- Donald Trump abruptly cancelled Covid-19 stimulus talks with Democrats until after the election, prompting a risk-off tone in Wall Street. The Nasdaq, S&P 500 and DJI fell -1.9%, -1.4% and -1.3% respectively. AUD/JPY and precious metals also finished lower.
- Earlier in the session, Fed Chair Jerome Powell reiterated that negative rates are not a tool the Fed are looking to use, and that coordinated central bank coordination is essential and ongoing (basically, expect low interest rates and asset purchased for some time).
- The RBA held rates as expected yesterday. They anticipate unemployment “to remain high for an extended period” but not as high as originally feared. The cash rate will not be raised until progress is made towards full employment and they are confident that inflation can be sustained between 2-3%. (So, again, do not expect a rate hike any time soon).
- Also in Australia, the Morison government revealed their 2020/2021 budget and which included tax cuts and extra spending, although markets didn’t seem to think it was quite adequate given the sanguine response on ASX 200 and AUD pairs.
- No major economic data is released today.
- CAD pairs in focus for Ivey PMI data.
USD/CAD: Failed Break of Key Support?
- After an intraday break failed to hold beneath 1.3250 support and the rising trendline, a bullish outside candle has formed to suggest a swing low could be in place.
- The bias remains bullish above yesterday’s low, and bulls could look to target the highs around 1.3400.
- Bulls could consider long opportunities above yesterday’s high, or seek to enter upon a retracement within yesterday’s range.
EUR/GBP: Potential Bullish Wedge
- Price action has been choppy on EUR/GBP but a bullish wedge appears to be forming.
- Given the strong, bullish momentum leading into the wedge formation, we are looking for a bullish breakout.
- The bias remains bullish above 0.9088. If successful, the wedge projects a target around the 0.9290 highs.
- Bulls could consider a break above 0.9126, although take note of resistance nearby at 0.9158. But if bullish momentum is to return (like seen at the beginning of September), resistance level may not prove too much of an issue for the bull camp.
Gold (XAU/USD): Clear Rejection at 1921
- Last week we had been looking for a swing trade short below the 1900-1921 resistance area. However, prices pushed slightly higher to remove it from our watchlist. The game has now changed.
- A bearish outside bar has formed around the 61.8% Fibonacci retracement level and back below the 50-day eMA to suggest a swing high has formed at 1921.59.
- A bearish triangle, if successful, projects an initial target around 1780. Bears could initially target the 1850 lows.
USD/JPY: The bias remains bullish whilst prices remain above Monday’s low (105.25). A clear break above 105.80 brings the 107 high into focus for bulls.
Hang Seng (HK50): Prices have retraced towards 24,146.69 resistance , and we now require bearish momentum to return quickly to retain our bearish view. If Asia follows Wall Street’s weak overnight lead then prices may indeed begin to turn lower.
AUD/NZD: Bias remains bearish below the bearish trendline. Prices have now broken beneath 107.69 support to assume bearish continuation.
EUR/USD: Prices retraced towards (and slightly beyond) the broken trendline. We prefer to step aside until the picture becomes clearer.
Silver (XAG/USD): Removed from watchlist. Bullish momentum failed to materialise before rolling over from its highs. A bearish outside day makes it of interest for a swing trade short, but momentum needs to subside for a better entry.
S&P 500 (US500): Removed from watchlist. Trump cancelled Coronavirus stimulus talks with democrats which left a bearish outside day on the S&P 500. For bearish setups we prefer the Nasdaq-100
S&P/ASX 200 (AUS200): A bullish hammer closed above 5,800 to suggest a swing low is in place. Bulls can target the 6,000 to 6,200 zone, although a retracement lower would help increase reward to risk potential.