- Indices closed lower for a second session as they continued to retrace from their highs, as US Treasury Secretary Mnuchin says that a coronavirus stimulus package before the election appears unlikely.
- French President Macron announced a late-night curfew for residents of Paris and reinstated their Covid-19 state of health emergency to tackle the 2nd wave of cases.
- Volatility was mostly contained overnight in FX. GBP/USD was the largest mover, closing 0.6% higher ahead of Boris Jonson’s self-imposed Brexit deal deadline of the 15th October, as traders bet that talks will continue later into the week.
- Gold (XAU/USD) and Silver (XAG/USD) also turned lower after bulls failed to break key resistance levels earlier in the week.
- With AUD in the doldrums following a potential flare in trade tensions with China, then a weak employment report at 11:30am Sydney could weigh on AUD more than it otherwise would. The surprise boost of 111k jobs last month was a welcome surprise but few expect this momentum to be maintained. Unemployment is also expected to rise to 7.1%.
- Chinese inflation data is also a key data release at 12:30 pm Sydney. Producer prices (PPI) fell -2% in August, its slowest contraction since turning negative in April. Therefore, anything above -2% will be seen as a positive for markets.
- Boris Johnson’s unofficial deadline is today, although GBP ha already rebounded as its now expecte talks will continue even if a deal isnot reached today.
FTSE 100 (UK100): Swing High In Place?
- The UK100 is setting up for a potential swing trade short within its bearish channel.
- The 50 and 100-day eMAs are capping as resistance and prices are firmly below 6,000 again.
- Bears could consider fading into minor rallies between 5953 (bearish engulfing low) and 6,000 (psychological round number) or a break of yesterday’s low.
- Initial target is the 5775 low and then the lower channel lines.
Nasdaq 100 (USTEC): Near-Term Bias is Bearish Below 12,046
- A head and shoulders (H&S) reversal was confirmed with a break beneath 12,033.
- Prior support has now turned into resistance, which was confirmed with a 2-bar reversal around 12,050.
- If successful, the H&S top projects a target just above 11,800.
- The near-term bias remains bearish below 12,500.
CHF/JPY: Tracking EUR/JPY Lower?
- The setup is similar to EUR/JPY but the correlation has a delay. If so, we could see further downside on CHF/JPY.
- A bearish trendline has been broken and prices have consolidated between 115.00 and 115.40.
- A clear break of yesterday’s low (114.97) brings the lows above 114.00 into focus.
- The bias remains bearish below 115.40.
Watchlist Update:
ASX 200 (AUS200): A second bearish hammer formed below 6,200 resistance to suggest a correction could be due before breaking higher.
AUD/CAD: The bias becomes bearish with a break beneath 0.9390 support with the initial target being 0.9266. A break above 0.9500 removes it from the watchlist.
EUR/JPY: Prices broke beneath the bearish outside bar low. The target of 123.00 remains although a minor correction could be due before reaching target.
Bitcoin (BTCUSD): H4 bias remains bullish above the 11,173 low, target of around 12,000 remains.
S&P 500 (US500): Bias remains bullish above the 3490/3500 support zone. Prices are currently retracing from their highs so we will continue to look for a swing low.
Brent (BRENT): Bias remains bearish below the 43.60 – 44.20 range although momentum has turned high. We stand on guard for a potential bullish breakout (see WTI analysis above).
