MNI US Morning FX Analysis - Equities Firmer in Election Week

Equities on Firmer Footing in Election Week

Equities trade on a more solid footing early Monday. Stock markets in Europe are higher by 0.8-1.5% while the E-mini S&P is higher by 40 points or so. Currencies are broadly non-directional, with the USD index inside last week's range, although the haven JPY is a touch weaker. CAD, NZD outperform slightly.

GBP was softer from the off, with the currency underperforming all others in G10 at the NY crossover following the announcement of a month-long lockdown effective Thursday to run until the beginning of December. While the move mimics others seen in France & Germany, Monday's GBP moves clearly show a lockdown wasn't seen as a done deal in the UK. GBP/USD bottomed out at 1.2855 this morning, the lowest since October 7th.

October Manufacturing ISM data as well as Construction spending cross, but broader focus remains on the coming US election, Fed rate decision and Friday's NFP release.

CoT Data Shows Markets Favoured MXN, Dropped GBP in Most Recent Week

Friday's CFTC CoT update shows speculators built MXN & trimmed GBP positions in the latest week of data.

• MXN saw the most sizeable change, with markets adding a net of 8k contracts, representing a 6.3 percentage point swing higher in the net long.
• GBP positions moved in the opposite direction, with GBP now at a near 7k net short position as speculators trimmed positions by close to 5k contracts.
• Both NZD and CHF net positions remain close to their 52w highs at 17.3% and 29.4% of open interest respectively.

Full update here:

EUR/USD TECHS: Attention Is On Key Support

• RES 4: 1.1881 High Oct 21 and the bull trigger
• RES 3: 1.1798 High Oct 28
• RES 2: 1.1761 20-day EMA
• RES 1: 1.1704 High Oct 30
• PRICE: 1.1645 @ 10:19 GMT Nov 2
• SUP 1: 1.1623 Intraday low
• SUP 2: 1.1612 Low Sep 25 and the bear trigger
• SUP 3: 1.1576 0.764 proj of Sep 1 - 25 sell-off from Oct 21 high
• SUP 4: 1.1541 Low Jul 23

EURUSD is off earlier lows but maintains a weaker outlook. Last week's sell-off confirmed a clear breach of the short-term trendline support drawn off the Sep 28 low. The break, confirmed by a move below the Oct 29 low of 1.1718 as well as key support at 1.1689, Oct 15 low strengthens the bearish case and has opened 1.1612, Sep 25 low and the primary bear trigger. Initial resistance is at 1.1704, Friday's intraday high.

GBP/USD TECHS: Remains Vulnerable

• RES 4: 1.3270 2.0% 10-dma envelope
• RES 3: 1.3177 High Oct 21 and the bull trigger
• RES 2: 1.3080 High Oct 27 and key near-term resistance
• RES 1: 1.3026 High Oct 29
• PRICE: 1.2923 @ 10:24 GMT Nov 2
• SUP 1: 1.2855 Intraday low
• SUP 2: 1.2863 Low Oct 14 and key near-term support
• SUP 3: 1.2806 Low Sep 30
• SUP 4: 1.2794 76.4% retracement of the Sep 23 - Oct 21 rally

The GBPUSD outlook remains bearish following last week's extension lower and despite today's intraday recovery. The breach last week of 1.2940, Oct 21 low suggests scope for a deeper pullback with attention on 1.2863, Oct 14 low and a key S/T support. Clearance of this level would open 1.2794, a Fibonacci retracement. Initial firm resistance is seen at 1.3080, Oct 27 high. A break would ease bearish pressure and open 1.3177, Oct 21 high.

EUR/GBP TECHS: Bearish Price Sequence Intact

• RES 4: 0.9146/62 1.0% 10-dma envelope / High Oct 7
• RES 3: 0.9149 Oct 20 high
• RES 2: 0.9107 High Oct 23
• RES 1: 0.9064 50-day EMA
• PRICE: 0.9011 @ 10:30 GMT Nov 2
• SUP 1: 0.8984 Low Oct 30
• SUP 2: 0.8967 76.4% retracement of the Sep 3 - 11 rally
• SUP 3: 0.8925 Low Sep 7
• SUP 4: 0.8900 Low Sep 4

EURGBP traded lower Friday and cleared 0.9007, Oct 14 low. This confirms a resumption of the downtrend that has been in place since reversing lower on Sep 11. The break lower maintains a bearish price sequence of lower lows and lower highs. This has exposed 0.8967 next, a retracement. Key short-term resistance is at 0.9149, Oct 20 high. Clearance of this level would undermine bearish conditions. Initial resistance is 0.9064, 50-day EMA.

USD/JPY TECHS: Bearish Despite Finding Support

• RES 4: 105.75 High Oct 20
• RES 3: 105.48/53 50-dma / High Oct 21
• RES 2: 105.06 High Oct 26 and key near-term resistance
• RES 1: 104.95 Intraday high
• PRICE: 104.74 @ 10:57 GMT Nov 2
• SUP 1: 104.00 Low Sep 21 and the bear trigger
• SUP 2: 103.67 76.4% retracement of the Mar 9 - 24 rally
• SUP 3: 103.09 Low Mar 12
• SUP 4: 102.02 Low Mar 10

USDJPY maintains a bearish outlook despite recovering from recent lows. Attention remains on the key 104.00 handle, Sep 21 low. Clearance of this support would suggest scope for a deeper USD sell-off within the bear channel drawn off the Mar 24 high. A break lower would also confirm a resumption of the current downtrend and maintain the bearish price sequence of lower lows and lower highs. Firm resistance is at 105.06.

AUD/USD TECHS: Bearish Theme Following Break Of Support

• RES 4: 0.7243 High Oct 10 and a key resistance
• RES 3: 0.7218 High Oct 13
• RES 2: 0.7138/58 Trendline drawn off the Sep 1 high / High Oct 23
• RES 1: 0.7076 High Oct 29
• PRICE: 0.7032 @ 10:46 GMT Nov 2
• SUP 1: 0.6996 Intraday low
• SUP 2: 0.6965 23.6% retracement of the Mar - Sep rally
• SUP 3: 0.6943 2.0% 10-dma envelope
• SUP 4: 0.6921 Low Jul 14

AUDUSD outlook is bearish. The pair has pulled further away from trendline resistance drawn off the Sep 1 high and importantly has today traded below 0.7000, signalling a clear breach of former support at 0.7006, Sep 25 low and 0.7002, Oct 29 low. The break lower has opened 0.6965 next, a Fibonacci retracement. On the upside, trendline resistance intersects at 0.7138 where a break is required to reverse the trend.

USD/CAD TECHS: Focus Is On Key Resistance

• RES 4: 1.3545 200-dma
• RES 3: 1.3474 2.0% 10-dma envelope
• RES 2: 1.3421 High Sep 30 and primary resistance
• RES 1: 1.3390 High Oct 29
• PRICE: 1.3308 @ 10:48 GMT Nov 2
• SUP 1: 1.3259 High Oct 15 and recent breakout level
• SUP 2: 1.3180 Low Oct 28
• SUP 3: 1.3109/3081 Low Oct 23 / Low Oct 21 and the bear trigger
• SUP 4: 1.3047 Low Sep 7

USDCAD is consolidating. Last week's bullish weekly close cemented the break of key short-term resistance at 1.3259, Oct 15 high as well as the break of 1.3341, Oct 7 high. Gains signal scope for a climb towards 1.3421 next, Sep 30 and primary resistance. Initial firm support is seen at 1.3180, Oct 28 low. A break of this level is required to undermine the developing bullish tone. First support however lies at 1.3259.

EUR/USD: MNI KEY LEVELS

• *$1.1783/84 50-dma/Cloud top
• *$1.1775 200-hma
• *$1.1763 21-dma
• *$1.1757 Sep27-2018 high
• *$1.1736 Fibo 38.2% 1.3993-1.0341
• *$1.1717 100-hma
• *$1.1691 Cloud base
• *$1.1655/57 Intraday high/100-dma
• *$1.1649/51 Lower 1.0% 10-dma env/Sep28-2018 high
• *$1.1632 Lower Bollinger Band (2%)
• *$1.1632 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *$1.1625/21 Intraday low/Oct16-2018 high
• *$1.1613/11 161.8% swing $1.1497-1.1309/Down Trendline from Jul18-2008
• *$1.1570/67 Jan10-2019 high/Lower Boll Band (3%)
• *$1.1540 Jan11-2019 high
• *$1.1531 Lower 2.0% 10-dma envelope
• *$1.1490 Jan15-2019 high
• *$1.1450/48 Jan29-2019 high/Mar20-2019 high
• *$1.1437 Mar21-2019 high
• *$1.1414/13/12 Lower 3.0% 10-dma env/200-wma/Jun25-2019 high
• *$1.1406 Jan30-2019 low

GBP/USD: MNI KEY LEVELS

• *$1.3020 200-hma
• *$1.3007 55-dma
• *$1.2997/99 Cloud top/61.8% 1.3381-1.2382
• *$1.2991/94 May10-2019 low/50-dma
• *$1.2979 21-dma
• *$1.2970/71 May14-2019 high/100-hma
• *$1.2956/60 Intraday high/Cloud base
• *$1.2948/50 50-mma/200-wma
• *$1.2904 May14-2019 low
• *$1.2878/82 100-dma/50% 1.3381-1.2382
• *$1.2877 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *$1.2877 Intraday low
• *$1.2872 Lower 1.0% 10-dma envelope
• *$1.2852 May16-2019 high
• *$1.2833/32/31 Feb12-2019 low/Lower Boll Band (2%)/Jan21-2019 low
• *$1.2825 Jan16-2019 low
• *$1.2813/10 May21-2019 high/61.8% 1.1841-1.4377
• *$1.2784 Jun25-2019 high
• *$1.2764/59 38.2% 1.3381-1.2382/Jun12-2019 high, Lower Boll Band (3%)
• *$1.2756 100-wma
• *$1.2742 Lower 2.0% 10-dma envelope

EUR/GBP: MNI KEY LEVELS

• *Gbp0.9133/34 Upper Boll Band (2%)/Sep11-2017 high
• *Gbp0.9125 Cloud top
• *Gbp0.9108 Jan03-2019 high
• *Gbp0.9079 Cloud base
• *Gbp0.9068 50-dma
• *Gbp0.9062/64 Jan11-2019 high/21-dma, 55-dma
• *Gbp0.9051/52 Jul17-2019 high/100-dma
• *Gbp0.9045/48 200-hma/Jul16-2019 high
• *Gbp0.9039 Jul18-2019 high
• *Gbp0.9033/35 100-hma/Intraday high
• *Gbp0.9033 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *Gbp0.9010 Jul10-2019 high
• *Gbp0.9005/00 Jul23-2019 high/Jul22-2019 high
• *Gbp0.8998 Intraday low
• *Gbp0.8993 Lower Bollinger Band (2%)
• *Gbp0.8959/57 Lower 1.0% 10-dma env/Lower Boll Band (3%)
• *Gbp0.8953 Jul23-2019 low
• *Gbp0.8921 Jul02-2019 low
• *Gbp0.8908 200-dma
• *Gbp0.8874/73/72 Jun19-2019 low/Jun20-2019 low/Jun12-2019 low
• *Gbp0.8869/65 Lower 2.0% 10-dma env/61.8% 0.9108-0.8473

USD/JPY: MNI KEY LEVELS

• *Y106.16 Upper Bollinger Band (2%)
• *Y106.03 100-dma
• *Y105.78 Upper 1.0% 10-dma envelope
• *Y105.77 Cloud top
• *Y105.49 55-dma
• *Y105.46 50-dma
• *Y105.19 Cloud base
• *Y105.17 21-dma
• *Y105.07 Cloud Kijun Sen
• *Y104.86/87 Intraday high/Jan03-2019 low
• *Y104.86 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *Y104.78 Cloud Tenkan Sen
• *Y104.61 200-hma
• *Y104.56 Mar26-2018 low
• *Y104.54 Intraday low
• *Y104.47 100-hma
• *Y104.13 Lower Bollinger Band (2%)
• *Y104.00 YTD low
• *Y103.94 200-mma
• *Y103.69 Lower 1.0% 10-dma envelope
• *Y103.62 Lower Bollinger Band (3%)

EUR/JPY: MNI KEY LEVELS

• *Y123.18 Jun11-2019 high
• *Y123.11 Fibo 50% 118.71-127.50
• *Y123.08 Fibo 38.2% 126.81-120.78
• *Y123.01 Jun12-2019 high
• *Y122.56 Jun13-2019 high
• *Y122.41 100-hma
• *Y122.23 Jul12-2019 high
• *Y122.13 Jun17-2019 high
• *Y122.07 Fibo 61.8% 118.71-127.50
• *Y122.00/01 Intraday high/Lower 1.0% 10-dma env
• *Y121.98 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *Y121.95/92 50% 94.12-149.78/Jun20-2019 high
• *Y121.85 Jul15-2019 high
• *Y121.84 Lower Bollinger Band (2%)
• *Y121.78 100-wma
• *Y121.70 Intraday low
• *Y121.42 Jul15-2019 low
• *Y121.17 200-dma
• *Y120.93 Lower Bollinger Band (3%)
• *Y120.78 Jul18-2019 low, Jun03-2019 low, Lower 2.0% 10-dma env
• *Y120.50 Jul23-2019 low

AUD/USD: MNI KEY LEVELS

• *$0.7140 Apr16-2019 low
• *$0.7116 Apr12-2019 low
• *$0.7110/14 Apr10-2019 low/100-dma, 21-dma
• *$0.7088/90 Apr08-2019 low/200-hma
• *$0.7069/73 Apr30-2019 high/Mar29-2019 low
• *$0.7061 100-hma
• *$0.7053/57 Apr02-2019 low/Jul22-2019 high
• *$0.7044/48 Jul16-2019 high/May07-2019 high, Jul04-2019 high
• *$0.7033 Intraday high
• *$0.7007 Lower 1.0% 10-dma envelope
• *$0.7005 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *$0.6991/87 Intraday low/Lower Boll Band (2%)
• *$0.6985 Jan03-2019 low
• *$0.6971/67 Jul12-2019 low/Jun11-2019 high
• *$0.6937 Lower 2.0% 10-dma envelope
• *$0.6925 Lower Bollinger Band (3%)
• *$0.6909 Jun19-2019 high
• *$0.6893 100-wma
• *$0.6879 Jun20-2019 low
• *$0.6866 Lower 3.0% 10-dma envelope
• *$0.6855 Jun19-2019 low

USD/CAD: MNI KEY LEVELS

• *C$1.3452 Jun04-2019 high
• *C$1.3441 Upper Bollinger Band (3%)
• *C$1.3431/32 Jun06-2019 high/Jun18-2019 high
• *C$1.3407 Fibo 61.8% 1.3565-1.3151
• *C$1.3383 Jun19-2019 high
• *C$1.3376/77 50% 1.4690-1.2062/100-wma
• *C$1.3370 Intraday high
• *C$1.3363 Upper Bollinger Band (2%)
• *C$1.3356/58 Upper 1.0% 10-dma env/50% 1.3565-1.3151
• *C$1.3345 Jun12-2019 high
• *C$1.3331 ***CURRENT MARKET PRICE 08:19GMT MONDAY***
• *C$1.3328 38.2% 1.2783-1.3665, 100-dma
• *C$1.3314/09 Intraday low/38.2% 1.3565-1.3151
• *C$1.3300/97 Jun13-2019 low/Cloud top
• *C$1.3286/85 Jun20-2019 high/100-hma
• *C$1.3240 Cloud base
• *C$1.3226/24 Jun10-2019 low/50% 1.2783-1.3665
• *C$1.3219 200-hma
• *C$1.3209/08 21-dma, 50-dma/55-dma
• *C$1.3182 50-mma
• *C$1.3164/63/61 Jul23-2019 high/Feb21-2019 low/200-wma

OPTIONS: Expiries for Nov2 NY cut 1000ET (Source DTCC)

EUR/USD: $1.1570-85(E529mln), $1.1750(E574mln), $1.1795-00(E838mln), $1.1815-20($980mln)
USD/JPY: Y104.85-00($618mln)
GBP/USD: $1.3100(Gbp1.2bln), $1.3150(Gbp911mln)
EUR/GBP: Gbp0.8900(E2.2bln-EUR puts), Gbp0.9000(E1.5bln)
AUD/USD: $0.7140-45(A$1.9bln)
USD/CAD: C$1.3300($662mln)
USD/CNY: Cny6.65($770mln)

Larger Option Pipeline

• EUR/USD: Nov03 $1.1900-05(E1.4bln); Nov06 $1.1600(E1.2bln), $1.1795-1.1805(E1.0bln)
• USD/JPY: Nov03 Y105.45-49($1.3bln); Nov04 Y105.00($1.1bln); Nov05 Y106.06-09($1.6bln)
• EUR/JPY: Nov05 Y124.50(E1.1bln)
• USD/CNY: Nov03 Cny6.5334($1.2bln); Nov05 Cny6.75($1.1bln), Cny6.80($1.9bln), Cny6.85($1.3bln); Nov06 Cny6.70($1.2bln)