Nervous markets waits on NFP

Market Brief

Risk appetite has stabilized yet remains soft in light of growing uncertainty around the US election and Brexit. In addition, news flow from Turkey that opposition lawmakers have been detained is generating unwarranted nervousness. Asian regional equity indices were lower with the Nikkei down -1.34%, Shanghai Composite -0.12% while the Hang Seng is flat. In FX, USD is stronger against G10 and EM currencies, reversing the recent sell-off. While the political risk has increased with national polls narrowing, Clinton continues to have the lead. CNN polls indicate that Clinton has a 46% to 45% lead of Trump. Our predictive market analysis indicates that the spread is narrower and forecasting further tightening in the polls ahead (See Swissquote’s US Election Analysis page). Heading into the last weekend before America heads to the polls, anything can happen. 

Oil futures fell to a six-week low as speculation that OPEC will be unable to limit production with a member agreement intensified. In Australia, retail sales came in at 0.6& m/m above expectations for 0.4% and the prior month's read of 0.4%. In Japan, new data indicates that the service sectors expanded in October with a PMI read of 50.5 from 48.2 in September. Output rose in individual firms supported by a surge in new orders. 

Finally, Brexit took an unexpected turn as the court ruled that the UK parliament has the right to vote on Article 50. The government will appeal the high courts verdict and a Supreme Court hearing is scheduled for 5-8 December. Should the concept of the referendum provide the government with special power, the likelihood of an “ultra-soft Brexit” (i.e non-existent Brexit) increases significantly. We continue to see long GBP opportunities in short term sell-offs.

Currency Tech

EUR/USD
R 2: 1.1352
R 1: 1.1210
CURRENT: 1.1096
S 1: 1.0822
S 2: 1.0711

GBPUSD
R 2: 1.2857
R 1: 1.2477
CURRENT: 1.2267
S 1: 1.2083
S 2: 1.1841

USDJPY
R 2: 111.45
R 1: 107.49
CURRENT: 103.56
S 1: 102.80
S 2: 100.09

USDCHF
R 2: 1.0093
R 1: 0.9999
CURRENT: 0.9707
S 1: 0.9843
S 2: 0.9632

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot