Dollar Drifts Ahead of Fed Meeting; Australian Dollar Slumps

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Daily Market Outlook, November 2, 2021

Daily Market Outlook, November 2, 2021 Overnight Headlines Manchin Won't Commit To Backing His Party's Spending Bill White House 'Confident' Manchin Will Back Reconciliation France Pulls Back In Brexit Fish Row, Gives Talks More Time OBR Warns UK Chancellor May Struggle To Meet Fiscal Rule Japan To Ease Entry For Business, Students But Not Tourists RBA Opens Door To An Earlier Rate Rise, Pledges Patience Australia 3-Year Bond Erase Losses As RBA Damps Hike Bets Dollar On Solid Footing Into Fed; Yen Dips On LDP Victory Oil Prices Rise On Reports Of Slow OPEC Oil Output Increase China Tech Stocks Jump On Signs Of Easing Trade Tensions The Day Ahead US equity markets closed at fresh all-time highs, but Asian markets were mixed this morning. The Reserve Bank of Australia left its cash rate unchanged at 0.1%, but scrapped its target for bond yields. In the US, there were reports that Congress may need more time to assess President Biden’s proposed $1.75tn fiscal package. Closer to home, France’s retaliatory measures against the UK on fishing rights were delayed as talks continued. Monetary policy updates from the US Federal tomorrow and the Bank of England on Thursday remain the key focus this week. In particular, markets are fully priced for a 15bps interest rate increase to 0.25%, although economists are pretty much evenly split between a rise and no change at 0.10%. In terms of economic releases, it remains relatively quiet before that. Today’s October PMI manufacturing update for the Eurozone is a second reading which is expected to confirm the initial estimate. That showed a fourth consecutive fall in the headline index, albeit marginally from 58.6 to 58.5, reflecting ongoing evidence of supply bottlenecks. It still remains well above the key 50 level separating expansion and contraction, although the output sub-index showed more signs of the impact of supply constraints, falling to a 17-month low of 53.2. In the UK, there are no major economic data releases, but Chancellor Sunak is scheduled to testify to the House of Lords Economic Affairs Committee on his Budget statement. The Chancellor is expected to be questioned on a range of topics, including the labour market after the end of the furlough scheme and the persistence of high inflation. UK 10-year gilt yields closed up 3bps at 1.06%, while their US counterparts were slightly lower overnight at 1.55%. Brent crude oil rose above $85 a barrel. In the currency markets, the Japanese yen outperformed, while sterling was little changed.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls )USDJPY - 115.00/10 430m. 114.20 642m. 113.50 430m. 111.10 440m.EURUSD - 1.1790/1.1810 1.46bn (1.17bn P). 1.1690/1.1700 798m. 1.1660/70 1.50bn (1.15bn C). 1.1640 811m. 1.1600/20 712m. 1.1570/80 2.12bn (1.54bn C). 1.1550/60 459m. 1.1540 445m. 1.1490/1.1500 1.38bn (P).GBPUSD - 1.3800 587m.USDCAD - 1.2550/60 916m.EURGBP - 0.8500/20 778m. 0.8440 580m.USDTRY - 10.00 655m. 8.50 946m.USDCNH - 6.37 900m.This week's larger FX option strike expiriesThe hedging of FX option strikes can influence FX price action if nearby, and more so when the strikes are large and soon to expire, so it's worth being armed with this information in advance.There's nothing substantial in USD/JPY until the wake of the U.S. Federal Reserve policy announcement on Thursday – $1.2-billion 113.00, $1.7-billion 114.00, $1.5-billion 114.30, $1-billion 115.00, and $850-million strikes at 115.30. Friday has $1.2-billion at 113.70, $600-million at 114.25, and $841-million at 115.00.The biggest EUR/USD strike is Tuesday at 1.1585 on 1.6-billion euros, with 810-million at 116.45, and 1.2-billion euros at 1.1495-1.1500. Wednesday has 900-million euros between 1.1585-1.1600. Thursday has 600-million euros at 1.1500, 1-billion 1.1515-25, and 685-million euros at 1.1550. Friday has 800-million euros between 1.1560-75.GBP/USD's biggest strikes are on Wednesday – 544-million pounds at 1.3550. 571-million at 1.3615 and 476-million pounds at 1.3650. Thursday has 460-million pounds at 1.3825. EUR/GBP has 581-million euros at 0.8440 and 440-million at 0.8525 Tuesday. Wednesday has 400-million at 0.8400, and 440-million at 0.8465. Thursday has 780-million euros at 0.8520-25, and Friday has 1-billion euros at 0.8440, and 444-million euros at 0.8550.The biggest AUD/USD strikes are Wednesday at 0.7350 on A$742-million, Thursday at 0.7500 on A$694-million, and Friday at 0.7500 on A$465-million. USD/CAD has $747-million at 1.2350 Monday .... Wednesday has $900-million at 1.2450. Thursday at 1.2420 on $500-million, and $1.2-billion between 1.2555-75. There are $700-million between 1.2375-1.2400 Friday, along with $760-million 1.2500-05.1.5-billion euros of a EUR/SEK strikes at 10.27 look unlikely to come in to play on Wednesday, but look out for $800-million USD/SEK at 8.5800 that day.Technical & Trade ViewsEURUSD Bias: Bearish below 1.17 Bullish above Deluge of event risk – 1.1520 – 1.1700 range to hold -0.05% after closing up 0.4%, unwinding part of Friday's month end fall France postpones fishing row sanctions on UK- no compromise yet... Plenty of event risk this week with the RBA, Fed and BoE rate decisions Charts - 5, 10 & 21 day moving averages plus 21 day Bolli bands flat line Daily momentum studies conflict - mixed signals suggest range trading 1.1522/28 October low and lower 21 day Bollinger band are key support 1.1670 upper 21 day Bolli band and 1.1692 October high major resistance 1.824 BLN 1.1585 and 1.1645 806 MLN are Tuesday's closest strikesGBPUSD Bias: Bearish below 1.37 Bullish above. Downside momentum builds ahead of BoE Thursday -0.05% towards the base of a 1.3648-1.3666 range with only modest interest France postpones fishing row sanctions on UK - little progress... Charts; 5, 10 & 21 day moving averages conflict, daily momentum studies slip 21 day Bolli bands contract - neutral setup into Thursday's BoE meeting Oct upper 21 day Bolli rejection and close below 1.3697 21 DMA is bearish Targets a test of the rising 1.3546 lower 21 day Bolli as seen in September 1.3623, 50%% of the October rise is close first significant support 1.3693 high on Monday and the 1.3697 21 DMA are initial resistanceUSDJPY Bias: Bullish above 112.50 Bearish below JPY crosses easy in Asia Japan holiday, pre – FOMC USD/JPY and JPY crosses trade easy in Asia ahead of Japan holiday, FOMC tom USD/JPY from 114.13 Tokyo fix high to 113.88 EBS, trading light Back into 113.76-98 ascending hourly Ichi cloud, 55-HMA 113.99 Some bidding interest noted sub-114.00, more towards 113.50 Offers in place from well ahead of 114.50, nearby option expiries not large USD/JPY still well-ensconced in recent 113.50-114.50 core range JPY crosses mostly heavy, EUR/JPY 132.14-37, GBP/JPY 155.45-94 AUD/JPY 85.90 to 85.26 so far following more-dovish than eyed RBA FinMin Suzuki comment urging FX market stability may have helped cap upsideAUDUSD Bias: Bearish below 0.75 Bullish above Offered again as Lowe pushes back on 2022 rate rise AUD/USD down 0.4% as RBA pushes back on hawkish expectations RBA abandons yield control, drops projection for no rate rise until 2024 C.bank downplays concerns on inflation, prepared to be patient on policy Gov.Lowe says 2023 rate rise possible, sees none in 2022 AUD undermined as Dalian iron ore falls 10% limit down Support 0.7480-85, 0.7450-55, resistance 0.7530-35, 0.7555-60

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Market Update – November 2 – Risk appetite soured

• RBA confirms end of yield curve targeting and after abandoning any attempt to defend the 0.1% for the April 2024 yield last week, the bank confirmed today that the yield target has been ditched and opened the door for an earlier interest rate hike.
• Lowe stressed that the bank will see through spikes in the inflation rates, and that unlike elsewhere the RBA sees a further, but gradual increase in core inflation, as there is a lot of inertia in the labour market, which makes it hard to see inflation accelerating too quickly.
• Australian shares fell on Tuesday – Miners and banks worst performers
• AUD tanked as markets adjusted rate hike bets. AUDUSD at 0.7465 from 0.7533.
• US Yields were off their early highs  (Currently 10yr fractionally higher at 1.56% compared to the day’s peak at 1.603%).
• USD (USDIndex 93.80) down as US futures in the red after a largely weaker session in Asia despite the strong earnings season. Overnight prices wobbled after the Manchin remarks and mixed data, but all rallied into the close. (a beat from the ISM, but a miss on construction spending, though they still modestly boosted growth prospects)
• The USA100 climbed 0.63% to 15,595, while the USA500 was 0.18% firmer at 4613, while the USA30 advanced 0.26% to 35,913. Treasury revised Q4 borrowings higher to $1,015 bln, with $650 December 31 cash balance, $476 bln borrowings for Q1 2022. GER30 and UK100 futures are down -0.17% and -0.21%
• Senator Manchin continued to oppose a quick vote on President Biden’s massive spending plans, saying he will not vote on reconciliation package without knowing more about its impacts. He worries over programs that “irresponsibly” add to the debt, which totals over $29 tln, and which risks hurting families that are suffering from “historic inflation.” He said holding the infrastructure bill “hostage” will not get his support for reconciliation.
• USOil top to $83.05, on slow OPEC oil output increase &  China ramped up operating rates to meet a spike in diesel demand.
• Gold – up to 1796.30 again.
• FX markets – AUD sold off, Yen strengthened- EURUSD little changed at just over 1.1605, GBPUSD dropped back to 1.3630. Markets are concerned that an early lift off in rates could hamper a still fragile economy.

Today –  Data releases today focus on final manufacturing PMIs for the Eurozone, which were delayed by the public holiday in parts of the region yesterday and employment data from New Zealand.

Biggest FX Mover @ (06:30 GMT) AUDJPY (-0.94%) dips tp 1-week los from 85.90 to 84.80. Faster MAs steadied, MACD signal line & histogram ara sharply lower in negative teritorry, RSI 20 and neutral. H1 ATR 0.186, Daily ATR 0.806.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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France frees seized British scallop dredger, Britain says

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Dollar Up, RBA Keeps Interest Rate Unchanged in Latest Policy Decision

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BTCUSD bearish momentum | 2nd Nov 2021

Support: 57521.13Pivot: 61252.25Resistance: 62538.27TypeBearish DropPreference:Price is currently at the Pivot level in line with descending trendline resistance. We can expect price to drop from the pivot level towards the 1st Support in line with 61.8% Fibonacci projection.Alternative Scenario:Alternatively, price could push pass the descending trendline resistance and push up to the 1st resistance in line with 61.8% Fibonacci projection and 50% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-bearish-momentum-or-2nd-nov-2021"
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Currencies wait for RBA to kick off big central bank week

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Wine of the week: a simply perfect tawny port

This is without doubt the most sensational tawny port I have ever tasted, says Matthew Jukes. And it is drinking perfectly right now.

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Mercedes C300e: an accomplished plug-in hybrid cruiser

The German carmaker’s hybrid model is impressive and a bargain to boot. Jasper Spires reports

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Three spooky stays for Halloween – and one for Bonfire Night

From a castle with a secret in Angus to a manor with ghostly residents in Norfolk. Chris Carter looks at some spooky breaks.

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ConocoPhillips Q3 earnings

ConocoPhillips is scheduled to release its third-quarter 2021 earnings report on November 2, 2021 at 4:00 PM GMT.

ConocoPhillips

ConocoPhillips Corporation, headquartered in Houston, Texas, is an American company specialized in the field of energy, exploration, production and development of natural gas and oil in various parts of the world. ConocoPhillips emerged after the merger of Philips Petroleum Corporation and Conoco Corporation on August 30, 2002.

On August 3, 2021 ConocoPhillips announced its earnings report for the second quarter of 2021, which reported: earnings of $2.1 billion, or earnings per share of $ 1.55 per share, after the company’s earnings in the same quarter of the previous year were $0.3 billion, or $0.24 per share. Adjusted earnings for the second quarter of 2021 were $1.7 billion, or $1.27 per share, compared to a loss from the same quarter in the prior year of $1.0 billion, or $0.92 per share.

Cash provided by operating activities was $4.3 billion. An amount of $1.2 billion was distributed to shareholders, divided into dividends of $0.6 billion and stock buybacks of $0.6 billion. The second fiscal quarter also included short-term investments of $2.3 billion, total cash equivalents and restricted cash and cash flow of $ 7.0 billion.

Technical Analysis

On the 4-hour time frame, the 50-period SMA (blue) is above the 200-period SMA (red) indicating the continuation of the bullish trend. The upward trend that began on September 13th continues. The highest reached was 77.10 and the lowest was  51.84. It is now trading at 74.58. MACD signal line and histogram are above the 0 line and continuing down.

The main pivot point is located at 74.95, while the first, second and third resistances are at 75.74, 76.22 and 76.85 and the first, second and third supports are at 74.53, 73.67 and 73.16. RSI is at 51.19.

After using the Bollinger Bands indicator, we find that the upper band of the volatility channel is located at 77.07 and the lower band is located at 73.77. The 20-day simple moving average is at 75.43. We notice here that the upper, middle and lower bands are approaching each other, and this indicates a period of low volatility. We also find the Standard Deviation (20) at 0.814 in the oversold region and the Average True Range (14) at 1.16.

Hence the asset is showing an intraday increasing positive bias before earnings release, with major support at 74.36. The medium-term outlook remains positive as the asset is flat at 4-month highs with a bullish crossover from the 20- and 50-day simple moving averages and rising MACD lines suggesting that the bulls are still in control. A break below 74.36 could open the door to a lower 51.76 (August low), while a further rise above 77.07 could draw attention to the 82 area.

Click  here  to access economic calendar

Eslam Salman

Regional Market Analyst 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Indra Nooyi: making progress and profits at Pepsi

Indra Nooyi put the principles of stakeholder capitalism into practice at the soft-drink giant before it was fashionable and grew returns for shareholders too.

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Three British growth stocks that are ready to boom

Professional investor Chris Ainscough of the Charles Stanley Monthly High Income Fund picks three UK growth stocks for the long term.

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USD may Extend the Rally on the FOMC Hawkish Surprise

The dollar rose sharply on Friday, breaking through a corrective channel and bouncing off a key bullish support line (scenario discussed on Friday):One of the key drivers of the rally was the US inflation report. Despite the fact that consumer inflation (Core PCE) rose by 3.6%, falling short of the forecast of 3.7%, the market was more concerned about dynamics of the labor cost index in the US - in the third quarter it rose by 1.3% against the forecast of 0.9%. Recall that both the Fed and the ECB have repeatedly said that a "second round" of inflationary effects may occur if inflation seeps into wages, since in this case further growth in consumer demand and accompanying inflation can be expected. In the meantime, the annual growth rate of labor costs in the United States is now at its highest level in more than 15 years:Today, the US Dollar index is consolidating around 94 points ahead of the release of two important news this week - the decisions of the Fed and the NFP. After the latest update on labor costs data, chances are high that the Fed will announce the start of QE rollback on Wednesday. Further dollar upside will undoubtedly depend on pace of bond purchase tapering. The closest target for USD index is the previous resistance at 94.50-94.75, which the dollar is likely to test on Wednesday before the Fed decision.It should also be noted that along with increased chances of imminent tightening of the Fed's policy, long-dated US Treasury bonds are beginning to price in future slowdown in inflation, possibly pricing in Fed policy error (i.e., that Fed starts to tighten too early, harming growth and inflation). This translates into decline of the spread between 10 and 2-year US Treasury bond yields:Nevertheless, the USD retains its short-term bullish prospects.

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