bears can either considering entering on a break or waiting for a retracement towards 11,600 to see if support can turn into resistance.
- A clear break beneath 11,600 targets the 11,211 lows.
Bitcoin (BTCUSD): Initial target of 12,000 reached. After a retracement or period of consolidation the next target around the 12,400 highs are in focus.
AUD/CHF: Both targets reached. Given the extended nature of the move we would prefer to wait for a period of consolidation or a retracement before reconsidering shorts.
CAD/JPY: Bullish momentum returned and stopped just shy of our initial target around 80.60. Whilst H1 trend structure remains firmly bullish, the reward to risk ratio is now inadequate for longs until prices consolidate.
EUR/AUD: Bullish momentum has accelerated and prices are now around half way towards the 0.7100 target. Given the extended nature of the move we would prefer to wait for a period of consolidation or a retracement before reconsidering shorts.