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Intermarket:
- SP Futures 3482 (-0.65%)
- EUSTXX 3191 (-0.63%)
- Crude Oil 37.88 (-2.44%)
- US 10YR 0.78
- EurUsd 1.1825 (+0.03%)
- UsdJpy 103.52 (+0.07%)
- DAX 12476 (+0.67%)
While waiting for the US election counting to finish in a few key states, FOMC was largely a non-event as expected. Biden remains favoured and even more interesting is the fact that Senate elections also remain close and the Democrats could still pull off a majority in the Senate.
Stock markets posted another strong performance yesterday but the rally faded a bit overnight on short-term profit taking ahead of NFP and the possibility of the Democrats taking the Senate seem to have weighed on markets.
Beyond the vote count, today we get the October non-farm payrolls numbers. Consensus is for slower job growth and higher earnings. This would be consistent with our favoured leading indicator, the employment component of non-manufacturing ISM. The market is expecting around 590K for the headline and 7.6% for unemployment, but unless we get a large deviation from consensus, the impact of NFPs should be negligible. The main focus remains the US election and there’s a reasonable chance we’ll know the outcome today.
Matters that Matter:
• Vote counts push Biden closer to victory as Trump falsely claims election being ‘stolen’
• Fed’s Powell: Don’t expect any major changes to central bank’s bond purchases
• U.S. COVID-19 cases climb by record for second day in a row, up over 120,000
• Japan PM Suga – Revitalizing economy govt’s top priority, will respond to market moves in coordination with overseas authorities
• RBA says recovery underway, population slowdown a major drag
• China needs to consider policy adjustments but cannot make hasty moves - PBOC vice gov
Majors 1-Day View:
USDJPY
- With a decline of over 1 Big Fig yesterday, signals remain bearish but we are extended at the weekly level. As such, bounces are expected but they should be temporary.
- USD weakness a theme, also risk-off in Asia
- Opex today: AudJpy 74.60 for 1 Bln
EURUSD
• Prices posted gains of over 1 Big Fig yesterday, keeping signals bullish but we are extended at the weekly level. As such, buying dips is the favoured strategy.
• Fundamentals bias still down on ECB easing bias and lockdowns spreading across Europe. Better odds on the crosses perhaps as USD weakness keeps EURUSD bid.
• Opex today: 1.1800 2.45 Bln, 1.1850 1.2 Bln
AUDUSD
• Prices posted the 3rd higher daily high in a row yesterday with gains of ¾ Big Fig. This keeps signals bullish into Friday but with caution as readings are extended at the weekly level. Buying dips remains the favoured strategy.
• Profit taking ahead of NFP seen in Asia trade.
• Traders also weighing AU/China dispute as China buyers instructed to not purchase 7 items of AU produce.
GBPUSD
• Prices posted a bullish engulfing yesterday, with gains of over 1 ¼ Big Fig, reaching the October top. As such, signals remain bullish into Friday but with caution as readings are extended at the weekly level. As such, buying dips remains the favoured strategy.
• BOE likely to remain dovish.
• Covid, Lockdowns, Brexit all negatives, but better odds shorting GBP on the crosses.
FX Relative ATR Grid
Comment: Ranges remain extended into Friday with the exception of Kiwi. Most trending instruments have covered the Weekly ATRs already so while intraday trading remains viable today, continuation trades are less favourable.
FX Relative Strength Grid
Comment: the main signal into Friday are USD, Cad and JPY weakness.