MNI US Morning FX Analysis: Mnuchin Pours Cold Water on Stimulus Hopes

FOREX SUMMARY

A super busy session for FX and across assets.

• Risk Off hit hard on the Govies opening bell.
• Chance of a US Stimulus package before the election, are all but gone according to Mnuchin, blaming politics.
• France is "a couvre feu" following Covid spikes, and the data across Europe paint a bleak picture, with numbers worst than the initial first wave.
• These have been the drivers, and USD took its cue and rallied across the board.
• Worth noting that volumes on Core Bonds are running close to 190% averages for this time of the day, with buying pushing yields to new lows.
• USD test high of the day against EUR, GBP, AUD, JPY, CAD, SEK NOK, PLN, ZAR, MXN, and we are still seeing buying momentum at the time of typing.
• CEE FX have felt the pinch with the EUR under pressure, but also having their own issues on Covid cases for Eastern Europe. EURCZK, EURHUF, and EURPLN are testing high of the session.
• AUD is the worst performing currency against the USD in G10, down 1.23%,
• Risk Off and RBA Gov Lowe's speech which was widely interpreted as dovish, has weighted on the Aussie.
• AUDUSD is off the lows at 0.7074 at the time of typing.
• Looking ahead, US Jobless is the data of interest, while BoE Cunliffe, BoC Tim Lane, ECB Lagarde, Fed Bostic, Bullard, Quarles, Kaplan, Barkin, and Kashkari are the schedule speakers.
• ALL EYES of course on the EU Summit

Resend - Under Pressure

• 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: 1.1705 @ 10:27 BST Oct 15
• SUP 1: 1.1685 Low Sep 30
• SUP 2: 1.1612/1581 Low Sep 25 and the bear trigger / Low Jul 24
• SUP 3: 1.1591 100-dma
• SUP 4: 1.1541 Low Jul 23

EURUSD is trading lower today in line with general USD strength. The move lower follows the recent rejection off the 1.1831 high on Oct 9. Attention turns to the next important support handle at 1.1685, Sep 30 low. A break of this level 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.

Still Trading Below Monday's High

• RES 4: 1.2280 High Sep 7
• RES 3: 1.3174 61.8% retracement of the Sep 1 - 23 sell-off
• RES 2: 1.3163 Former trendline support drawn off the Mar 20 low
• RES 1: 1.3083 High Oct 12
• PRICE: 1.2962 @ 10:30 BST Oct 15
• 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. Price however remains below Monday's high of 1.3083. A break of this level is needed to resume the recent uptrend that would open 1.3000 and 1.3163. The latter is the former trendline support drawn off the Mar 20 low. The trendline was breached on Sep 9. A break of 1.3163 is required to strengthen a bullish theme. Initial support is at 1.2863.

Bearish Conditions Still Dominate

• 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: 0.9035 @ 10:32 BST Oct 15
• 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 remains soft following yesterday's strong rejection off the day high. The break lower follows another failed attempt yesterday to convincingly clear trendline resistance drawn off the Sep high. The move lower also confirms a resumption of the downtrend that has been in place since Sep 11 and sets 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.

Eyeing 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: 105.32 @ 10:34 BST Oct 15
• 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 Wednesday extending this week's slide and the recent pullback from last week's 106.11 high on Oct 7. 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 current sell-off is considered a correction following recent gains. The bull trigger is at 106.11, Oct 7 high. Initial resistance is at 105.63.

Edges Lower

• RES 4: 126.46 High Sep 10 and a key resistance
• RES 3: 125.77 High Sep 15
• RES 2: 125.09/28 High Oct 9 / 61.8% of the Sep 1 - 28 sell-off
• RES 1: 124.48 High Oct 13
• PRICE: 123.33 @ 10:43 BST Oct 15
• SUP 1: 123.03 Low Sep 29 and Oct 2 and key near-term support
• 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, trading lower once again this morning. While near term weakness is considered a correction, attention turns to support at 123.03, Oct 6 low with the former support at 123.86, Oct 6 low breached. This week's move below 123.86 strengthens the intraday bearish tone and clearance of 123.03 would highlight scope for a deeper pullback. Key resistance is at 125.09, Oct 9 high. Initial resistance is at 124.48.

Pulls Further Away From Trendline Resistance

• RES 4: 0.7258 61.8% retracement September Sell-Off
• RES 3: 0.7243 High Oct 10 and the intraday bull trigger
• RES 2: 0.7213 Trendline resistance drawn off the Sep 1 high
• RES 1: 0.7170 Intraday high
• PRICE: 0.7077 @ 10:56 BST Oct 15
• SUP 1: 0.7067 Intraday low
• 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 is sharply lower this morning. 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 0.7213 today. A failure to clear the trendline is weighing and with support at 0.7096, Oct 7 low cleared this morning, 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 first resistance.

TECHS: Corrective Bounce

• RES 4: 1.3341 High Oct 7 and a reversal trigger
• RES 3: 1.3268 High Oct 7 and 50-day EMA
• RES 2: 1.3225 20-day EMA
• RES 1: 1.3205 Intraday high
• PRICE: 1.3198 @ 11:04 BST Oct 15
• SUP 1: 1.3143 Intraday low
• SUP 2: 1.3099 Low Oct 13
• SUP 3: 1.3095 76.4% retracement of the Sep 1 - 30 rally
• SUP 4: 1.3038 Low Sep 2

USDCAD has rebounded this morning as the USD rallies across the board. The recovery highlights scope for a corrective bounce with attention turning to resistance at 1.3222 next, the 20-day EMA. A break of this level would signal scope for a stronger short-term recovery and expose the 50-day EMA that intersects at 1.3268 today. The 1.3222/68 zone represents a key resistance. On the downside, initial support lies at 1.3143, today's intraday low.

Expiries for Oct15 NY cut 1000ET (Source....>

OPTIONS: Expiries for Oct15 NY cut 1000ET (Source DTCC)

EUR/USD: $1.0950-55(E660mln), $1.1015-20(E1.07bln), $1.1100(E532mln),

$1.1200(E646mln)

USD/JPY: Y106.50($579mln), Y107.00-10($2.1bln), Y107.40-50($589mln),

Y107.75-85(E636mln), Y108.00-20($1.62bln), Y109.00-10($962mln), Y110.00($824mln)

EUR/JPY: Y118.00-05(E536mln), Y119.45-50(E624mln), Y121.00(E595mln)

GBP/USD: $1.2200(Gbp713mln), $1.2600(Gbp1.0bln)

AUD/USD: $0.6800(A$624mln), $0.6880-00(A$812mln)

USD/CAD: C$1.3260-80($950mln)

USD/CNY: Cny6.97($700mln), Cny7.08($1.12bln)