UK Budget and US Core PCE

GBPUSD – technical overview

While on a medium to longer term basis, the outlook is still looking constructive off the +30 year low from 2016, on the daily chart, the latest round of setbacks has taken the uptrend out of the picture, with the market trading back below the Ichimoku cloud. The market will now need to establish back above 1.2920 to take the pressure off the downside and eliminate risk for a retest of the 2018 low.

• R2 1.2991 – 24Oct high – Strong
• R1 1.2920 – 25Oct high – Medium
• S1 1.2778 – 26Oct low – Medium
• S2 1.2730 – 20Aug low  – Strong

GBPUSD – fundamental overview

The Pound comes into the new week after going through a tough run of Brexit uncertainty that has many talking about a no deal again. All of this comes ahead of today's UK budget. Chancellor Hammond was out over the weekend in an interview warning against the risks associated with a no deal outcome, saying there would likely need to be a new budget in that event. Clearly, there has been a lot of pressure from the Treasury and central bank to make sure a deal gets done, given the downside risks of a no deal, and it remains to be seen if there will be any upgraded sense of urgency to get the process back to where those odds of a no deal are diminished. Looking at the rest of the calendar on Monday, aside from the UK budget, we also get UK CBI distributive trades, the US core personal consumption expenditure, US personal income and spending, and Dallas Fed manufacturing.

GBPUSD - Technical charts in detail

USDJPY – technical overview

Rallies continue to be very well capped on a medium-term basis, with the outlook still favouring lower tops and lower lows. The latest breakdown back below 111.60 strengthens the outlook, with a fresh lower top in place at 112.90, ahead of the next major downside extension towards next key support around 109.75. Rallies should now be well capped ahead of 112.90, while a break back above 114.75 would be required to negate the bearish outlook.

• R2 112.90 – 22Oct high  – Strong
• R1 112.45 – 26Oct high – Medium
• S1 111.38 – 26Oct low – Medium
• S2 110.39 – 17Sep low – Medium

USDJPY – fundamental overview

The Yen was the strongest G10 currency on Friday and remains in position to appreciate as risk liquidation persists. USDJPY looks increasingly vulnerable given the state of US equities, which are threatening a major capitulation. We're now living in a world where central bank and government stimulus is no longer there in the way it had been for a decade post 2008 crisis, which increases the probability for Yen demand, as negative shocks to the global economy surface, particularly in light of tension surrounding fallout from US protectionism. We remain skeptical that stimulus measures out of China will be enough to translate to sustainable rallies in the US equity market, which ultimately is going to be dictating direction. The BOJ and Financial Services Agency held an unscheduled meeting to discuss volatility in markets, while PM Abe visited China, where both countries reiterated their commitment to support free trade. Both countries also called for the early conclusion of a regional trade pact with 16 Asia-Pacific nations that doesn't include the US. Looking at today's calendar, we get US data in the form of an important core personal consumption expenditure, along with personal income and spending, and Dallas Fed manufacturing.

EURCHF – technical overview

The market has been in the process of recovering out from a 2018 low coinciding with critical support in the 1.1200 area. However, at this stage, there is no clear directional bias, with the price action deferring to a neutral state. Back above 1.1560 would get some bullish momentum going for a push to 1.2000, while back below 1.1200 would be quite bearish.

• R2 1.1560– 8Aug high – Strong
• R1 1.1502 – 22Oct high – Medium
• S1 1.1313 – 27Sep low– Medium
• S2 1.1224– 18Sep low – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation between now and year end, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

Technical studies are stretched on a medium term basis, though the market has been unable to work its way out from its lowest levels since February 2016. The market is now considering the establishment back below the major psychological barrier at 0.7000, which defends against a retest of the 2016 low down at 0.6830. At this stage, the market will need to break back above 0.7160 to take the immediate pressure off the downside.

• R2 0.7160 – 17Oct high – Strong
• R1 0.7126– 22Oct high – Medium
• S1 0.7022 – 26Oct/2018 low – Medium
• S2 0.7000 – Psychological – Strong

AUDUSD – fundamental overview

The Australian Dollar is tracking along with bigger picture macro drivers that have weighed heavily on the currency, resulting in fresh setbacks to its lowest levels against the US Dollar since February 2016. These drivers are highlighted by the Fed's more hawkish policy outlook and downside risk associated with US trade policy. Attempts by the Chinese government to bolster sentiment haven't helped to give Aussie any meaningful in recent days, with the global sentiment gauge coming from a US equity market that looks like it could have a lot more to drop in the weeks and months ahead. Looking at today's calendar, we get US data in the form of an important core personal consumption expenditure, along with personal income and spending, and Dallas Fed manufacturing.

USDCAD – technical overview

The market has been under pressure since topping out in June, which could still invite a deeper decline before the next upside extension gets underway. Still, look for any weakness to be well supported ahead of 1.2500 with only a break back below this psychological barrier to negate the bigger picture constructive outlook.

• R2 1.3175 – 11Sep high – Medium
• R1 1.3160 - 26Oct high – Medium
• S1 1.3016 – 25Oct low– Medium
• S2 1.2970 – 24Oct low – Strong

USDCAD – fundamental overview

Worry about a collapse in the US equity market has been fueling safe haven demand for the US Dollar, with the Buck even more exciting these days as a safe haven, given its status as a safe haven that also offers favorable yield differentials. Setbacks in the price of OIL and a run of softer Canada data over the past week have also done nothing to help the Loonie's cause, all more than offsetting a hawkish, upbeat Bank of Canada decision earlier last week. Looking at today's calendar, there is no first tier data scheduled out of Canada, though there were reports that Canada was going to be looking to ratify the CPTPP trade deal . On the US docket, we get an important core personal consumption expenditure, along with personal income and spending, and Dallas Fed manufacturing.

NZDUSD – technical overview

The market remains under pressure, consolidating off +2.5 year lows from early October. This leaves the door open for declines down towards massive support just ahead of 0.6100, in the form of the 2015 low. At the same time, technical studies are looking stretched on a medium term basis, which could warn of a meaningful low ahead of such a retest. Still, at this point, it would take a break back above 0.6611 to take the immediate pressure off the downside.

• R2 0.6611 – 22Sep high – Strong
• R1 0.6545 – 25Oct high – Medium
• S1 0.6466 – 26Oct low – Medium
• S2 0.6425 – 8Oct/2018 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has come back under pressure in recent days, with risk off flow and broad based US Dollar demand factoring into the price action. Last Thursday's wider than expected Kiwi trade deficit was another negative for the currency, though we did see some bids into the Friday low after some softer US data. Overall, it appears as though sustained moves to the topside could be a tough go for some time. The combination of Fed policy normalisation and fallout from US trade policy are some of those big themes that would suggest Kiwi won't be looking for any major rallies in the foreseeable future. Looking at today's calendar, we get US data in the form of an important core personal consumption expenditure, along with personal income and spending, and Dallas Fed manufacturing.

US SPX 500 – technical overview

A market that has been extended on the monthly chart is at risk for a major correction, with the possibility for a massive topping formation. Any rallies should now continue to be very well capped ahead of 3000, in favour of renewed weakness back below the 2530 area yearly low (neckline) and towards a retest of strong longer-term resistance turned support in the form of the 2015 high at 2140. Only a weekly close above 3000 would negate the outlook.

• R2 2824 – 17Oct high – Strong
• R1 2757 – 23Oct high – Medium
• S1 2627 – 26Oct low – Medium
• S2 2594 – 3May low – Strong

US SPX 500 – fundamental overview

Investor immunity to downside risk is not as strong these days. The combination of Fed policy normalisation, US protectionism, ongoing White House drama and geopolitical tension are all warning of capitulation ahead, despite this latest run to record highs. The Fed has also finally acknowledged inflation no longer running below target in 2018, something that could very well result in even less attractive equity market valuations given the implication on rates. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as this could be something that inspires a more aggressive decline in the fourth quarter.

GOLD (SPOT) – technical overview

The market has been showing signs of wanting to turn back up after establishing back above the daily Ichimoku chart. There are also signs that we could be seeing the formation of a more significant medium to longer-term structural shift that would be confirmed if this latest recovery can extend back through big resistance in the form of the 2016 high at 1375. Look for setbacks to be well supported ahead of 1200, with only a close back below 1150 to compromise the constructive outlook. A daily close above 1250 will strengthen the outlook.

• R2 1266 – 9Jul high – Strong
• R1 1244 – 21Oct high – Medium
• S1 1200 – Psychological – Medium
• S2 1160 – 16Aug/2018 low  – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

Considering the intensity of declines already seen this year, if the market does break to the topside, it could be a bullish signal that gets the trend moving up again. But we would need to see a break above the July lower top at around 8,500 for confirmation. Until then, a bearish continuation back towards the September 2017 low around 2,975 can not be ruled out.

• R2 7,695 – 14Oct high – Strong
• R1 7,000 – Psychological – Medium
• S1 6,418– 3Oct low –Medium
• S2 6,213 – 12Oct low  – Strong

BTCUSD – fundamental overview

Overall, Bitcoin is doing its best to try and hold up above $6,000 in 2018 after undergoing a massive decline off the record high from December 2017. At the moment, the market has found some stability around the $6,000 barrier, with buyers stepping in on the view that the regulatory challenges will eventually work themselves out, leaving a very bullish picture for a technology with tremendous potential and increasing adoption. Still, there has been concern in the shorter-term on account of regulatory challenges in the space and downside pressure in global equities. The cryptocurrency will get some more attention this week, as it gets set to celebrate it 10th birthday. It's also worth noting Bitcoin has held up quite well in the face of a drop in global equities.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market remains under pressure in 2018, extending its run of intense declines to fresh 2018 lows. The next level of major support comes in around $160, which goes back to the low from July 2017. Daily studies are however oversold, which could warn of a bigger corrective bounce before the next downside extension and bearish continuation. It would take a break back above $321 to officially take the pressure off the downside.

• R2 321 – 18Aug high – Strong
• R1 255 – 22Sep high – Medium
• S1 188 – 12Oct low – Medium
• S2 167 – 12Sep/2018 low  – Strong

ETHUSD – fundamental overview

Overall, we've seen quite a bit of weakness in the price of Ether in 2018 and there's still legitimate risk for deeper setbacks, given technical hurdles within the protocol, ongoing regulatory challenges and a global macro backdrop exposing risk correlated projects on the Ethereum blockchain. Monetary policy normalisations around the globe and an anticipated reduction in global risk appetite are placing a tremendous strain on ERC20 projects that have yet to even produce proper use cases and proof of concept.