Special report: UK jobs report preview - What to expect
Today’s report: Tuesday calendar weighted to European session
The US will get back to a fuller session on Tuesday, following the Veterans Day holiday Monday, though there isn’t much going on as far as the US calendar goes, with only second tier data and Fed speak from Clarida and Harker standing out. Instead, the focus will be on UK jobs data and Eurozone and German sentiment indicators.
- Sentiment readings
- UK employment
- JGB auction
- tougher battle
- business confidence
- OIL price
- Inflation expectations
- trade policy
- hard asset
- institutional demand
- traditional markets
Chart talk: Technical & fundamental highlights
EURUSD – technical overviewThe downtrend off the 2018 high is looking exhausted and the prospect for a meaningful higher low is more compelling. A higher low is now sought out above the multi-year low from 2017, ahead of the next major upside extension. Only a weekly close back below 1.0800 would compromise this outlook. Back above 1.1412 will strengthen the view.
- R2 1.1180 – 21 October high – Strong
- R1 1.1093 - 6 November high – Medium
- S1 1.1000 - Psychological – Strong
- S2 1.0991 – 15 October low – Strong
EURUSD – fundamental overviewNot much going on with the Euro into Tuesday. ECB Mersch was out calling for more fiscal stimulus, and German Defense Minister Kramp-Karrenbauer said her government wouldn't be able to hit a NATO defense spending benchmark much faster than 2031 because of a lack of personnel. Looking ahead, we get ECB speak from Coeure and Mersch, Eurozone and German ZEW reads, and Fed appearances from Clarida and Harker.
EURUSD - Technical charts in detail
GBPUSD – technical overviewThe market has seen a recovery out from the lowest levels since 2016, with the price recovering back above the daily Ichimoku cloud to take the immediate pressure off the downside. Ultimately, only back below the bottom of the daily Ichimoku cloud would compromise the more constructive outlook for the major pair. Next key resistance comes in the form of the 2019 high from March around 1.3380. Setbacks should ideally be well supported ahead of 1.2400.
- R2 1.3013 – 21 october high – Strong
- R1 1.2878 – 7 October high – Medium
- S1 1.2769 – 8 November low – Strong
- S2 1.2700 – Figure – Medium
GBPUSD – fundamental overviewSlightly softer than expected UK data reads on Monday, including GDP rising less that forecast, had little negative impact on the Pound, with the UK currency holding up well. The market was more consumed with Brexit related updates, and the news Nigel Farage had pledged not to fight the ruling Conservatives. This increases probability the Tories will win the December election and finally get the Brexit deal pushed through. Looking ahead, we get UK employment data, and Fed appearances from Clarida and Harker.
USDJPY – technical overviewThe longer-term downtrend remains firmly intact, with the major pair recently taking out major support in the form of the 2018 and 2019 lows respectively. Rallies should continue to be well capped below 110.00 in favour of the next major downside extension towards the 2016 low at 99.00.
- R2 110.00 – Psychological – Strong
- R1 109.49 – 7 November high – Strong
- S1 108.65 – 7 November low – Medium
- S2 107.89 – 1 November low – Strong
USDJPY – fundamental overviewDemand for today's JGB auction dipped a bit, but was broadly in line with the recent average. There was some caution out there after PM Abe said he wanted the extra budget that was announced last Friday, to ensure Japan's economic recovery. Updates from the US-China trade front continue to play a major role here as well. Looking ahead, we get second tier US reads and Fed appearances from Clarida and Harker.
EURCHF – technical overviewThe market is attempting to recover out from its lowest levels in two years, with the recent break back above 1.1000 taking the immediate pressure off the downside and opening the door for a larger correction back towards next key resistance at 1.1160. Overall however, the medium-term picture continues to favour the downside, and the market could have a hard time pushing much beyond that solid previous support turned resistance around 1.1160.
- R2 1.1173 – 2 July high – Strong
- R1 1.1060 – 17 October high – Medium
- S1 1.0871 – 9 October low – Medium
- S2 1.0811 – 4 September/2019 low – Strong
EURCHF – fundamental overviewThe 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, 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 overviewThe market has been under pressure over the past several months, but has also been well supported on dips. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7100 to strengthen this outlook. In the interim, look for setbacks to continue to be well supported above 0.6700 on a weekly close basis.
- R2 0.7083 – 19 July high – Strong
- R1 0.6930 – 31 October high – Strong
- S1 0.6809 – 25 October low – Medium
- S2 0.6710 – 10 October low – Strong
AUDUSD – fundamental overviewAussie has found some demand into the latest round of setbacks, with the currency getting some Tuesday support from the better than expected NAB business confidence and conditions reads. Looking ahead, we get second tier US reads and Fed appearances from Clarida and Harker.
USDCAD – technical overviewThe longer-term structure remains constructive, with dips expected to be well supported for renewed upside, eventually back above the 2018/multi-month high at 1.3665. At this point, only a weekly close below the psychological barrier at 1.3000 would compromise this outlook.
- R2 1.3348 – 3 October high – Medium
- R1 1.3300 - Figure – Medium
- S1 1.3200 – Figure – Medium
- S2 1.3160 – 7 November low – Strong
USDCAD – fundamental overviewThe Canadian Dollar has come under pressure over the past several sessions, with a more dovish leaning Bank of Canada and softer economic data accounting for the Loonie's slide. Looking ahead, we get second tier US reads and Fed appearances from Clarida and Harker. There is no first tier data scheduled on the Canada docket.
NZDUSD – technical overviewDespite recent weakness, there's a case to be made for a meaningful bottom, with the market rallying out from longer-term cycle low area around 0.6200. As such, look for setbacks to be well supported in the days ahead, in anticipation of a continued recovery. Only a weekly close below 0.6200 would give reason for rethink. Back above 0.6451 will strengthen the outlook and take the immediate pressure off the downside.
- R2 0.6466 – 4 November high – Strong
- R1 0.6400 – Figure – Medium
- S1 0.6322 – 8 November low – Medium
- S2 0.6241 – 16 October low – Strong
NZDUSD – fundamental overviewNZIER's monetary policy shadow board had helped to prop Kiwi up after recommending the central bank should keep rates unchanged this week. But doubts have crept back in on Tuesday, after New Zealand inflation expectations data came in soft. Looking ahead, we get second tier US reads and Fed appearances from Clarida and Harker.
US SPX 500 – technical overviewThere have been signs of a major longer term top, after an exceptional run over the past decade. Any rallies from here, are expected to be very well capped, in favour of renewed weakness targeting an eventual retest of strong longer-term previous resistance turned support in the form of the 2015 high at 2140. The initial level of major support comes in at 2854, with a break below to strengthen the outlook. A monthly close above 3100 would be required to compromise the outlook.
- R2 3100 – Psychological – Strong
- R1 3097 – 7 November/Record high – Medium
- S1 2854 – 3 October low – Medium
- S2 2777 – 6 August low – Strong
US SPX 500 – fundamental overviewAlthough we've seen the market extending to fresh record highs in 2019, on the back of the Fed policy reversal, with so little room for additional easing, given an already depressed interest rate environment, the prospect for a meaningful extension of this record run, on easy money policy incentives, should no longer be as enticing to investors as it once was. Meanwhile, tension on the global trade front should continue to be a drag on investor sentiment despite any signs that would suggest otherwise. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that could be a major stress to the financial markets looking out.
GOLD (SPOT) – technical overviewThe 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1600, while in the interim, look for any setbacks to be well supported above 1400.
- R2 1558 – 4 September/2019 high – Strong
- R1 1536 – 24 September high – Medium
- S1 1448 – 11 November low – Medium
- S2 1400 – Psychological – Strong
GOLD (SPOT) – fundamental overviewThe 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 overviewThe market continues to consolidate in the aftermath of a major surge in the second quarter of 2019. However, any setbacks should be very well supported ahead of 7,000, with an higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 7,000 would compromise the constructive outlook.
- R2 10,468– 26 October high – Strong
- R1 9,612 – 4 November high – Medium
- S1 8,000 – Psychological – Medium
- S2 7,326 – 23 October low – Strong
BTCUSD – fundamental overviewBitcoin is going through a period of technical adjustment after the fierce Q2 run up, though we anticipate continued demand from institutional players starved for yield in a world where global equities are increasingly vulnerable. Plenty of demand is reported on dips down towards $7,000.
BTCUSD - Technical charts in detail
ETHUSD – technical overviewThe market is in the process of a major correction after a surge in the second quarter of 2019. Look for setbacks to be well supported above of previous resistance turned support at 100 on a weekly close basis, in favour of the next major higher low and bullish resumption back towards and through the 2019 high up at 363. Ultimately, only a weekly close below 100 would compromise the outlook.
- R2 225 – 19 September high – Strong
- R1 200 – Psychological – Medium
- S1 177 – 1 November low – Medium
- S2 153 – 23 October low – Strong
ETHUSD – fundamental overviewProfit taking in the aftermath of the rapid Q2 appreciation has triggered a healthy period of correction and consolidation, while critique of the space from the likes of President Trump and Fed Chair Powell, along with worry associated with fallout in the global economy, are stories that could continue to keep the more risk correlated crypto asset weighed down into the end of the year. Risk off in the global economy is expected to result in ETH underperformance relative to Bitcoin.
- Yes, Stocks Are Soaring in the Trump Era, M. Gongloff, Bloomberg (November 11, 2019)
- Why Hong Kong Protests and Violence Are Escalating, S. Wong, FT (November 11, 2019)