Has the Market Already Priced a Clinton Win?

GBPUSD – technical overview

The market has broken out of a multi session consolidation off the multi-year low, which could now open the door for a more significant correction higher in the days ahead. Ultimately, there is room to run towards 1.2800 without compromising the intense downtrend, with a lower top sought out in favour of a bearish resumption back towards 1.2000. Only a weekly close above 1.2800 would compromise the structure.

• R2 1.2557 – 4Nov high – Strong
• R1 1.2498 – 7Nov high– Medium
• S1 1.2350 – Mid-Figure – Medium
• S2 1.2297 – 3Nov low – Strong

GBPUSD – fundamental overview

A healthy recovery in the Pound has stalled out after the UK currency took a hit from the Clinton news and weekend story the Labour party would be willing to block Article 50 if the PM would not guarantee access to the single market. No real prop early Tuesday from the healthy UK BRC like-for-like retail sales showing, with the Pound not looking to make any commitments ahead of UK industrial and manufacturing production. Additionally, with the US election finally here, it’s more than likely most of the next wave of volatility will come after the result is know early Wednesday. It’s worth noting that Fed Evans is on the wires later today.

USDJPY – technical overview

The recent rally above 105.00 could not be sustained and the pressure has once again shifted back to the downside following this latest break back below 103.15. Look for a daily close below 103.00 to reaffirm bearish momentum, exposing a potential retest of the 2016 low around 99.00. At this point, back above 105.53 will be required to take the pressure  off the downside.

• R2 105.53 – 28Oct high – Strong
• R1 105.00 – Psychological – Medium
• S1 103.77 – 7Nov low – Medium
• S2 102.55 – 3Nov low – Strong

USDJPY – fundamental overview

The major pair will likely be comfortable trading in consolidation mode until the results of the US election can either be projected with confidence later today or officially confirmed early Wednesday. We’ve already seen a sizable pullback in the Yen on the news of Clinton getting cleared of wrongdoing and a confirmation of her victory will invite more Yen selling on risk on flow and favourable US Dollar yield differentials with the Fed to stay on course with a rate hike. There is no first tier data to speak of today and the only noteworthy calendar event outside the US election will be a speech from Fed Evans.

EURCHF – technical overview

The latest break below 1.0800 warns the market could be getting set to deviate from what had been a well defined range between 1.0800 and 1.1000. Look for a daily close below previous support at 1.0755 to strengthen the outlook and open the door for an acceleration of declines towards the 2016 low at 1.0624 further down. At this point, a daily close back above 1.0865 would be required to suggest the market is once again looking settle back into the range.

• R2 1.0900 – Figure – Medium
• R1 1.0865 – 28Oct hig – Strong
• S1 1.0755 – 2Nov low – Medium
• S2 1.0624 – 24Jun/2016 low – Strong

EURCHF – fundamental overview

SNB President Jordan reiterated his central bank’s stance on monetary policy last week, saying the SNB was committed to using its two tools of intervention and negative interest rates to prevent further appreciation in the Swiss Franc. However, this strategy to prop the local currency is going to prove to be a very tough go if the SNB finds itself in a battle with global themes and flows that demand safe haven passage into the Swiss Franc. There had been many talking about 1.0800 as an unofficial EURCHF floor, but with that level broken, the market could quickly turn its attention to the post Brexit 2016 low in the lower 1.0600s. For the moment though, the SNB has received some welcome news in the form of the FBI findings, which significantly increase Clinton’s chances of winning today’s US election.

AUDUSD – technical overview

The market has struggled on rallies above 0.7700 and this suggests the rate could be looking to carve a lower top below the 2016 high at 0.7835 in favour of the next major downside extension. Look for a break back below 0.7421 to strengthen this outlook and accelerate declines towards 0.7000 in the days ahead. Ultimately, only back above 0.7758 will negate the bearish outlook and invite a retest of the 2016 highs.

• R2 0.7835 – 21Apr/2016 high – Strong
• R1 0.7758 – 11Aug high – Medium
• S1 0.7653 –4Nov low – Medium
• S2 0.7558 – 28Oct low – Strong

AUDUSD – fundamental overview

Earlier today Aussie NAB business confidence readings came out below forecast, while China trade disappointed, which has been weighing on the currency. However, with the market consumed with the US election, it’s unlikely we see any additional movement that isn’t from this major event risk. Aussie has been very well bid, helped along by the risk on reaction to odds for a Clinton victory and it will be interesting to see where we go from here if Clinton does in fact pull it out and the focus shifts back to the Fed and favourable US DOllar yield differentials. As far as the calendar outside the US election goes, we get US JOLTS job openings and a speech from Fed Evans.

USDCAD – technical overview

This market looks to be in the process of carving out a longer-term base off the 1.2461, 2016 low. Look for any additional weakness to be supported ahead of 1.3000 in favour of the next major upside extension towards a measured move objective into the 1.3500-1.4000 area. Ultimately, only back below 1.2764 would delay the constructive outlook.

• R2 1.3500 – Psychological – Strong
• R1 1.3466 – 4Nov high – Medium
• S1 1.3342 – 7Nov low – Medium
• S2 1.3278 – 25Oct low– Strong

USDCAD – fundamental overview

The Canadian Dollar has rallied back just a little from recent lows, helped along by the positive risk reaction to odds of Clinton winning today’s US election. The concurrent recovery in the price of OIL has also contributed to Loonie bids, though overall, this is a currency that is still expected to be well offered into rallies as yield differentials with the US Dollar come back to the forefront post election. Looking ahead, we get Canada housing data, US JOLTS job openings and a speech from Fed Evans.

NZDUSD – technical overview

The pressure has shifted back to the downside with the market now expected to be very well capped on rallies. Look for a fresh lower top ahead of 0.7400 in favour of the next major downside extension below 0.7000 and towards medium-term support at 0.6675 further down.

• R2 0.7369 –22Sep high – Strong
• R1 0.7341 – 3Nov high  – Medium
• S1 0.7279 – 3Nov low – Medium
• S2 0.7181 – 2Nov low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar remains exceptionally well bid this week, getting an added boost from risk on flow coming from ramped up odds of Hillary Clinton winning today’s US election. However, with the currency trading at elevated levels ahead of Thursday’s RBNZ, there is risk for a pullback, with the central bank seen cutting rates and expressing concern with the higher exchange rate. Meanwhile, today’s softer China trade data is offsetting some of the positive flow into Tuesday. Looking ahead, we get US JOLTS job openings and a speech from Fed Evans.

US SPX 500 – technical overview

Signs of a potential top after the market recently broke below critical support at 2108. This now opens the door for a meaningful period of weakness exposing a more pronounced decline towards the June base at 1990. Look for any rallies to now be well capped ahead of 2156, with only a daily close back above this level to compromise the newly adopted bearish outlook.

• R2 2156.00 – 25Oct high – Strong
• R1 2137.00 – 31Oct low – Medium
• S1 2084.00 – 3Nov low – Medium
• S2 2065.00 – 30Jun low– Strong

US SPX 500 – fundamental overview

US election risk is dominating flow at the moment and after stocks took a big hit in the previous week, we are seeing the emergence of heavy demand as Clinton regains momentum on the FBI news which is expected to push her over the top. But overall, once the election is out of the way, the market will need to once again think about the bigger issue at hand, which is an exhaustion of global monetary policy tools and an inability for central banks to continue to support and stimulate the global economy. This leaves financial markets vulnerable to any shocks and exposed to intense periods of risk liquidation going forward.

GOLD (SPOT) – technical overview

Despite a major setback in October, the overall structure remains highly constructive with the market in the process of carving out a longer-term base. Look for additional weakness to be very well supported above 1240, with only a close back below this level to delay the bullish outlook and give reason for pause. Back above 1300 strengthens the outlook and should accelerate gains towards a retest of the 2016 peak at 1375.

• R2 1313.10 – 4Oct high – Strong
• R1 1308.00 – 2Nov high – Medium
• S1 1260.40 – 24Oct low – Medium
• S2 1241.45 – 7Oct low – Strong

GOLD (SPOT) – fundamental overview

Overall, GOLD has been very well supported in 2016, with the yellow metal finding solid demand from medium and longer-term players on the back of fears over the limitations of exhausted monetary policy, extended global equities, systemic risk and a bet that record low inflation will eventually start to turn up. All of this will almost certainly continue to keep the commodity in demand, even if the Buck is propped, with many market participants fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

Feature – technical overview

USDSGD has been well bid in recent trade, with the market establishing back above 1.3500 and pushing up towards 1.4000. However, while the structure remains constructive and additional upside is projected, scope exists for consolidation to allow for stretched interday studies to unwind. Still, look for any setbacks to be well supported above 1.3700 in favour of the next major higher low and bullish resumption beyond 1.4000.

• R2 1.4000 – Psychological – Strong
• R1 1.3962 – 27Oct high – Medium
• S1 1.3818 – 2Nov low – Strong
• S2 1.3770 – 12Oct low – Medium

Feature – fundamental overview

The overall outlook for the Singapore Dollar is not that bright right now, with the currency under pressure on yield differentials with the US and reduced appetite for emerging market FX. Meanwhile on the domestic front, in its macroeconomic review, the MAS said it did not expect the Singapore economy to pick up significantly in the near term on the drag from lackluster external demand and weak global trade. This has also contributed to more pessimistic growth forecasts. Clearly Monday’s uptick in sentiment and rally in the correlated USDJPY market is behind this latest USDSGD buying, after Clinton was cleared of wrongdoing. Dealers also continue to cite plenty of demand for USDSGD on dips.