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On Monday, data out of the Eurozone and UK was better than expected, while data out of the US disappointed. However, none of that mattered when looking at where things settled, with the US Dollar broadly in demand.
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Technical highlights
- EURUSD Setbacks viewed as corrective
- GBPUSD Well supported on dips
- USDJPY Rallies should be well capped
- EURCHF Lower top sought out
- AUDUSD Bounces from longer-term support
- USDCAD Setbacks seen supported into dips
- NZDUSD Working its way out from major low
- US SPX 500 Upside limited from current levels
- GOLD (spot) Room for run towards 2k
- BTCUSD Showing signs of turning back up
- ETHUSD Additional downside limited
Fundamental highlights
- EURUSD Eurozone producer prices digested
- GBPUSD UK services PMIs stand out
- USDJPY Yen back to tracking risk flow
- EURCHF SNB faces tougher battle with Franc
- AUDUSD RBA holds as widely expected
- USDCAD Loonie underperforming across board
- NZDUSD New Zealand GDT auction ahead
- US SPX 500 Stocks extend record run in October
- GOLD (spot) Pick up in hard asset demand
- BTCUSD More institutional demand expected
- ETHUSD Ether exposed to traditional markets
5 Day Performance vs. US dollar
Further reading
- Stock Market Confuses Optimism with Relief, R. Burgess, Bloomberg (November 4, 2019)
- The Happy, Healthy Capitalists of Switzerland, R. Sharma, The New York Times (November 2, 2019)
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EURUSD technical overview
The 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.
EURUSD fundamental overview
The Euro came under some pressure on Monday, though it had nothing to do with economic data. Releases out of the Eurozone were better than expected, as reflected through manufacturing PMI reads, while data out of the US disappointed. Overall however, the setbacks should not be overstated, as the major pair is more confined to choppy up and down action within a tighter range than anything else. Looking ahead, key standouts on the calendar come in the form of Eurozone producer prices, US trade, US ISM non-manufacturing, and US JOLTS job openings.
EURUSD – Technical charts in detail
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GBPUSD technical overview
The 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.
GBPUSD fundamental overview
Monday’s UK construction PMI read came in better than expected, though the Pound traded lower on the day on the back of a minor wave of broad based US Dollar demand. A spokesperson for Boris Johnson said the Prime Minister believed the UK would reach a good trade deal with the EU by the end of 2020 and would not be extending the Brexit transition period. Looking ahead, key standouts on the calendar come in the form of UK services PMIs, US trade, US ISM non-manufacturing, and US JOLTS job openings.
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USDJPY technical overview
The 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.
USDJPY fundamental overview
There’s been no material reaction to BOJ Kuroda’s latest speech, in which the central banker reiterated the BOJ’s tweaked forward guidance showed the bank was tilted towards extra easing and that it’s options weren’t limited to negative interest rates. Overall, mixed trade in the major pair, with not a lot going on at the moment. Looking ahead, key standouts on the calendar come in the form of US trade, US ISM non-manufacturing, and US JOLTS job openings.
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EURCHF technical overview
The 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.
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, 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
The 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.
AUDUSD fundamental overview
The RBA decision has come and gone without any major surprises. The central bank left policy on hold as was widely expected, though if there was something to talk about at all, it was the fact that the RBA sounded a little less dovish than many had been expecting. This helped to prop Aussie after the currency underwent a minor round of setbacks in Monday trade. Looking ahead, key standouts on the calendar come in the form of US trade, US ISM non-manufacturing, and US JOLTS job openings.
USDCAD technical overview
The 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.
USDCAD fundamental overview
The Canadian Dollar has been underperforming of late, weighed down by the more dovish Bank of Canada decision and softer economic data in the previous week. Setbacks have however stabilized with broad profit taking on USD longs and a rebound in the price of OIL playing a part. Looking ahead, key standouts on the calendar come in the form of Canada trade, US trade, US ISM non-manufacturing, and US JOLTS job openings.
NZDUSD technical overview
Despite 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.
NZDUSD fundamental overview
New Zealand PM Ardern announced an ‘upgrade’ to the country’s free-trade agreement with China, which included new rules that would make exports to China cheaper and easier. At the same time, the NZ Treasury lowered its terminal and nominal neutral interest rate to 3% from 3.75% for upcoming 6-month forecasts, citing downside risks Looking ahead, key standouts on the calendar come in the form of US trade, US ISM non-manufacturing, and US JOLTS job openings.
US SPX 500 technical overview
There 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.
US SPX 500 fundamental overview
Although 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 overview
The 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.
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
The 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.
BTCUSD fundamental overview
Bitcoin 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
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ETHUSD technical overview
The 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.
ETHUSD fundamental overview
Profit 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.