Tuesday has been a full “risk-on” session, as traders dial down on expectations for big swings in US stockmarkets, instead looking for market uncertainty to recede after the US Election. Global stocks have rallied sharply as optimism seems to grow over the result of the election, with the major European indices leading the way in rising by around 2.5% and then followed up by the US indices which are closing the day up by around 2%.

The US$, which has been acting as a safe-haven, has been sold off sharply as the positive, risk-on mood took hold, with the EU majors all making good gains in leaving the DXY down by 0.6%. The Aud$ had a strong session too, in rallying to 0.7150, leaving yesterday’s  RBA rate cut behind and instead looking at the prospects of a stronger risk scenario, dragging the Kiwi along for the ride, which is now back at 0.6700.

In the commodities sector, the positive risk mood allowed oil to make further gains, with WTI putting on another 1.7%, now @ 37.75, while the precious metals took advantage of the weaker dollar, allowing Gold to regain 1900.

The US election will be the sole focus for the next 24 hours but while that is unfolding the day begins with the NZ Q3 Unemployment data (exp Change; -0.8%, Headline rate; 5.4%) and then the Australian Retail Sales for September (exp -1.5%mm). The Global Mfg Services/Composite (Australia, China Caixin, Japan, EU, UK, US) are due through the session, while the latest BOJ Minutes will also be released. From Europe, there is an EcoFin Meeting, while the EU Commission Growth forecasts are due for release. The US will be all about the election, but ISM Services figures are due, while the ADP Jobs data will be closely watched (exp 650K) as a barometer of what we might expect in Friday’s NFP reading. Have a good day.

Economic data highlights will include:

Wed: NZ Unemployment, Global Mfg Services/Composite (Australia, China Caixin, Japan, EU, UK, US), Australian Retail Sales, BOJ Minutes, EU Commission Growth forecasts, EU PPI, US Trade Balance, ADP Jobs data, US ISM Services PMI -Prices Paid, EIA Weekly Crude Stocks Change

Market moves, in brief:

FX: DXY 93.56 (-0.60%)

Bonds: US10Y; 0.879% (+4.42%), German 10Y; -0.619% (+2.58%), UK 10Y; 0.274% (+4.74%), Australian 10Y; 0.783% (-6.17%), NZ 10Y; +0.549% (-3.21 %), China 10Y; 3.18% (-0.77%)

Stock Indices: DJI; +2.07%, S+P; +1.85%, NASDAQ; xxxx%, EUStoxx50; xxxx%, FTSE100; xxxx%, Shanghai Composite; +1.42%, ASX200SPI: +1.94%

Metals: Gold $1907 oz (+0.60%), Silver $24.12 oz (+0.08%), Copper $3.0935 lb (+0.55%), Iron Ore $xxxx per tonne (NYMEX) (xxx%),

Oil: WTI $37.75 pb (+1.86%)

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Trend Table: November 4, 2020                                                    

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In the trend table below, when looking at the charts for a particular FX pair, index or commodity, we are we searching for 2 or 3 consecutive boxes of the same colour which might indicate a trend – and a possible trading opportunity. Consecutive (1 & 4 hour, 4 hour/daily, daily/weekly) green boxes indicate a possible uptrend; red, a possible downtrend, while blue signifies a neutral bias (range trade possibility).  The boxes on the trend table merely replicate the look of the charts for the specific time-frame in MT4/5. Assets with a mixture of colours are ignored for the coming session.

For instance, if we see consecutive green boxes in the  1 hour and 4 hour time-frames for the FX pair “EURUSD”, that would signify the chance of a move higher in that pair over the next 24 hours. If the dailies were also green that would add to the bullish conviction from a slightly longer term perspective, and if the weeklies are also green then it would give added credence to the longer term bullish view, albeit that it might take longer for the trend to play out, so patience will almost certainly be required.   The opposite would be true of red boxes, which could signify downward momentum. The strength of any possible trend depends on the time-frame, with the longer term (daily, weekly charts) obviously having a greater overall weighting than the short-term charts.

In the near term though, the 1 and 4 hour charts are what are likely to combine to indicate the possibility of a trading idea for the next few, possibly up to 24, hours.

Note that a longer term bullish view (green daily/weekly boxes) does not discount the possibility of near term dips (i.e. Red 1 & 4 hour boxes), which may indicate near term weakness and suggesting that we should be looking to buy dips for a longer term rally – and vice versa if the near term boxes are green and the longer term; red.

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There is no outlook today as we prefer to await the outcome of the US election.

EURUSDUSDJPYGBPUSDUSDCHFAUDUSDNZDUSD
1 HourPossible Topping FormationTurning NeutralPossible Topping FormationDownOverbought – Turning Lower?Possible Topping Formation
4 HourTurning HigherTurning NeutralNeutral – Turning Higher?Turning LowerTurning Higher?Neutral – Turning Higher?
1 DayNeutral – Turning Lower?Turning NeutralTurning NeutralNeutral – Turning Higher?Turning NeutralNeutral
1 WeekTurning Lower?Turning NeutralTurning NeutralPossible Basing FormationTurning LowerPossible Topping Formation
DXYS+PASX200GOLDSILVEROIL_WTI
1 HourPossible Basing FormationPossible Topping FormationTurning LowerPossible Topping FormationTurning NeutralOverbought – Turning Lower?
4 HourTurning LowerNeutral – Turning Higher?Neutral – Turning Higher?Turning Higher?Turning NeutralTurning Higher
1 DayTurning NeutralTurning NeutralNeutral – Turning Lower?Turning NeutralTurning NeutralTurning Neutral
1 WeekPossible Basing FormationTurning LowerTurning NeutralDownDownNeutral
EURJPYEURGBPGBPAUDAUDJPYEURAUDAUDNZD
1 HourTurning LowerTurning Lower?Possible Basing FormationPossible Topping FormationPossible Basing FormationUp – Overbought
4 HourTurning HigherTurning NeutralNeutral – Turning Lower?Turning Higher?DownTurning Higher?
1 DayTurning LowerNeutralTurning NeutralTurning NeutralTurning NeutralPossible Basing Formation
1 WeekTurning LowerTurning NeutralNeutral – Turning Higher?Turning LowerTurning NeutralTurning Lower

 

There is no outlook today as we prefer to await the outcome of the US election.

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