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GILTS

UK 5s/30s drifts towards Friday's low

CZECHIA

CZKJPY Found Support Above 38.2% Fibo Level

Most FX pairs have remained stable this afternoon, beside of course the old British Pound as the street awaited the EU Summit and the state of play on Brexit.

  • Cable plummeted 90 pips to 1.2865, when UK Johnson said that UK should be ready for
    an Australian style deal.
  • But GBP recovered, now at 1.2922 at the time of typing, after Boris confirmed that the UK
    is not Walking Away, But There Must Be Change Of EU Approach.
  • The EU are now ready to engage in further trade talks in London next week.
  • US Data were mixed this afternoon, with US Retail sales beating expectation, while
    US IP missed the survey.
  • Finally US Michigan came above expectations, but most of the price action was mainly
    seen in US Bonds and Equities,
  • Equities are trending higher this afternoon, keeping the USD heavy, but yet mixed
    against the majors.
  • The Rand is the best performing currency, up 0.66% versus the Greenback.


    AFTER THE CLOSE:
  • Late Friday Moody's downgraded UK sovereign debt rating one notch to Aa3 from
    Aa2, based on weakening economic and fiscal strength stemming from Brexit woes and
    COVID-19-induced shocks.
  • NZ PM Jacinda Ardern wins landslide election victory.
  • Chinese Govt officials issue warning they may detain US nationals in China in response
    to the Justice Dept.'s prosecution of Chinese military affiliated scholars.
  • Italy considering a nationwide curfew and closing schools after country reported
    highest ever daily toll of COVID infections.
  • More than 70 British business groups representing more than 7mn workers have
    made a last ditch attempt to persuade politicians to return to the table next week to
    strike trade deal between the UK and the EU.
  • Senior Federal Reserve officials call for tougher financial regulation to prevent low
    interest rate policies giving rise to excessive risk taking and asset bubbles in the
    market.
  • UK Sunday Times reported NHS preparing to introduce a corona virus vaccine soon
    after Christmas.

TECHNICALS:

EURUSD: Remains Vulnerable

  • RES 4: 1.1917 High Sep 10 and 76.4% of the Sep 1 - 25 sell-off
  • RES 3: 1.1859 61.8% retracement of the Sep 1 - 25 sell-off
  • RES 2: 1.1817/31 High Oct 13 / High Oct 9 and the bull trigger
  • RES 1: 1.1771 High Oct 14
  • PRICE: 1.1716 @ 17:00 BST Oct 16
  • SUP 1: 1.1685 Low Sep 30
  • SUP 2: 1.1612/1581 Low Sep 25 and the bear trigger / Low Jul 24
  • SUP 3: 1.1597 100-dma
  • SUP 4: 1.1541 Low Jul 23

EURUSD is largely unchanged. The move lower this week follows the recent rejection off the 1.1831 high on Oct 9. Attention is on the next important support handle at 1.1685, Sep 30 low. A break of would set the scene for a deeper decline and expose the key 1.1612 level, Sep 25 low. 1.1612 also represents the trigger for a resumption of the downtrend that started on Sep 1. Resistance is at 1.1771 Wednesday's high.

GBPUSD: Bearish Risk Still Present

  • RES 4: 1.2280 High Sep 7
  • RES 3: 1.3186 Former trendline support drawn off the Mar 20 low
  • RES 2: 1.3174 61.8% retracement of the Sep 1 - 23 sell-off
  • RES 1: 1.3083 High Oct 12
  • PRICE: 1.2937 @ 17:05 BST Oct 16
  • SUP 1: 1.2863 Low Oct 14
  • SUP 2: 1.2846 Low Oct 7 and key near-term support
  • SUP 3: 1.2806 Low Sep 30
  • SUP 4: 1.2745 Low Sep 28
GBPUSD maintains a choppy tone. The pair recovered Wednesday bouncing sharply off the
day low of 1.2863 before finding resistance Thursday. Price remains below the Oct 12 high
of 1.3083. A break of this level is needed to resume the recent uptrend that would open
1.3000 and 1.3186. The latter is the former trendline support drawn off the Mar 20 low.
The trendline was breached on Sep 9. A break of 1.3186 is required to strengthen a bullish
theme. Initial support is at 1.2863.

EURGBP: Support Still Exposed

  • RES 4: 0.9190 61.8% retracement of the Sep 11 - 28 sell-off
  • RES 3: 0.9162 High Oct 7 and the bull trigger
  • RES 2: 0.9132 High Oct 10
  • RES 1: 0.9122 Oct 14 high
  • PRICE: 0.9055 @ 17:07 BST Oct 16
  • SUP 1: 0.9007 Low Oct 14
  • SUP 2: 0.9000 Round number support
  • SUP 3: 0.8967 76.4% retracement of the Sep 3 - 11 rally
  • SUP 4: 0.8808 Low May 13

EURGBP maintains a bearish outlook despite recovering off recent lows. The move lower
on Oct 14 followed another failed attempt to convincingly clear trendline resistance drawn
off the Sep 11 high. Weakness that day also confirmed a resumption of the current
downtrend setting the scene for a move to 0.9000 and below towards 0.8967, a
retracement level. Resistance is at 0.9122, the Oct 14 high.

USDJPY: Focus Is On The Key Short-Term Support

  • RES 4: 106.95 High Sep 28
  • RES 3: 106.55 High Sep 3 / Channel resistance drawn off Mar 24 high
  • RES 2: 106.11/38 High Oct 7 and the bull trigger / High Sep 8
  • RES 1: 105.63 High Oct 13
  • PRICE: 105.38 @ 17:10 BST Oct 16
  • SUP 1: 105.04 Low Oct 14
  • SUP 2: 104.94 Low Oct 2 and key near-term support
  • SUP 3: 104.41 Low Sep 22
  • SUP 4: 104.00 Low Sep 21 and the bear trigger

USDJPY traded lower on Oct 14 extending this week's slide and continues to display a weaker tone. Intraday momentum studies still point south however, to strengthen a bearish theme price needs to trade below 104.94, Oct 2 low. This would open 104.00, Sep 21 low. While 104.94 remains intact, the recent sell-off is considered a correction. The bull trigger is at 106.11, Oct 7 high. Initial resistance is at 105.63.

EURJPY: Support Has Remained Intact

  • RES 4: 125.77 High Sep 15
  • RES 3: 125.09/28 High Oct 9 / 61.8% of the Sep 1 - 28 sell-off
  • RES 2: 124.48 High Oct 13
  • RES 1: 123.94 High Oct 14
  • PRICE: 123.47 @ 17:12 BST Oct 16
  • SUP 1: 123.03/02 Low Sep 29 and Oct 2 / Low Oct 15
  • SUP 2: 122.38/28 Low Sep 28 / 61.8% of the Jun 22 - Sep 1 rally
  • SUP 3: 122.25 38.2% retracement of the May - Sep rally
  • SUP 4: 121.82 Low Jul 15 and 16

EURJPY maintains a softer tone having traded lower again Thursday. While recent
weakness is considered a correction, attention turns to support at 123.03, Oct 6 low. This
level was probed briefly Thursday. A clear breach of 123.03 would highlight scope for a
deeper pullback and open the key support at 122.38, Sep 28 low and the bear trigger. On
the upside, key resistance is at 125.09, Oct 9 high. Initial resistance is at 123.94.

AUDUSD: Failure At Trendline Resistance Weighs

  • RES 4: 0.7258 61.8% retracement September Sell-Off
  • RES 3: 0.7243 High Oct 10 and the intraday bull trigger
  • RES 2: 0.7201 Trendline resistance drawn off the Sep 1 high
  • RES 1: 0.7170 High Oct 15
  • PRICE: 0.7084 @ 17:14 BST Oct 16
  • SUP 1: 0.7056 Low Oct 15
  • SUP 2: 0.7029 Low Sep 28
  • SUP 3: 0.7006 Low Sep 25 and the bear trigger
  • SUP 4: 0.6965 23.6% retracement of the Mar - Sep rally

AUDUSD remains vulnerable. On Oct 9, the pair cleared resistance at 0.7209, Oct 1
and 6 high resulting in a test of trendline resistance drawn off the Sep 1 high. The line
intersects at 0.7201 today. A failure to clear the trendline is weighing on the Aussie and,
with support at 0.7096, Oct 7 breached, the scene is set for a deeper pullback. Attention
turns to the primary support and bear trigger at 0.7006, Sep 25 low. 0.7170 is resistance.

USDCAD: Needle Pointing North

  • RES 4: 1.3421 High Sep 30 and primary resistance
  • RES 3: 1.3341 High Oct 7 and a reversal trigger
  • RES 2: 1.3266/68 50-day EMA / High Oct 7
  • RES 1: 1.3259 High Oct 15
  • PRICE: 1.3183 @ 17:17 BST Oct 16
  • SUP 1: 1.3143 Low Oct 15
  • SUP 2: 1.3099 Low Oct 13 and the bear trigger
  • SUP 3: 1.3095 76.4% retracement of the Sep 1 - 30 rally
  • SUP 4: 1.3038 Low Sep 2

USDCAD pulled back Friday following strong gains Thursday. The recent recovery signals scope for a stronger corrective bounce. The pair has breached the 20-day EMA paving the way for move towards the 50-day EMA that intersects at 1.3266. A breach of this average would strengthen a bullish case. On the downside, initial support lies at 1.3143, Thursday's intraday low. A move through this level would undermine the recent bounce.

MNI KEY LEVELS:

EUR/USD: MNI Key Levels

  • $1.1872/77 Cloud top, Sep21 high/Upper 1.0% 10-dma env
  • $1.1856 100-mma
  • $1.1817/27/31 Oct13 high/Oct12 high/Upper Boll Band (2%), Oct09 high
  • $1.1794/96 50-dma/55-dma
  • $1.1771 Oct14 high
  • $1.1746/58/61 Oct16 high/Oct15 high/200-hma
  • $1.1736/37/43 38.2% 1.3993-1.0341/21-dma/100-hma
  • $1.1718 ***CURRENT MARKET PRICE 09:03BST SATURDAY***
  • $1.1694/89 Oct16 low/Oct15 low
  • $1.1685 Sep30 low, Sep25 high
  • $1.1661 Sep29 low*$1.1642/32 Lower 1.0% 10-dma env/Lower Boll Band (2%)
  • $1.1612/04/98 Sep25 low/100-dma/Cloud base
  • $1.1582/81 Lower Boll Band (3%)/Jul24 low
  • $1.1541 Jul23 low

GBP/USD: MNI Key Levels

  • $1.3064/72 Oct14 high/Oct13 high
  • $1.3030 Oct15 high
  • $1.3017/24 50-dma/55-dma
  • $1.3007 Oct06 high, Sep16 high
  • $1.2962/67 200-hma, Oct16 high/100-hma
  • $1.2943/50 200-wma/50-mma
  • $1.2921 Cloud base
  • $1.2915 ***CURRENT MARKET PRICE 09:09BST SATURDAY***
  • $1.2891 21-dma
  • $1.2865/63 Oct16 low/Oct14 low
  • $1.2846/38/37 Oct07 low/Oct02 low/100-dma
  • $1.2829/20 Lower 1.0% 10-dma env/Oct01 low
  • $1.2806 Sep30 low
  • $1.2781 Sep24 high
  • $1.2763 Sep11 low

EUR/GBP: MNI Key Levels

  • Gbp0.9240 Upper Bollinger Band (3%)
  • Gbp0.9220 Sep22 high
  • Gbp0.9181/94 Sep24 high/Upper Boll Band (2%)
  • Gbp0.9166 Upper 1.0% 10-dma envelope
  • Gbp0.9156/57/62 Oct01 high/Sep30 high/Oct07 high
  • Gbp0.9122/23/32 Oct14 high/Oct08 high/Oct09 high
  • Gbp0.9105 21-dma
  • Gbp0.9074 ***CURRENT MARKET PRICE 09:11BST SATURDAY***
  • Gbp0.9074/68/61 200-hma/Cloud top, Cloud base/50-dma
  • Gbp0.9059/56 55-dma/100-hma
  • Gbp0.9044/39 Oct16 low/100-dma
  • Gbp0.9017/09/07 Oct15 low/Lower Boll Band (2%)/Oct14 low
  • Gbp0.8984 Lower 1.0% 10-dma envelope
  • Gbp0.8967/63 Sep08 low/Lower Boll Band (3%)
  • Gbp0.8925 Sep07 low

USD/JPY: MNI Key Levels

  • Y105.77 50-dma
  • Y105.76 55-dma
  • Y105.63 Oct13 high
  • Y105.58 Cloud Tenkan Sen
  • Y105.57 200-hma
  • Y105.52 Oct14 high
  • Y105.42/45/49 21-dma/Oct16 high/Oct15 high
  • Y105.40 ***CURRENT MARKET PRICE 09:15BST SATURDAY***
  • Y105.35 100-hma
  • Y105.19 Oct16 low
  • Y105.13 Cloud Kijun Sen
  • Y105.09 Oct15 low
  • Y105.04 Oct14 low
  • Y104.94 Oct02 low
  • Y104.88 Sep23 low

EUR/JPY: MNI Key Levels

  • Y124.26 Cloud Kijun Sen
  • Y124.16 200-hma
  • Y124.06 Cloud Tenkan Sen
  • Y123.94 Oct14 high
  • Y123.77 Oct15 high
  • Y123.73 21-dma
  • Y123.67/70/71 Cloud base/100-hma/Oct16 high
  • Y123.48 ***CURRENT MARKET PRICE 09:18BST SATURDAY***
  • Y123.43 100-dma
  • Y123.12 Oct16 low
  • Y123.03 Oct02 low, Sep29 low
  • Y123.02 Oct15 low
  • Y122.92 Lower 1.0% 10-dma envelope
  • Y122.40 Lower Bollinger Band (2%)
  • Y122.38 Sep28 low

AUD/USD: MNI Key Levels

  • $0.7218/25 Oct13 high/Upper 1.0% 10-dma env
  • $0.7191/02/05 Oct14 high/55-dma/50-dma
  • $0.7170 Oct15 high
  • $0.7146/47/54 Cloud base/21-dma/200-hma
  • $0.7123/36 Oct08 low/100-hma
  • $0.7098 Oct16 high
  • $0.7082/97 Lower 1.0% 10-dma env/100-dma
  • $0.7081 ***CURRENT MARKET PRICE 09:20BST SATURDAY***
  • $0.7071/56 Oct16 low/Oct15 low
  • $0.7029/22 Sep28 low/Lower Boll Band (2%)
  • $0.7010/06 Lower 2.0% 10-dma env/Sep25 low
  • $0.6973/63 Jul20 low/Jul16 low, Lower Boll Band (3%)
  • $0.6939 Lower 3.0% 10-dma envelope
  • $0.6921 Jul14 low
  • $0.6897 100-wma

USD/CAD: MNI Key Levels

  • C$1.3377 100-wma
  • C$1.3359 100-dma
  • C$1.3341/52 Oct07 high/Sep29 low
  • C$1.3320/28 Cloud top/Upper 1.0% 10-dma env
  • C$1.3259/66/73 Oct15 high/21-dma/Oct08 high
  • C$1.3238 Oct16 high
  • C$1.3212/23 50-dma/55-dma
  • C$1.3189 ***CURRENT MARKET PRICE 09:23BST SATURDAY***
  • C$1.3188/77/76 200-hma/Oct16 low/50-mma
  • C$1.3165/62/61 100-hma/Cloud base/200-wma
  • C$1.3143 Oct15 low
  • C$1.3117 Oct14 low
  • C$1.3099/87 Oct13 low/Sep08 low
  • C$1.3084 Lower Bollinger Band (2%)
  • C$1.3064 Lower 1.0% 10-dma envelope

OPTIONS: Expiries for Oct19 NY cut 1000ET (Source DTCC)

EUR/USD: $1.1540-50(E1.1bln), $1.1600(E767mln), $1.1615-20(E720mln-EUR puts), $1.1650(E1.1bln), $1.1700-15(E1.0bln), $1.1730-35(E601mln),
$1.1770-75(E1.1bln), $1.1800(E1.0bln), $1.1850(E659mln), $1.1900(E751mln), $1.1950(E981mln)
USD/JPY: Y105.00($557mln), Y106.00($1.1bln), Y107.00-10($886mln)
EUR/JPY: Y125.00(E514mln)
AUD/USD: $0.7280-85(A$718mln)
USD/CNY: Cny6.7735($1.0bln), Cny6.80($829mln), Cny7.00($750mln)
-----------------------------------
Larger Option Pipeline
EUR/USD: Oct20 $1.1745(E1.4bln); Oct22 $1.1600(E1.2bln), $1.1645-50(E1.8bln); Oct23 $1.2000(E1.3bln); Oct26 $1.1500(E1.8bln), $1.1650-60(E1.7bln);
Oct28 $1.1800-05(E1.4bln), $1.2000-05(E2.1bln); Oct30 $1.1800(E1.1bln)
USD/JPY: Oct20 Y106.35-44($2.3bln-USD calls); Oct21 Y105.00-10($1.9bln), Y105.50($1.1bln), Y105.90-106.00($2.2bln), Y106.65($1.0bln);
Oct22 Y104.00-10($1.6bln), Y104.50-55($2.1bln), Y104.95-105.00($1.1bln), Y105.95-106.00($1.2bln); Oct26 Y103.95-104.00($1.5bln-USD puts),
Y106.95-107.00($1.6bln); Oct27 Y105.00($1.2bln); Oct28 Y105.00($1.1bln); Oct29 Y106.00($1.2bln); Oct30 Y104.50($1.9bln), Y106.00-05($1.9bln)
EUR/GBP: Oct26 Gbp0.8900(E990mln), Gbp0.9000(E1.8bln-EUR puts)
AUD/JPY: Oct22 Y76.44(A$2.1bln); Oct29 Y73.20(A$1.0bln-AUD puts), Y76.35-40(A$2.4bln-AUD calls)
AUD/NZD: Oct27 N$1.0809-20(A$2.5bln); Oct30 N$1.0750(A$1.2bln)