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05 November 2020

Geopolitics, the BoE, and the FED Put the Pound and the Dollar in the Spotlight

As the markets look for some clarity on the U.S election, Brexit, the BoE, and the FED will also influence throughout the day.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar.

Key stats include German factory orders and construction data, along with Eurozone retail sales figures.

Expect German factory orders and Eurozone retail sales figures to be the key driver.

Away from the economic calendar, updates on Brexit, COVID-19, and the U.S Presidential Election will remain key drivers.

At the time of writing, the EUR was down by 0.03% to $1.1722.

For the Pound

It’s also a relatively quiet day ahead on the economic calendar. October’s construction PMI is due out later today. We don’t expect any influence from the numbers.

The main event of the day is the Bank of England’s monetary policy decision.

Brexit talks and updates from the U.S on the 46th Presidential Election will also be key drivers on the day.

The markets are expecting updates on Brexit talks as Trump calls for recounts and judicial decisions to try to swing the balance in his favor.

At the time of writing, the Pound was down by 0.26% to $1.2954.

For the USD

It’s a relatively quiet day ahead for the U.S Dollar. Key stats include the weekly jobless claims and nonfarm productivity and unit labor cost figures for the 3rd quarter.

The focus will remain on the weekly jobless claims figures. Ultimately, however, updates from the U.S on the Presidential Election will remain a key driver.

On the monetary policy front, the FED is also in action late in the day. With a lack of progress towards a stimulus package before the election, will the FED promise more?

At the time of writing, the Dollar Spot Index was up by 0.08% to 93.478.

For the Loonie

It’s another quiet day on the economic data front, with no material stats to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment and crude oil prices.

At the time of writing, the Loonie was down by 0.22% to C$1.3165 against the U.S Dollar.

GBP/USD Big Swings as Volatility Kicks In

The GBP/USD is bullish and we can see big swings happening. This is expected as the GBP isvery volatile during the crisis period.

As already explained, we have a triple crisis. US elections, BREXIT and COVID-19. Headline risk is big for the pound. Judging from the latest movements, I expect the GBP to go further up.

1.2900-20 is the POC zone. Any retracement might be used for a fresh buying. If the price closes above 1.3045 we will possibly see a continuation up. Targets are 1.3109 and 1.3148. For me, today is buying the dip.

AUD/USD looks to regain the October 9 high at 0.7242 – Commerzbank

“AUD/USD recently failed to close below the 0.7006 support and has now closed above the near-term downtrend twice and this has shifted our bias to neutral to positive and we have been tempted back into long positions.”

“Ideally we would like to see the market regain the 9th October high at 0.7242 as this guards the 0.7413 September high, which in turn protects long-term Fibonacci retracements at 0.7574 and 0.7639.”

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Strong Over 11749.75, Weak Under 11595.50

Daily Swing Chart Technical Forecast

The early price action indicates the direction of the December E-mini NASDAQ-100 Index on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at 11749.75.

Bullish Scenario

A sustained move over 11749.75 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the minor top at 12022.00. Taking out this level should trigger a further rally into the pair of main tops at 12249.00 and 12444.75.

Bearish Scenario

A sustained move under 11749.75 will signal the presence of sellers. This could trigger a quick break into the 50% level at 11595.50. This price is a potential trigger point for an acceleration to the downside with the first target coming in around 11464.50.

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