- Wall Street was given a boost overnight by stronger than expected PMI data. Manufacturing PMI hit a 2-year high and Services is back near it 2020 peak, although most agree the road ahead could prove more difficult with lockdowns being reinstated.
- Earlier in the European session, Manufacturing PMI for Germany, France and the Euro zone were upgraded slightly to show firmer growth potential.
- Joe Biden continues to lead in the polls, with FiveThirtyEight’s poll average suggesting he has a +8.4 lead over Trump (51.7% for Biden vs 43.3% for Trump).
- To help support oil prices, Russian oil company executives are considering extending oil output through to Q1 2020.
Today’s Calendar Events (Time are GMT+10 Sydney)
- RBA’s cash rate decision is the main economic event today. Markets are pricing in an 84% chance of a rate cut in today’s meeting, so the more volatile response could be if RBA surprise with a hold which would likely send AUD broadly higher. The consensus is for RBA to cut from 0.25% to a new record low of 0.1%.
GBP/AUD: Struggles at The Highs
- The British pound is under pressure due to the UK’s latest national lockdown announced over the weekend. And as today’s RBA cut is already priced in, it leaves potential for a stronger AUD if they surprise by holding rates. Moreover, a Biden or Trump win could send risk assets (such as AUD) if announced on Wednesday (and no results are contested).
- A bearish outside day close back below 1.8408 resistance to suggest the market it trying to top out.
- A clear break of the trendline suggests a change in trend and brings the 1.7970 low into focus.
ASX 200 (AUS200): Seeking a Minor Break Above 6k
- We could see the ASX 200 take the positive lead from Wall Street overnight and break back above 6,000.
- A series of bullish hammers / pinbars have formed on the daily chart near recent low to suggest the sell-off from 6,250 is overextended and due a bounce.
- A break above 6,000 (yesterday’s high) assumes a run towards 6,100. This target could be extended if sentiment remains positive towards Wednesday’s US election.
Brent (BRENT): Bullish Engulfing Day at the Lows
- A bullish engulfing candle has formed to show demand at the lows.
- A break above 39.50 assumes bullish continuation, with the initial target being near the gaps around 41.63.
- Whilst a break below 39.48 (engulfing low) invalidates the bullish bias, traders could use the 50% retracement level of yesterday’s candle to fine-tune risk management.
AUD/JPY: Removed from watchlist. Whilst prices remain beneath the 73.97 – 74.20 resistance zone yesterday’s bullish engulfing candle makes us err on the side of caution. We can reconsider longs if a swing high forms.
CHF/JPY: A small bullish Doji has formed above the 200-day eMA. We now need bullish momentum to return to suggest the swing low is in place.
EUR/AUD: Removed from watchlist. Whilst prices remain above the 1.6460 low we’d prefer to see volatility subside before reconsidering long opportunities.
Ethereum (ETHUSD): The gap has been filled and momentum is pointing lower, although the monthly pivot point continues to provide support. The bias remains bullish above the 372.79 low but momentum needs to turn higher soon.
USD/CNH: The bias remains bearish beneath the two-bar reversal.
AUD/USD: Prices remain above key support at 0.7000. There’s potential for a bounce from current levels which could remains within the bearish triangle. But if Biden wins a landslide victory then we’d expect risk-on sentiment to push AUD firmly higher. A break below 0.7000 assumes bearish continuation.
AUD/CHF: Removed from watchlist. Bullish momentum has taken prices near 0.6500 resistance and is not the characteristic we were seeking for a bearish swing trade.