Trump Win A Catalyst to Already Fated Move

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 1.2353 – 9Nov low – Medium
• S2 1.2297 – 3Nov low – Strong

GBPUSD – fundamental overview

It was only just some months back that the Pound was shocked lower on confirmation the UK had voted to leave the EU. The market wasn’t pricing this event and the Pound collapsed as a result. And just months later, we’ve received another colossal shock that has played out in an eerily similar way, with the market not projecting a Trump win only to find Trump emerge as the next President of the United States. And so, the uncertainty that comes along with this news has chopped Fed rate hike odds, forcing an initial outflow of US Dollars into the Pound. But with the UK still in deep trouble on the Brexit overhang, it will be difficult to see the Pound managing to successfully absorb any sustainable inflows.

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 105.00 – Psychological – Strong
• R1 103.77 – 7Nov low – Medium
• S1 101.19 – 9Nov low – Medium
• S2 100.00 – Psychological – Strong

USDJPY – fundamental overview

No surprise to see the Yen rally significantly on Wednesday, with the market reacting to the shocking Trump victory in the US election. The combination of US Dollar outflow on the news from reduced Fed rate hike odds and flight to safety environment have been the primary drivers behind the flow. Looking ahead, the market will continue to digest the implications of this latest result, which could expose a retest of the USDJPY 2016 low if risk off trade ensues. At the same time, things will get a little tricky with Japanese officials unwelcoming of unwanted Yen appreciation and quite capable of responding with measures to cap additional upside in the Yen.

EURCHF – technical overview

The recent 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 the same time, a daily close back above 1.0865 would take the pressure off the downside and suggest the market is once again looking settle back into the range.

• R2 1.0900 – Figure – Medium
• R1 1.0865 – 28Oct hig – Strong
• S1 1.0750 – 7Nov low – Medium
• S2 1.0624 – 24Jun/2016 low – Strong

EURCHF – fundamental overview

The SNB has unquestionably had a difficult Wednesday with the central bank forced to contend with an intense wave of risk off flow that has invited flight to the Swiss Franc. The central bank has been committed to its mandate of ensuring the Franc does not appreciate further through monetary policy and intervention tools and with the EURCHF rate managing to trade higher on the day, there is little doubt the SNB has been active offsetting any demand for the Franc. However, if risk off flow intensifies and global equities come under more pressure, it is going to be very difficult for the SNB to continue to keep the Franc from appreciating which could be a major headache.

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  a daily close back above 0.7758 will negate the bearish outlook and invite a retest of the 2016 highs.

• R2 0.7779 – 9Nov high – Strong
• R1 0.7700 – Figure – Medium
• S1 0.7580 –9Nov low – Medium
• S2 0.7507 – 13Oct low – Strong

AUDUSD – fundamental overview

Aussie Westpac consumer confidence readings came in softer than expected and were just the tip of the iceberg in terms of the pain the Australian Dollar would feel on Wednesday from the US election result. The shocking Trump victory has opened the door for an intense round of risk liquidation that has weighed on correlated currencies, with Aussie pulling back sharply as a result. While the reduced odds for a Fed rate hike are somewhat offsetting, the risk off flow is the more dominant driver of this currency. Hotter China inflation data hasn’t been getting a lot of attention.

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 1.3588 – 29Feb high – Strong
• R1 1.3525 – 4Nov high – Medium
• S1 1.3400 – Figure – Medium
• S2 1.3265 – 9Nov low– Strong

USDCAD – fundamental overview

The Canadian Dollar has been one of the weaker currencies of late and has taken another hit on Wednesday on news of the Trump victory in the US election. The uncertainty from the result and concurrent drop in the price of OIL are negative drivers that should continue to  keep the Loonie offered going forward. The only mitigating factor is that Fed rate hike odds have been reduced, though this won’t be enough to offset Canadian Dollar outflow from risk off trade.

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 at 0.7403 in favour of the next major downside extension below 0.7000 and towards medium-term support at 0.6675 further down.

• R2 0.7486 –7Sep/2016 high – Strong
• R1 0.7403 – 8Nov high  – Medium
• S1 0.7273 – 9Nov low – Medium
• S2 0.7181 – 2Nov low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is going to have a busy 24 hours with the currency already taking a big hit on the risk off flow from the news of the Trump victory. Looking ahead, the market will continue to digest the implications of the US election while also thinking about the early Thursday RBNZ decision in which the central bank is expected to cut rates but potentially signal the end to the easing cycle. However, softer inflation, an elevated exchange rate and this latest escalation in global risk could be factors which ultimately leave the RBNZ still open to additional easing going forward.

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 2157, with only a daily close back above this level to compromise the newly adopted bearish outlook.

• R2 2157.00 – 9Nov high – Strong
• R1 2084.00 – 3Nov low – Medium
• S1 2032.00 – 9Nov low – Medium
• S2 1990.00 – 27Jun low– Strong

US SPX 500 – fundamental overview

US election risk is dominating flow at the moment with stocks taking a dive as Donald Trump emerges as the next President of the United States. But overall, once the election is out of the way, the market need to once again think about the bigger, more worrying 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, exposed to intense periods of additional 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 any 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 1375.20 – 6Jul/2016 high – Strong
• R1 1337.30 – 9Nov high – Medium
• S1 1268.10 – 9Nov 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. Clearly this latest wave of risk off flow from the Trump victory is playing into this theme on Wednesday, helping to drive the yellow metal back towards the 2016 peak.

Feature – technical overview

USDMXN has raced to a fresh record high with the market surging through critical psychological barriers at 20.000. The break to new highs now opens the door for a measured move upside extension towards 22.0000 in the days ahead, following a period of consolidation roughly between 18.0000 and 20.0000. At this point, only back below 18.000 would compromise the highly constructive outlook.

• R2 22.0000 – Measured Move – Strong
• R1 20.7750 – 9Nov/Record High – Medium
• S1 19.5490 – 3Nov high – Medium
• S2 18.1600 – 9Nov low – Strong

Feature – fundamental overview

The danger of a Trump Presidency to the Mexican economy has become a reality, with Trump emerging victorious in today’s US election. This has opened a dramatic +8% collapse in the Peso in a matter of hours, with the currency sinking to a fresh record low against the Buck. This will make the Banxico’s job extremely difficult going forward, with many expecting the central bank to quickly announce as much as a 100 basis point rate hike. And while a hike of this magnitude may slow the pace of the Peso depreciation, it will also act as a major strain on the local economy and Mexico’s growth prospects.