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Roller-Coaster Ride Started Even Before US Election Results

Much volatility was seen in the financial markets in the past 24-hours, as traders were pre-trading US elections results. At the time of writing, the race between Donald Trump and Joe Biden is very tight, totally different from the picture portraited by most main steam media. Overall picture in the forex market is very mixed with Dollar and Yen as the strongest ones for today, but weakest for the weak. Commodity currencies are the weakest for today so far, but strongest for the weak. More time is needed to have a firm answer on who’ll be the next US President, and the next direction in the markets.

Technically, Gold has been impressively calm despite the rides elsewhere. We’ll keep an eye on gold to double confirm the moves in the forex markets. In short, firm break of 1933.17 resistance in Gold will be Dollar bearish. Sustained break of 1848.39 support will be Dollar Bullish.

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In Asia, Nikkei closed up 1.72%. Hong Kong HSI is up 0.34%. China Shanghai SSE is up 0.09%. Singapore Strait Times is up 0.83%. Japan 10-year JGB yield is up 0.037 at -0.0085. Overnight, DOW rose 2.06%. S&P 500 rose 1.78%. NASDAQ rose 1.85%. 10-year yield rose 0.033 to 0.882.

BoJ Kuroda: Extremely important to keep exchange rate moves stable

BoJ Governor Haruhiko Kuroda emphasized in an online meeting with business leaders, “it’s extremely important to keep exchange-rate moves stable.” “As a central bank, we won’t act directly to stabilise markets,” he added. “But we of course will work closely with financial authorities and overseas central banks to help keep currency moves stable.”

“Global market developments remain jittery reflecting uncertainty over the outlook.” BoJ will also “closely watch global and economic market developments, including those after the U.S. presidential election.”

Kuroda also noted that “the spread of COVID-19 has not subsided globally, including Europe and the United States, and public health measures have been tightened in European countries… Under these circumstances, the consequences of COVID-19 and the magnitude of their impact on domestic and overseas economies are highly unclear.”

Released from Japan, monetary base rose 16.3% yoy in October, versus expectation of 14.5% yoy.

China Caixin PMI services rose to 56.8, composite rose to 55.7

China Caixin PMI Services rose to 56.8 in October, up from 54.8, beat expectation of 55.2. That’s the second best reading since 2020, just after June’s high of 58.4. PMI Composite rose to 55.7, up from 54.5.

Wang Zhe, Senior Economist at Caixin Insight Group said: “Overall, as the domestic epidemic situation stabilizes, recovery remained the main economic theme…. The development of the epidemic in Europe and the U.S. is still an uncertain factor affecting economic trends. In the coming months, a continued recovery of the Chinese economy is highly likely, but it is necessary to be cautious about the normalization of monetary and fiscal policies in the post-epidemic period.”

New Zealand unemployment rate surged to 5.3%, most people unemployed in 8 years

New Zealand unemployment rate jumped to 5.3% in Q3, up from Q2’s 4.0%, but was slightly better than expectation of 5.4%.The 1.3% jump was the biggest quarterly increase on record. Labor force participation rate rose 0.2% to 70.1%. Employment dropped -0.8% over the quarter, matched expectations. 37k more New Zealanders were unemployed, bringing the total to 151k, highest in eight years.

“We are continuing to see the economic effects of COVID-19, and its associated border and business closures,” labour market and household statistics senior manager Sean Broughton said. “Last quarter’s low unemployment rate of 4.0 percent was explained in part by people’s inability to be ‘actively seeking’ and available for work during the national lockdown that was in place for much of the quarter. This quarter’s increase in unemployment reflects a return to more normal job-hunting behaviours.”

Australia retail sales dropped -1.1% mom in Sep

Australia retail sales dropped -1.1% mom in September, better than preliminary reading of -1.5% mom. It’s also an improvement over August’s -4.0% mom. In seasonally adjusted terms, there were falls in New South Wales (-0.9%), Queensland (-1.2%), Western Australia (-1.7%), South Australia (-2.9%), Victoria (-0.4%), the Australian Capital Territory (-2.4%), and Tasmania (-2.0%). The Northern Territory (4.3%) rose.

AiG Performance of Construction Index rose to 52.7 in October, up from 45.2. It’s the first expansionary result since August 2018.

Looking ahead

Eurozone PMI services final and PPI will be featured in European session, together with UK PMI services final. Later in the day, Canada will release trade balance. US will release ADP employment, trade balance and ISM services.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1658; (P) 1.1699; (R1) 1.1761; More…..

EUR/USD rebounded strongly to 1.1771, but was kept well below 1.1880 resistance. Breach of 1.1622 suggests that fall from 1.2011 is resuming. Intraday bias is back on the downside for 38.2% retracement of 1.0635 to 1.2011 at 1.1485. On the upside, however, break of 1.1771 resistance will now be the first sign that correction from 1.2011 has completed. Intraday bias will be turned back to the upside for 1.1880 for confirmation.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1422 resistance turned support holds.

Economic Indicators Update

21:30AUDAiG Performance of Construction Index Oct52.745.2
21:45NZDEmployment Change Q3-0.80%-0.80%-0.40%
21:45NZDUnemployment Rate Q35.30%5.40%4.00%
21:45NZDLabour Cost Index Q/Q Q30.40%0.30%0.20%
23:50JPYMonetary Base Y/Y Oct16.30%14.50%14.30%
23:50JPYBoJ Minutes
0:30AUDRetail Sales M/M Sep-1.10%-1.50%-1.50%
1:45CNYCaixin Services PMI Oct56.855.254.8
8:45EURItaly Services PMI Oct4748.8
8:50EURFrance Services PMI Oct F46.546.5
8:55EURGermany Services PMI Oct F48.948.9
9:00EUREurozone Services PMI Oct F46.246.2
9:30GBPServices PMI Oct F52.352.3
10:00EUREurozone PPI M/M Sep0.30%0.10%
10:00EUREurozone PPI Y/Y Sep-2.40%-2.50%
13:15USDADP Employment Change Oct690K749K
13:30USDTrade Balance (USD) Sep-64.2B-67.1B
13:30CADTrade Balance (CAD) Sep-2.4B
14:45USDServices PMI Oct F5656
15:00USDISM Services PMI Oct57.857.8
15:30USDCrude Oil Inventories4.3M
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