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Andreas Zanin
Analysis | November 6, 2020

KTM FX Daily: Market update; charts you need to see

Welcome to Friday.

  • Bond yields continue to slide along with the dollar
  • Risk-on mood elevated the antipodeans
  • Brent crude oil down and Gold jumps

The 2020 U.S. election outcome is still uncertain on Friday Asia morning, and I hope we will know the next president before Asia goes to sleep. The financial markets are considering the probability of Biden securing the presidency is highly likely.

Beyond the U.S. election outcome, we had two central bank policy meetings with BoE and FOMC. Both the central banks hold the rates at lower levels. However, early this week, the Reserve Bank of Australia cut the rates to 0.10% and started a massive Q.E.

Bonds: The UST 10yr yield was unchanged on Thursday at 0.79%, and it made its big risk move yesterday (down) and has held since then. Their 2-10 rate curve is unchanged at +63 bps after yesterday’s unusually big move, their 1-5 curve is marginally steeper today at under +22 bps, while their 3m-10 year curve is also marginally steeper at +71 bps.

F.X: In G10 FX, high beta currencies like the Australian dollar (AUD), Swedish Krona (SEK), and Norwegian krone (NOK) extended significant gains ahead of the election outcome. Besides, the Pound and the Kiwi dollar rallied more than a percent.

Charts you need to see

USDCAD is trading at the thick congestion zone located between 1.3080-1.2950. The RSI is pointing to a higher low pattern, but the oscillator is remaining bearish. We focus on the support zone, and as long it holds on a closing basis, we expect a decent bounce towards 1.3170-1.3200 and 1.3300 initially. The cross has been a roller coaster this week so far, and we are waiting for the weekly closing level.

USDSGD: The lower end of the range is still valid. The daily RSI has been painting the bullish divergence. Levels to watch downside is 1.3440 and 1.3340. Suppose the price is moving higher watch out for 1.3570-1.3600 and 1.3700.

USDCHF: The daily chart pattern is nearly similar to the USDCAD. A bearish H&S pattern is visible in a larger symmetrical triangle. The levels to watch downside is 0.9030-0.8990. A daily close below could retrace further towards 0.8930 and 0.8800. For bulls, we advise focusing on the daily RSI as it is about developing a bullish divergence pattern like USDSGD. If the price starts moving higher, levels to watch are 0.9200.

EURUSD: Raises the nose

The price traced out a double bottom on the chart and Monthly too. As long as 1.1600 is support, expect a rally towards 1.1880 initially. ” Buy on dips” favour the longer term.

 

 

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