- Top Republicans have promised a peaceful transfer of power if Joe Biden wins the election, after Trump refused to commit to a peaceful transfer if he loses the election. Then again, Trump did say he would not accept the results if Hillary Clinton won the 2016 election, so there’s no real surprise on Trump’s view.
- Democrats are reported to be be working on a $2.2 trillion Covid-19 stimulus package which could be voted on next week.
- US jobless claims are on the rise again, with 12.58 million US citizens filing their first claim and 26 million now on unemployment benefits.
- SNB (Swiss National Bank) held interest rates at -0.75% as expected, but are ready to intervene and weaken their currency if global political risks cause the Swiss franc to rise due to safe-haven flows.
- It was a slightly indecisive session by the close with doji’s on the S&P 500 (US500), USD/JPY, EUR/USD and Gold (XAU/USD) forming on the daily charts. US indices closed marginally higher, European were lower – so we could be in for a mixed session in Asia today with a quiet economic calendar.
- No major economic data is scheduled for today
- Fitch ratings are to review the UK’s credit rating (no time scheduled). Any downgrade will put GBP pairs and FTSE into the volatility hotspot.
AUD/USD: Potential to Mean Revert
- After a very bearish week, AUD/USD could potentially mean revert today given the lack of any pullback and the fact the sell-off stalled just above 0.7000 support.
- RSI (2) was also at ‘0’ which flags an extremely oversold condition. It has not been at zero since the March low.
- It is debatable whether this is one to trade, but it does highlight that several USD pairs look exhausted after such a busy week (to the USD’s favour) so we could see some retracements among FX majors. Even if only mild bounces.
USD/CNH: 6.8000/70 Could Be Pivotal
- As the US dollar index rally is losing steam, several USD pairs may now retrace which could help USD/CNH move lower.
- USD/CNH remains in a strong downtrend, and today’s price action has moved lower after printing a Doji on the daily chart (not pictured).
- Prices are in a corrective channel, so whilst the 0.6800/70 support zone holds, it runs the risk of a minor bounce higher.
- Yet a break beneath the support zone brings the 0.7600 / 0.6770 zone into focus (historical gap).
GBP/USD: Brexit Talks Remain the Key Driver
- With Brexit talks resuming in Brussels, GBP pairs will be sensitive to any rumours or headlines that arise from them.
- GBP/USD is consolidating between 1.2670/80 which leaves three potential scenarios; it remains rangebound or breaks out to the upside, or the downside.
- If the session remains uneventful, range trading strategies could be considered (bears sell at the tops or bulls go log at the bottom)
- A break above 1.2780 brings the 1.2870 high into focus, a break below 1.2670 rings 1.2600 into focus.
USD/CHF: Prices broke above 0.9240 resistance but, with a quiet calendar ahead of the weekend it could be vulnerable to a retracement. If traded, perhaps kept on very low timeframes – we can revisit this next week.
NZD/CHF: Bias remains below 0.6120 high (daily bearish outside day). However a minor bullish day closed back above 0.6040 support which warns of a bear-trap. We will step aside and reassess next week.
EURO STOXX 50 (STOXX50): Intraday break failed to close beneath 3145 support, although the potential for a multi-month rounding top remain in place. A break beneath last week’s low could assume bearish trend continuation.
US30: The bearish bias worked well overall. Yet with the indecision candle on the daily chart, we’ll step aside and reassess next week.
GBP/CAD: Bias remains bearish beneath the bearish resistance zone highlighted on Wednesday.
EUR/JPY: The tight consolidation continues. We will continue to monitor for a breakout from compression, whichever way that may be.