- US and European shares closed broadly higher overnight on fresh hopes of fiscal support, following comments from President Trump.
- The Canadian dollar is also broadly firmer due to higher oil prices, despite BOC (Bank of Canada) Governor leaving negative rates on the table in a speech last night.
- Oil output shutdowns in Gulf of Mexico saw WTI and Brent futures hit a 2-week high and support CAD pairs.
- US President Trump has refused to participate in the 2nd Presidential debate as it had been changed to a virtual event. “I’m not going to waste my time on a virtual debate”, fearing his mic could be cut off “whenever they want”. Joe Biden will now do it as a solo event.
- China’s Service PMI could direct sentiment in the Asian session with a miss or beat, relative to expectations. A stronger number tends to improve risk sentiment and support AUD/JPY, NZD/JPY and equity indices. Asian traders will likely focus on the ASX 200 (AUS200), Nikkei 225 (JP225), Hang Seng (HK50) China A50 (CN50) but US indices such as the S&P 500 (US500) will tend to move in tandem.
- UK GDP is expected to contract at a slower rate, which leaves room for disappointment (and potentially a weaker GBP) if it misses target.
- A weaker Canadian employment report could weigh on CAD pairs, given their governor reiterated that negative rates are the table. However, oil prices remain a key driver so if output in the Gulf Coast remains limited (and oil remain firm), a strong employment report may provide a bullish move for CAD.
GBP/CAD: 1.7037 is Pivotal
- GBP/CAD fell to a 2-week low overnight but found support at a rising trendline.
- A bullish hammer is trying to form at 1.7037 and the stochastic oscillator has reached oversold, which suggests mean reversion could see it correct higher.
- However, if prices break the trendline, bears could then target the 1.6900 and 1.6820 lows.
- How prices react around 1.7037 are key to its next directional move.
Gold (XAU/USD): 1900 Resistance Reaffirmed
- Prices found resistance overnight at 1900, by the 100-bar eMA and 61.8% Fibonacci retracement.
- The bias remains bearish on H4 below 1900. A break beneath 1881 assumes a bearish run towards 1850.
- The bias on D1 remains bearish below 1921,91. A bearish triangle remains in play which, if successful, projects an initial target around 1780.
EURCAD: Break of Rising Support
- Prices broke the rising support line with strong bearish momentum overnight.
- Whilst support has been found around 1.5510, the strength of the bearish break is keeping us on guard for further losses towards the 1.5430/40 zone.
- Bears could seek to fade into minor rallies, or seek bearish setups around the 1.5540/48 and 38.2% Fibonacci resistance zones.
Watchlist Update:
USD/JPY: The inverted head and shoulders pattern remains valid above the right shoulder. A break above this week’s high targets the 10655/70 resistance zone.
USD/CAD: Bears drove USD/CAD through the 1.3250 support zone and are on track to test the lows around 1.3135. The bias remains bearish below 1.3250.
Nasdaq 100 (USTEC): A break beneath 11,183 brings the September low into focus for bears, a break above 11,600 assumes bullish continuation.
Silver (XAG/USD): D1 bias remains bearish 24.50. Whilst we saw an initial break above the 61.8% Fibonacci zone, a bearish engulfing candle has formed on H4. A break beneath 23.63 assumes bearish continuation.
