Euro Capped on Italian Referendum Overhang

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. A daily close below 1.2300 will put the immediate pressure back on the downside.

• R2 1.2674 – 11Nov high – Strong
• R1 1.2529 – 15Nov high– Medium
• S1 1.2302 – 18Nov low – Medium
• S2 1.2206 – 1Nov low – Strong

GBPUSD – fundamental overview

Comments from the chief Brexit negotiator that the UK must be out of the EU before the next European Parliament elections shook up the Pound a bit on Tuesday, given the implication that this would only allow for a 14-15 month Brexit negotiation window. Looking ahead, we get the Chancellor’s Autumn Budget Statement where the market will be looking for the announcement of a spending program. Then into the US, we get a busy US calendar that features durable goods, initial jobless claims, new home sales, Michigan confidence and the Fed Minutes.

USDJPY – technical overview

The major pair has seen an intense bullish shift in recent days, with the most recent break above 107.50 exposing fresh upside towards next meaningful resistance at 111.45. However, daily studies are looking stretched which suggests that additional upside could be limited to the 112.00 area for now in favour of a healthy corrective pullback. Ultimately, any setbacks are expected to be well supported above 105.00.

• R2 111.89 – 28Apr high – Strong
• R1 111.45 – 30May high – Strong
• S1 109.80 – 18Nov low – Medium
• S2 108.55 – 17Nov low – Strong

USDJPY – fundamental overview

Japan is out on holiday and the US is about to head out for the remainder of the week for Thanksgiving, leaving very little in the way of any serious volume. The major pair has slowed down as a result and could be in for some quieter trade after surging over the past several days. US equities and risk sentiment will likely play a role over the coming sessions, with any signs of deterioration to potentially weigh on an overbought USDJPY market. As far as today’s US calendar goes, it’s a busy one, with durable goods, initial jobless claims, new home sales, Michigan confidence and the Fed Minutes all due.

EURCHF – technical overview

The latest daily close below 1.0738 strengthens the bearish outlook and opens the door for an acceleration of declines towards the 2016 low at 1.0624. At this point, a daily close back above 1.0865 would now be required to take the immediate pressure off the downside and suggest the market is once again looking settle back into the previous range.

• R2 1.0865 – 28Oct high – Medium
• R1 1.0760 – 15Nov high – Strong
• S1 1.0687 – 18Nov low – Medium
• S2 1.0624 – 24Jun/2016 low – Strong

EURCHF – fundamental overview

The SNB has unquestionably had a difficult time of late, with the central bank forced to contend with an intense wave of demand for 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. Though despite all efforts, the Franc continues to want to appreciate against the Euro. It seems the strategy has been to buy Euro when risk comes off and to do nothing when risk is back on and natural flows should be CHF bearish. But the trouble is, when risk comes back, the Franc is still not depreciating as much as the SNB would probably like to see and if global risk sentiment deteriorates, it could invite a massive wave of demand for the Franc that the SNB will be unable to offset.

AUDUSD – technical overview

The latest break below 0.7400 is a significant development and now opens the door for deeper setbacks towards next key support at 0.7145 in the days ahead. At this point, look for any rallies to be well capped ahead of 0.7600. Only back above 0.7700 delays the bearish outlook.

• R2 0.7502 – 17Nov high – Strong
• R1 0.7419 – 18Nov high – Medium
• S1 0.7312 –21Nov low – Medium
• S2 0.7285 – 16Jun low – Strong

AUDUSD – fundamental overview

The Australian Dollar has managed to shrug off the softer Q3 Aussie construction work done data, instead choosing to focus on an affirmation from Moody’s that most Australian corporates show solid balance sheets and liquidity. Another prop for the currency has been cross related, with heavy demand reported for AUDNZD over the past 24 hours. Looking ahead, the US calendar is quite busy, with everything stuffed in ahead of the US Thanksgiving Day holiday. We get durable goods, initial jobless claims, new home sales, Michigan confidence and the Fed Minutes.

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 well ahead of 1.3000 in favour of the next major upside extension towards a measured move objective into the 1.4000 area. Ultimately, only back below 1.3000 would delay the constructive outlook.

• R2 1.3589 – 14Nov high – Strong
• R1 1.3565 – 18Nov high – Medium
• S1 1.3378 – 22Nov low – Medium
• S2 1.3354 – 1Nov low– Strong

USDCAD – fundamental overview

A minor recovery in the Canadian Dollar came to a halt on Tuesday after Canada retail sales disappointed and OIL finally cooled off from an impressive rally. From here, volumes are expected to thin out quite a bit into the end of the week, with US desks clearing out for the Thanksgiving holiday. Still, we get a healthy batch of US releases today that could very well factor as the market takes in durable goods, initial jobless claims, new home sales, Michigan confidence and the Fed Minutes.

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 0.6952 and towards medium-term support at 0.6675 further down.

• R2 0.7114 – 16Nov high – Strong
• R1 0.7100 – Figure  – Medium
• S1 0.6985 – 21Nov low – Strong
• S2 0.6900 – Figure – Medium

NZDUSD – fundamental overview

There hasn’t been a whole lot of activity in the New Zealand Dollar this week, with the currency seemingly comfortable trading within a range. However, rallies have been very well capped and dealers are now talking about sizable sell orders on any pushes higher. Cross related flows have also been Kiwi negative, with AUDNZD demand picking up quite a bit over the past 24 hours. Looking ahead, we get a healthy batch of US releases today that could very well factor as the market takes in durable goods, initial jobless claims, new home sales, Michigan confidence and the Fed Minutes.

US SPX 500 – technical overview

While this latest surge back to a fresh record high could compromise what has been the possibility for a toppish structure, the risk is still tilted to the downside if the market fails to establish above 2200 on a weekly close basis. But ultimately, at this point, any topside failure will also need to be met with a break back below 2100 to once again encourage the possibility for a bearish structural shift.

• R2 2250.00 – Psychological – Strong
• R1 2206.00 – 22Nov/Record high – Medium
• S1 2148.00 – 8Nov high – Medium
• S2 2100.00 – Psychological– Strong

US SPX 500 – fundamental overview

The ongoing bid for US equities has been more than impressive, particularly at a time when the Fed is about to embark on a more steady path to policy normalisation. But the market will need to once again think about the bigger, more worrying issue at hand, which is an exhaustion of global monetary policy tools globally and an inability for central banks to continue to support and stimulate growth. This leaves financial markets vulnerable to any shocks and exposed to intense periods of additional risk liquidation going forward, especially at a time when the Fed is moving further away from accommodation. Looking ahead, volumes are expected to thin out into the Thanksgiving holiday, though we do get a healthy batch of releases later today that include durable goods, initial jobless claims, new home sales, Michigan confidence and the Fed Minutes.

GOLD (SPOT) – technical overview

Despite a major setback, 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 1200, with only a close back below this level to delay the bullish outlook and give reason for pause. Back above 1233.10 strengthens the outlook and should accelerate gains towards a retest of the 2016 peak at 1375.

• R2 1265.50 – 11Nov high – Strong
• R1 1233.10 – 18Nov high – Medium
• S1 1202.95 – 18Nov low – Medium
• S2 1199.90 – 30May 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 turn up even faster in a Trump presidency. 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. Dealers cite strong demand in the $1200 area.

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 sessions 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 21.3950 – 11Nov/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. This has opened a dramatic collapse in the Peso, with the currency sinking to a fresh record low against the Buck and down as much as 10% post election. It has also forced the Banxico into the uncomfortable position of having to raise rates another 50bps to offset the rapid Peso depreciation at a time when such a hike will only act as a major strain on the local economy and Mexico’s growth prospects. The only help to the Peso at the moment is the ongoing bid for US equities, but with this market in desperate need of a major correction, things could really get ugly for the Banxico if risk comes off.