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Daily Market Outlook, November 6, 2020
As the US Presidential election entered its final stretch, market sentiment turned a little cautious overnight. US and European equity futures have slipped, while equity markets across Asia are somewhat mixed. Joe Biden is seemingly edging closer to being the next US President, although Trump continues to question the integrity of the US voting system.
Given the proximity of the election, it was unsurprising that the Federal Reserve stood pat at its policy meeting last night leaving interest rates and its asset purchase programme unchanged. However, while the Fed acknowledged that the economy had continued to grow, it also pointed to downside risks to growth and expressed concerns that the economy’s recovery may stall amid a renewed rise in Covid-19 cases. Both the press statement and Fed Chair Powell’s post meeting press conference emphasised that the US central bank stood ready to offer more support to the economy if warranted. Meanwhile, domestically, the UK Chancellor announced yesterday that the furlough scheme would be extended until March 2021.
As an exceptionally eventful week draws to a close, particularly in the US, today’s payrolls report for October will provide one final point of interest for market participants. Following the sharp decline in payrolls seen across March and April combined – as the economy went into lockdown – recent months have seen a recovery. However, an acceleration in the number of new Covid cases in recent weeks, and a fall of around 130k-150k in temporary Census workers are likely to have weighed on hiring activity in October. Look for a 700k rise, broadly in line with that seen in September, it is noticeable that the pace of the jobs recovery has eased back of late, leaving the level of employment still some way below its pre-Covid level. Still that should be enough to see the unemployment rate edge down a little more, to 7.8%. Nevertheless, such a jobless rate should serve as a reminder to the next administration of the challenges that lie ahead for the US economy.
Elsewhere, across Europe it is a very quiet day with no major data releases due in either the UK or Eurozone. ECB Governing Council member Holzmann speaks at an online conference on European Economic Integration.
Today’s Options Expiries for 10AM New York Cut
- EURUSD: 1.1795 (439M), 1.1800 (1.8BLN), 1.1850 (1.1BLN),
- GBPUSD: 1.3115 (233M)
- USDJPY: 103.30 (350M), 104.00 (501M), 104.75 (280M), 104.90 (300M)
- AUDUSD: 0.7200 (256M), 0.7225 (350M), 0.7250 (235M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.1780 bearish below
EURUSD From a technical and trading perspective, the failure to hold 1.1687 lows opens quick move to test 1.1610 as 1.1780 contains upside attempts look for a test of the pivotal 1.15. UPDATE through 1.1780 opens a move to challenge offers and stops above 1.19 as the next upside objective
Flow reports suggest topside offers through the 1.1860 area and then increasing on a move to the 1.1880 area to find increasing congestion through to the 1.1920 level, even there where you’re likely to see weak stop you will find the same type of congestion continuing to the 1.1950 before weakening a little and increasing for any move to the 1.2000 level. Downside bids light through the 1.1800 area with weak stops on a dip through the 1.1780 area and opening the market for a renewed challenge of the 1.1700 area with light support from there.
GBPUSD Bias: Bullish above 1.2861 targeting 1.3266
GBPUSD From a technical and trading perspective, while 1.2950 attracts sufficient bids look for a test of primary equality objective at 1.3264
Flow reports suggest topside offers increasing through to the 1.3200 level with weak stops likely on a move through the level and becoming weaker on a break through to the 1.3260 area with limited offers once through the 1.3300 area, Downside bids light through to the 1.2950 level before stronger bids start to appear and increase through to the 1.2900 level with weak stops likely on a dip into the 1.2880 level again with stronger bids appearing into 1.2850.
.USDJPY Bias: Bearish below 104 bullish above
USDJPY From a technical and trading perspective, as 104.30 supports look for a test of descending trendline resistance at 105.50 Update as 104 now acts as resistance look for a test of 103 next
Flow reports suggest downside bids into the 103.00 level and likely to continue through to the 102.80 before weak stops appear and the market then finding limited bids through to the 103.20 area and the same story however, the bids are likely to increase on each dip.
AUDUSD Bias: Bearish below .7243 bullish above
AUDUSD From a technical and trading perspective, as .7243 caps upside attempts look for decline to resume to expose bids and stops towards .6900 UPDATE as .7240 now acts as support look for a retest of offers and stops above .7400
Flow reports suggest topside congestion through the 0.7290 area and likely to continue through to the 0.7320 area before a little less resistance through to 0.7350, however a push through this level is likely to see increasing offers into the 0.7380 level and continuing through to the 0.7420 and the highs since September, strong breakout stops likely on a move through the level and opening a larger move higher against the rub of the economics for the moment. Downside bids light through to the 0.7140 level before finding some light congestion with stronger bids into the 71 cents level to some extent however weak stops and then better bids through the 0.7050 area and increasing into the 70 cents level with short term profit taking likely.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!