- In true Trump style, the President added confusion over his stance on the Covid-19 stimulus package after calling on congress to approve a series of smaller deals, just 24 hours after completely calling them off. Naturally, this boosted his beloved stock market which had closed aggressively lower on Tuesday following his original comments.
- Asian equities are expected to see a positive open on Wall Street’s lead. With airlines likely to receive government aid, The DJI enjoyed its best day since June to close 1.9% higher with Boeing rallying 3.2%, and the Nasdaq 100 and S&P 500 losing the session 1.9% and 1.7% higher, respectively.
Vice Presidential Debate (12pm Sydney Time)
- Vice President Mike Pence and Vice President nominee Kamala Harris square off in their first and single debate. As Vice President’s don’t get to call the big shots in the White House, its market impact is usually less severe than the presidential debates. But given that Trump is recovering from Covid-19 ahead of the election, Mike Pence will need to put in an excellent effort to appeal to his base and swing voters, so markets may react more than usual based on his performance today. Still, we are far more likely to be treated to a ‘grown up’ debate than that seen between Trump and Biden, which boiled down to name calling, talking over one another and seething hatred. At least, let’s hope so.
- There’s no major economic data is released today in the Asian or European session.
- US jobless claims brings US indices and USD pairs into focus, particularly if it is a large deviation from expectations.
USD/JPY: Breakout from Resistance
- Prices broke above 105.80 resistance overnight and the H4 timeframe is carving out a bullish structure.
- A potential inverted head and shoulders pattern has formed which, if successful, projects an initial target around 106.70.
- The bias remains bullish above ‘RS’ (right shoulder) and bulls can seek to enter on dips, or a break above yesterday’s high to target the 106.55 – 106.70 zone.
USD/CAD: Dollar remains Sensitive to Trump’s Whims
- As long as a stimulus package is on the horizon and Trump’s health does not deteriorate, equities are more likely to rally and USD more likely to fall (they share an inverted relationship at present). And given Trump is desperate to win re-election, he probably wants to support stocks. If the stimulus package and is health falter, equities are more likely to fall and USD rally.
- Despite yesterday’s bullish bias, the game has again changed. But support around 1.3250 remains key.
- A clear break below the 1.3250 support zone with equities trading higher assumes bearish continuation. If USD/CAD rebounds whilst equities fall it suggests bullish continuation.
- Given the turbulence from Trump, it may be better to remain nimble.
Silver (XAG/USD): Retracement Stalls At Resistance
- Like gold, silver also produced a bearish outside day on Tuesday. Prices have since retraced which is of interest to bearish swing traders.
- A wide legged doji has formed on H4 below the 50-bar eMA and 61.8% Fibonacci retracement to suggest a swing high is in place.
- A break below the doji assumes bearish continuation.
- The bias on D1 remains bearish below 24.50, although the doji high can also be used to fine tune risk management on intraday timeframes.
EUR/GBP: Prices broke higher to confirm the a breakout of the bullish wedge highlighted yesterday. Yet the reversal lower and bearish pinbar close warns of exhaustion at the get go, so we will step aside for now and seek a better entry.
AUD/NZD: Removed from watchlist. A bullish engulfing candle has taken it clearly above the bearish channel in a risk-on environment.
Hang Seng (HK50): Removed from watchlist with a clear break above 24,156.
S&P/ASX 200 (AUS200): Bulls have taken it to 6000 in the sideways range. We’ll continue to look for signs of weakness for bears to fade into below 6200 as part of the range trading bias.