- Joe Biden continued to edge closer to victory overnight, despite President Trump’s legal bids to stop vote counting and claims of voter fraud. Still, it remains a tight race which could go either way.
- Equities remained firm in the belief a result is not far off. Joe Biden just needs to win 6 more votes, so a victory in Nevada would seal the deal. However, Trump remains ahead in the remaining swing states so, if Biden were to lose Nevada, Trump remains in power.
- The Fed kept policy unchanged, which is no major surprise given we are in the middle of an election.
- The BOE (Bank of England) held interest rates at 0.1% but increased their QE program by £150 billion to help the UK’s flailing economy and warned that GDP could contract this quarter. They upgraded their CPI forecast to 0.5% in Q4 from 0.25%, and revised unemployment lower to 6.25% from 7.5%.
- The USD retained its inverted correlation with equities and traded lower against its major peers. Most notably, USD/JPY cut through 104 support like a knife through butter. We expect BOJ to remain traders they will “watch the exchange rate closely” to try and taper yen strength.
Today’s Calendar Events (Time are GMT+10 Sydney)
- Updates from the election is likely to remain the key driver for markets.
- All eyes are on Nevada who are taking a long time to release the final 25% of their votes. Offering the 6 electoral votes he needs for victory, Nevada currently favours Biden for a win.
- Trump is ahead in Georgia (99% reported with 16 votes), North Carolina (94% reported with 15 votes) and Pennsylvania (88% reported with 20 votes).
- RBA release their quarterly MPC (Monetary Policy Statement). Given they have just cut rates it may have less impact than usual, although it does provide their latest forecasts which allows traders to fine tune their longer-term views on AUD and their expectations for further easing along the way.
- Nonfarm payrolls is expected to see job growth soften to +600k (+661k prior) and unemployment go down to 7.7% (7.9% prior). Average hours worked is expected to remain steady at 374 hours per week. Barring a major miss, it may have a limited impact on the USD dollar compared to any election result.
Gold (XAU/USD): Correction Phase Over?
- Gold may have finally broken out of its corrective phase and realigned with its long-term bullish trend with a break above 1933 resistance.
- 2000 – 2015 are now in focus for bulls, who could consider bullish setups on periods of consolidation or a retracement towards 1933 support.
- A break above 1933 invalidates the bullish bias over the near-term, although we’d remain bullish further out unless bearish momentum returns in a big way.
ASX 200 (AUS200): Preparing For A Break to New Highs?
- Bullish momentum took it swiftly towards our 6200 target after printing 3x bullish pinbars.
- Given the positive sentiment with global equities and the potential for an election result over the next 24-hours, we’re monitoring for a breakout above 6250.
- A break above 6250 brings the 6500 highs into focus.
- If bearish momentum returns below 6250, bears could consider trading the range ad initially target 6000.
WTI (WTI): Rally Stalls at the 200-day eMA
- Oil prices extended their gains for another two days after printing bullish engulfing candles on Monday.
- However, WTI has printed a small bearish candle below the 200-day eMA and 39.50 resistance to suggest a retracement could be o the cards.
- Over the near-term, bears could seek bearish setups with a break beneath yesterday’s low. Or revert to a bullish bias with a break above 39.50.
S&P 500 (US500): Prices broken above the monthly pivot / resistance zone in line with dominant momentum. The key levels highlighted yesterday remain unchanged, which could provide targets or reversal points for price action around the election results.
Ethereum (ETHUSD): Momentum has taken it closer to the initial 425 target and a new level of support has been created around 395.
GBP/AUD: Prices have stalled just above the initial 1.7970 / 1.8000 target. We would prefer to see a period of consolidation before reconsidering shorts.
AUD/USD: Momentum point firmly higher after rebounding from 70c support. Prices are closely tracking global equities, so bulls could consider continuation patterns on intraday timeframes as long as this correlation holds true.