Daily Market Outlook, October 27, 2020
Equity markets pared losses but remained broadly lower in Asia, following sizeable falls at the US close. European futures, however, point to a moderately positive opening. Investors remain concerned about rising Covid-19 infections across the world and whether a vaccine will be found to forestall another economic downturn. Meanwhile, a US fiscal package has yet to be agreed by politicians, while potential uncertainties regarding the US election, now only a week away, may also be weighing on risk sentiment.
The CBI’s distributive trades survey will provide an early snapshot into UK October retail activity. While the reported sales balance improved to +11 in September, it is expected to ease back to around ‑1 in October. A fall would be consistent with the decline in GfK consumer confidence reported last week, with the resurgence in coronavirus infections leading to renewed restrictions to tackle the pandemic and concerns about wider economic prospects.
In the US, September durable goods orders will garner some attention ahead of Q3 GDP figures on Thursday. The economy is expected to have bounced back sharply in Q3 (look for 29% annualised; the consensus forecast is 32%), but attention has already shifted to Q4 and beyond with increasing concerns about the recovery’s fading momentum.
Also out is the US Richmond Fed manufacturing survey and, perhaps more interesting, the Conference Board’s consumer confidence survey. For the latter, have pencilled in a rise to 103.0 in October from 101.8, although it will remain below pre‑Covid levels. The market consensus is for a more cautious rise to 102.0.
Today’s Options Expiries for 10AM New York Cut
- EURUSD: 1.1800-05 (1.2BLN), 1.1850 (470M)
- USDJPY: 104.25 (1BLN), 105.00 (1.8BLN), 105.10 (380M), 105.25 (1.1BLN)
- AUDNZD: 1.0810-15 (2.3BLN), 1.0820 (200M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.1687 targeting 1.19
EURUSD From a technical and trading perspective, as 1.1687 supports look for a test of the primary equality objective at 1.19, expect profit taking pull back on first test.
Flow reports suggest topside offers increasing the closer the market gets to the 1.1900 level with strong offers into the area however, a break through the 1.1920 level will likely see the market gunning for the 1.2000 for the highs of the year however, option plays are likely to see good defences of the levels for the moment and any push through could be brief before dropping back again and any push for the top would have to have good timing. Downside bids light through to the 1.1780 with weak stops on a move through the level before running into congestion around the 1.1750-00 area before further stops appear and a weak downside on any break below 1.1650 area
GBPUSD Bias: Bullish above 1.2861 targeting 1.3266
GBPUSD From a technical and trading perspective, while 1.2950 attracts sufficient bids look for a test of primary equality objective at 1.3264
Flow reports suggest downside bids into the 1.3000 level however, they are likely to be limited with weak stops through the level however, the move through to the 1.2950 level well likely see increasing bids and will possibly slow the market with further bids appearing into the 1.2900 level possibly significant. Topside offers light through into the 1.3150 level before stronger offers start to make an appearance and those offers are likely to increase into the 1.3200 area with limited stops on a move through and 1.3250-1.3300 area likely to be strong.
USDJPY Bias: Bullish above 104.30 targeting 1.05.50
USDJPY From a technical and trading perspective, as 104.30 supports look for a test of descending trendline resistance at 105.50
Flow reports suggest downside bids strengthen into the 104.20-00 level with possibly bottom pickers appearing below the figure level however weak stops through the 103.80 area could see a quick stab lower through to the 102.00 level before bids start to reappear. Topside offers light on a push through the 105.00 level with limited offers into the 105.80-106.20 area and the possibility of congestion then continuing through to the 106.40-80 area. And stronger offers thereafter
AUDUSD Bias: Bearish below .7243 targeting .6907
AUDUSD From a technical and trading perspective, as .7170 caps upside attempts look for decline to resume to expose bids and stops towards .6900
Flow reports suggest topside offers into the 0.7140-60 area before some light weakness appears however, 0.7180-0.7200 area sees stronger offers and 0.7220 level likely to see some congestion with stop losses through the level to open a quick move to stronger offers around the 0.7250 area. Downside bids light through to the 0.7060-40 area with stronger bids likely to appear on any move to test the 0.70000 areas, while there may be some weak stops on a move through the 0.6980 area the market is likely to see plenty of congestion into the 0.6950 area and increasing bids beyond
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!