- Joe Biden won the race to the Whitehouse after four gruelling days of counting. Trump is yet to concede (and not ever likely to) and is pursuing to get the result overturned due to claims of voter fraud. The markets appear to be looking past this with indices, commodities, crypto all trading higher.
- Equities embraced the election with all major markets moving higher in tandem. Volatility was not shy either, with all major markets we tracked far exceeding their 10-week ATR’s (average true ranges).
- Precious metals broke key resistance levels as it appeared that Biden was likely to win the presidency. With the potential for higher taxes and inflation, gold could perform well under his presidency.
- The US dollar was broadly lower, with USD/CAD near September’s low, USD/JPY breaking beneath 104 and USD/CNH hitting its lowest level since June 2016.
Trader FX Positioning (COT Report):
As of Tuesday 3rd November:
- Large speculators flipped to net-short exposure on Australian dollar futures. Gross shorts increased by +7k contracts and gross longs were reduced by -3.2k contracts.
- British pound traders reduced their gross long positions to increase their net-short exposure by 4.6k contracts.
- The largest volume changes for the week were on Euro and JPY futures, which saw Euro net-long exposure reduced by -15.2 contracts and JPY futures net-long exposure increased by +10.2k contracts.
Calendar Events This Week (Time are GMT+10 Sydney)
RBNZ Interest Rate Decision
No change is expected, although RBNZ has remained very vocal about the possibility of negative interest rates, so we expect this to be reiterated in their statement. They are however expected to provide details on their FLP program (Funding for Lending) to help businesses. They also release their quarterly MPC (monetary policy statement) which provides their updated economic forecasts and expectations.
USD/CHF: 0.9000 Could Be Pivotal
- The dollar’s demise continues as it weakens across the board. USD/CHF is in a strong downtrend on the weekly chart and closed on key support at 0.9000.
- It also produced a bearish outside week to show bears remain in control.
- Prices gapped below 0.9000 today but traders are tyring to push this higher.
- A clear break back above 0.9000 should be of interest to bullish intraday traders. Whilst bears could also look for evidence of a lower high forming over the coming week/s to anticipate an eventual break beneath 0.9000 and target the 0.8700 lows.
AUD/USD: Bulls Take it to a 6-week High
- Positive sentiment for equities and bearish moves on USD pushed the Aussie to a 6-week high, despite RBA’s rate cut to 0.1%.
- Prices are now consolidating above the 0.7240 support zone.
- A break beneath 0.7240 warns of a deeper correction, although the trend remains bullish above the 0.7048 low. Under this scenario, bears could initially target the 0.7145 low.
- A break above 0.7300 assumes bullish continuation and brings the 0.7340 high into focus.
NZD/CHF: Bulls to Test a Bearish Trendline
- We’ll be keeping a eye on NZD/CHF to see how prices react around the long-term bearish trendline.
- A bullish pinbar appeared 3-weeks ago to suggest strong demand around 0.6000.
- A break above the trendline brings the 0.6290 high into focus. Failure to break the trendline could create a near-term bearish opportunity.
Gold (XAU/USD): Bulls Eye up 2,000
- Thursday’s clear break above the correction line suggests the retracement from the 2070 highs has completed.
- Friday’s doji warned of a hesitancy to break immediately higher. A break beneath Friday’s low suggests a minor correction is underway.
- The bias remains bullish above the 1946 – 1933 support zone. Bulls could consider bullish setups around this area or wait for a break above last week’s high to assume bullish continuation.
Silver (XAG/USD): Following Gold’s Lead
- Silver is following gold’s lead and is trying to resume its bullish trend.
- A break above the prior swing highs and clear break of the correction line suggests the retracement from the 29.80 highs is complete.
- Bulls could consider bullish setups above the 24.50 support zone.
ASX 200 (AUS200): Breaks Out to an 8-month High
- It took longer than originally anticipated, but we have finally seen a break above the 6,200 – 6,250 resistance zone.
- Global sentient suggest further upside potential for the ASX 200.
- The bias remains bullish above 6,200 and bulls can target 6,500.
Bitcoin (BTCUSD): Bull Flag Below 16,000
- The trend structure on the four-hour chart remains firmly bullish and a potential bullish flag has formed just below 16,000.
- The bias remains bullish above 15,200 and a break above 16,000 assumes bullish continuation.
- Bulls could also consider entering a break of the flag’s resistance line, if the reward to risk ratio is adequate for an initial target to 16,000.
GBP/AUD: Prices are consolidating above our 1.7970 / 1.8000 target. A break below 1.7970 assume bearish continuation, although there is the potential for prices to retraces higher before moving lower.
Ethereum (ETHUSD): Bullish momentum exceeded the initial 425 target and have gapped higher today. The bias remains bullish above 425, although we’d prefer to see a retracement before considering new longs to target the 480 highs.