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• Gold is trading sideways, well below its recent high
• Volatility remains elevated ahead of the US election
• Momentum indicators remain mostly bullish

Gold is trading sideways today and thus failing to forcefully react to the two negative sessions that pushed it well below its all-time high of 2,790. Month-end portfolio reallocations and profit taking could explain last week’s price movements, with the market now preparing for Tuesday’s US presidential election. The medium-term bullish trend since the June lows remains in place, supported by a series of higher highs and higher lows. 

In the meantime, the momentum indicators are still bullish. The RSI is trading comfortably above its midpoint but appears unwilling to record a higher high. Similarly, the Average Directional Movement Index (ADX) is edging lower, and gradually pointing to a weaker bullish trend in gold. More importantly, the stochastic oscillator is hovering inside its overbought territory (OB) but looks ready for a break below both its moving average (MA) and OB area. Should this move take place, it could be seen as a strong bearish signal.

If the bulls remain confident, they could try to push gold above the October 23, 2024 high of 2,758, with the next target level being the all-time high at 2,790. Should events favour another upleg, the 2,800 level might end up being a small obstacle for the bulls on their way higher.

On the flip side, the bears are keen for a continuation of last week’s weakness. They could lead gold lower towards the 2,685 area where the September 26, 2024 high and the August 5, 2024 ascending trendline intersect. Even lower, the 50-day SMA at 2,638 could be the last hurdle before the bears are able test the support set by the 261.8% Fibonacci extension of March 8, 2022 – September 28, 2022 downtrend at 2,601.

To sum up, gold is trying to find its footing after last week’s correction, with market participants firmly focused on the US presidential election.

AUD/USD is attempting a recovery wave from 0.6540. NZD/USD is also correcting losses and might recover further if there is a clear move above the 0.6030 resistance.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar found support near 0.6540 and is now recovering against the US Dollar.
• There was a break above a key bearish trend line with resistance at 0.6575 on the hourly chart of AUD/USD at FXOpen.
• NZD/USD is attempting a recovery wave above the 0.5960 resistance.
• There was a break above a major bearish trend line with resistance near 0.5980 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair dipped from the 0.6600 resistance zone. The Aussie Dollar declined below 0.6600, but the bulls were active near 0.6540 against the US Dollar.

A low was formed near 0.6537 and the pair is now correcting losses. There was a move above the 50% Fib retracement level of the downward move from the 0.6659 swing high to the 0.6537 low. There was also a break above a key bearish trend line with resistance at 0.6575.

The pair is now above 0.6585 and the 50-hour simple moving average. On the upside, immediate resistance is near the 61.8% Fib retracement level of the downward move from the 0.6659 swing high to the 0.6537 low at 0.6610.

The first major resistance is near a rising channel at 0.6630. A clear upside break above 0.6630 could send the pair toward 0.6660. The next major resistance on the AUD/USD chart is near 0.6680, above which the price could rise toward 0.6725. Any more gains might send the pair toward 0.6740.

On the downside, initial support is near 0.6575 or the 50-hour simple moving average. The next support could be the 0.6540 zone. Any more losses might send the pair toward the 0.6500 support.

NZD/USD Technical Analysis

On the hourly chart of NZD/USD on FXOpen, the pair also followed a similar pattern and declined from the 0.6030 zone. The New Zealand Dollar gained bearish momentum and traded below 0.6000 against the US Dollar.

The pair even dropped below the 50-hour simple moving average and tested 0.5940. A low was formed near 0.5939 and the pair is now attempting a fresh increase. It is back above the 0.5960 level and the 50-hour simple moving average.

Besides, there was a break above a major bearish trend line with resistance near 0.5980. The pair surpassed the 50% Fib retracement level of the downward move from the 0.6031 swing high to the 0.5939 low.

On the upside, the pair is facing resistance near the 76.4% Fib retracement level of the downward move from the 0.6031 swing high to the 0.5939 low at 0.6010.

The next major resistance is near the 0.6030 level. If there is a move above 0.6030, the pair could rise toward the 0.6050 resistance. Any more gains might open the doors for a move toward the 0.6085 resistance zone.

On the downside, immediate support on the NZD/USD chart is near 0.5975. The next major support is near the 0.5960 zone. If there is a downside break below 0.5960, the pair could extend the decline toward the 0.5940 level. The next key support is near 0.5910.

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Cable's drop to a new low last week occurred in only three waves from 1.3044, suggesting it’s likely part of wave "b" in a complex correction. Therefore, we are looking for a potential flat formation here in wave B, with resistance possibly at the 1.3044 to 1.31 area. We think there is a chance for a sell-off from there, especially if we consider that BOE can be looking for cuts and sound very dovish as latest inflation figures came out at 1.7%, down from 2.2%.

Markets

US payrolls and the Manufacturing ISM caused quite some intraday volatility on Friday but in the end didn’t change the broader market picture in any profound way. The US economy in October only added 12k jobs versus a 100k rise expected. However, the outcome was materially distorted by hurricanes and by a major strike (Boeing) which made it very difficult to draw conclusions on the underlying trends/strength of the US labour market. The unemployment rate remain low at 4.1%. Average early earnings (0.4% M/M, 4.0% Y/Y) were marginally stronger than expected. In a first Pavlov reaction, US yields and the dollar nosedived, but soon reversed (more than) the initial decline. This reversal also shouldn’t have been triggered by a mediocre/mixed manufacturing ISM (46.5 from 47.2). The prices paid index jumped to 54.8 from 48.3, but this might also have been a one-off due to temporary supply disruptions. In the end, Friday’s data didn’t change markets’ assessment that everything is in place for the Fed to slow the pace of easing to 25 bps at this week’s meeting. The long end of the curve continues to suffer from fiscal uncertainty going in the US elections. US yields in the end added between 3.5 bps (2-y) and 10.3 bps (30-y). After better growth data and slightly higher than expected inflation published earlier last week, the German yield curve (re)steepened slightly, changing between -3.4 bps (2-y) and +3.6 bps (30-y). The dollar rebounded against most majors (EUR/USD close 1.0834, DXY 104.28, USD/JPY 153.01), but this probably was mostly ‘conservative’ market positioning going into the weekend and looking forward to the outcome of US elections. US equities gained modest ground after the setback earlier last week (S&P 500 + 0.41%). Some kind of calm also returned to UK markets after the budget-induced volatility. Sterling regained part of last week’s losses. EUR/GBP dropped back from the 0.8440 area to close at 0.8386.

Asian markets this morning are taking a cautious, mostly positive start to the new trading week. US Treasuries gain and the dollar is ceding ground, probably on headlines referring to a poll that Kamala Harris might take the lead in the battleground state of Iowa. Even if this is the reason behind the move, it only can be considered as markets moving to a more neutral positioning as the outcome remains a very close call. This might also cause some further erratic market moves today and tomorrow. The downside in EUR/USD now looks a bit better protected with some additional breathing space versus the 1.0761/69 recent lows. However, the real evaluation will only be possible on Wednesday. Aside from the Fed policy decision on Thursday, several other central banks will also hold regular meetings including the RBA (Tuesday), the National Bank of Poland (Wednesday) and the BOE, the Riksbank, the Norges Bank and the Czech national bank on Thursday. We especially look out for the BoE assessment of the Budget and its potential impact on the pace of easing going forward.

News & Views

The OPEC+ cartel yesterday decided to delay the start its production cut reversal for a second time. The alliance in June announced that they would gradually restore in monthly tranches 2.2mn barrels a day of output halted since 2022. The process would have originally started in October by adding 180k b/d. Weak Chinese demand and higher US supplies triggered a delay to December which is now pushed to January amid the fragile economic outlook which dampened oil prices. OPEC+ will meet on December 1st to review the 2025 outlook. Brent crude prices gapped open higher this morning, rising from a $73/b close on Friday to $74.50.

Rating agency S&P raised the Turkish credit rating for a second time this year by one notch, from B+ to BB- (three notches below investment grade). That’s in line with Fitch (BB-, stable) and slightly better than Moody’s (B1; positive). S&P changed the outlook from positive to stable. The rating agency said that the risk of the sovereign preventing private-sector debtors from servicing foreign currency-denominated debt is diminished in light of steps taken by authorities to re-build previously depleted external buffers amid a gradual removal of financial sector regulations hampering foreign currency liquidity management. The stable outlook balances S&P’s expectation that the current economic team will persevere with tight monetary policy against the implementation risks associated with the government's medium term program. The Turkish lire continues trading near all-time lows (EUR/TRY 37.50).

Last week was packed with earnings and data. Five of the Magnificent 7 stocks announced magnificent earnings. Some, like Google and Amazon, kept their investors on their sides, whereas others, like Microsoft and Meta failed to impress as their investors couldn’t get over the weaker forecast and further AI spending that they announced. Big Oil came up with lower profit but share buybacks and higher dividends at some of them helped weathering the bad news Then, the US GDP growth came in slightly lower than expected by analysts, at 2.8% for the Q3, but the consumer spending remained robust. And finally, on Friday, the US announced the official jobs data. The US economy ended up adding a meagre 12K jobs last month, the manufacturing and private nonfarm payrolls printed negative numbers. But the bright spot was that unemployment remained steady at 4.1% - suggesting that the NFP number probably took a one-off hit, and the wages continued to grow by 4% on a yearly basis – high compared to where the Federal Reserve (Fed) would like to see it, but well aligned with the market expectations. The market is now convinced that the Fed will announce another 25bp cut when it meets this week. That announcement is due Thursday, as before that we have the US election – on Tuesday.

Anyway, Friday’s NFP figure didn’t necessarily bring a relevant information on the table. The S&P500, Nasdaq and Dow Jones were better bid on Friday, but all three closed the week on a negative note. The US 2-year yield consolidated around 4.20% and the 10-year around 4.30% after the release. This morning, both are pushing higher, especially the 10-year yield – which spiked to 4.38% in Asia, as investors are closing their US treasury positions before the US election.

US election

The clock is ticking, and soon the suspense will break over who will be the next US president. Even though the prediction markets have been in favour of a Trump victory, the CNN poll this morning prints a 48% chance for a Harris win, versus 47% assessed to a Trump victory. The worst possible outcome for the market would be a too close race and a contested outcome.

In the short run, a Harris victory could bring relief to treasury and international markets, while a Trump victory could resonate louder – and not necessarily in a good way – for the euro and the European markets, due to the tariff threat. The Stoxx 600 index rebounded on Friday, but the index could bear the brunt of a potential Trump victory later this week.

In China, the Chinese equities start the week on a bullish note as the National People’s Congress began its five-day meeting, where policymakers are expected to provide more details on debt and fiscal initiatives to revive growth. There are media reports suggesting that China may announce a stimulus package exceeding 10 trillion yuan to boost economy. I can’t tell what amount of stimulus China will announce, if they put any number on it at all. But a Trump presidency could increase the size of the package and provide a safety net to Chinese investors in case of a Trump win.

USD offered ahead of US election

The US dollar kicks off the week on a bearish note. The USD index slid below the 200-DMA in Asia, the EURUSD is testing the 1.09 level at the time of writing, and Cable, which has been pressured by last week’s budget has jumped to flirt with the 1.30 psychological resistance. One of the safest harbours is gold, bid this morning near an ATH. The Swiss franc and the Swiss equity index are also seen as interesting defensive names in preparation of a contested US election outcome and heightened short-term volatility. The USDCHF has been testing an important Fibonacci resistance – the major 38.2% retracement on May to September selloff and which should determine whether the pair should remain in the bearish trend or step into a medium term bullish consolidation zone. Last week’s softer-than-expected Swiss inflation and sales data came to reinforce the dovish Swiss National Bank (SNB) expectations, weakened the franc bears’ hands, but the crucial Fibonacci resistance hasn’t been pulled out, and the USDCHF bulls may have to wait until the US election dust settles to continue betting in favour of a weaker franc. For the equities, the Swiss market is heavy in healthcare, pharmaceuticals, consumer staples and financials. Therefore, Swiss equities should weather increased market volatility.

Elsewhere, oil kicked off the week better bid on weekend news that OPEC could delay the planned December increase to oil production by a month – or more – on the back of a persistent selloff in oil prices due to the unfavourable combination of weaker demand and strong output prospects. The Middle East rumours also hint at a possible revival of tensions between Iran and Israel – a factor that could help bring tactical long positions back to the market this week. But price rallies are considered as interesting top selling opportunities as long as the gap between demand and supply widens.

In focus this week

Today, in the euro area, we receive the Sentix investor confidence indicator, providing the first assessment of sentiment in November. Focus is also on the final manufacturing PMI data for October.

On Tuesday, the US election takes place and is the major highlight of the week. Donald Trump is the small favourite to win the presidential election according to prediction markets, Republicans are expected to win majority in the Senate elections and House elections remain highly uncertain.

On Wednesday morning, when we - hopefully - know the results of the US election, we will be hosting two conference calls where we present our instant view on the results and implications for markets and the economy: Conference call on the implications of the US election for Global and Scandi markets at 8:40 - 9:10 CET and US elections morning call - Macro need-to-knows at 9:15 - 9:30 CET.

Economic and market news

What happened overnight

In oil markets, oil prices gained more than 1 USD following the announcement made by OPEC+ to delay December output increases until January next year. Recently, the price of oil has been pressured by decreasing demand in China, rising external supply and the outlook of the conflict in the Middle East improving.

What happened over the weekend

In the US, nonfarm payrolls growth practically halted according to October Jobs Report released Friday morning. NFP grew by only 12k (cons: 113k, prior: 254k). US government bond yields and EUR/USD shifted higher, but rather modestly compared to the seemingly large negative surprise. Most other labour market indicators for October have still painted a rather positive picture, so perhaps it is a good idea to not give this single (potentially distorted) reading too much weight.

On the wage side, average hourly earnings increased by a solid 0.4% m/m SA, which means that wage sum growth continued despite the weak employment reading. The household measure of employment showed an outright decline in employment (-368k) but as the labour force also shrunk by 220k, unemployment rate remained steady at 4.1%.

Finally, the ISM manufacturing index painted a mixed picture, with weaker business activity of 46.5 (cons: 47.6%, prior: 47.2%), but stronger new orders, employment and prices paid.

In Sweden, PMI for the manufacturing sector surprised to the upside with 53.1 (prior: 51.3). The surprise contradicts the weak NIER survey of last week and is off the table as an argument for the Riksbank to make a 50bp cut on Thursday.

In Norway, the NSA unemployment rate for October dropped to 1.9% (cons: 2.1%, prior: 2.0%) beating market expectations and tightening an already tight labour market. Additionally, the number of new vacancies dropped following relatively weak growth for more than a year.

In Switzerland, inflation for October surprised sharply to the downside with headline at 0.6% y/y (cons: 0.8%, prior: 0.8%) and core at 0.8% y/y (cons: 1.0%, prior: 1.0%). Prior to the release markets were pricing a 37bp cut for the meeting on 12 December. On release, EUR/CHF jumped, driven by energy prices, hotels and the volatile component of international package holidays. While our base case is a 25bp cut in December and March, this increases the likelihood of a 50bp cut in December quite significantly.

Equities. Global equities were higher on Friday, yet still lower over the past week. As mentioned several times last week, numerous factors are currently at play, making it challenging to distinguish the true drivers from mere noise. Nonetheless, last week and particularly Friday presented some very interesting results. Bond yields dropped sharply right after the low Non-Farm Payroll (NFP) print on Friday, only to grind higher throughout the session and closed the day higher. In the short term, the risk of a red sweep in the upcoming election seems more important for bond market than macroeconomic factors.

Last week's best-performing style was small-cap, despite higher yields. A red sweep would likely mean reduced regulation, or more precisely, diminished regulatory fears, which typically benefits small caps. Additionally, this season's earnings from small caps have not been impressive. Again, in the short term, it appears that elections have a more significant impact on small caps than yields.

Banks performed very well last, which makes sense given the strong earnings and higher yields. However, for us, banks are one of the biggest beneficiaries of a red sweep. More fiscal spending, increased lending activity, higher yields, and less regulation are all advantages. Policies on immigration and trade will have very little effect on banks. Therefore, based on both fundamentals and politics, it is logical to see banks performing exceptionally well recently.

US main equity indices on Friday were as follows: Dow +0.7%, S&P 500 +0.4%, Nasdaq +0.8%, Russell 2000 +0.6%. Asian markets were mostly higher this morning, with Japan closed.

FI: A sharp rally in global yields was recorded following the weaker-than-anticipated NFP on Friday with just 12k new jobs in October. However, as markets digested the timing of the poll coinciding with hurricanes as well as strong prices paid figure of the US ISM, markets quickly repriced higher in yields. 10y UST ended 10bp higher at 4.38%, in a bearish steepening move. German yields were broadly unchanged on the day. German ASW spread continued its tightening and now stands at just 5.8bp.

FX: EUR/USD rallied above 1.0900 after the NFP release. The distorted data did not have a lasting impact though and the cross closed Friday's session at day lows. Monday morning, one day before the US election, the cross is back at 1.09. Similarly, USD/JPY dropped briefly after the NFP, closed the week at day highs and is back below 152 this morning. Weak Swiss inflation numbers weighed on the CHF. The Scandies remain under pressure. EUR/NOK challenges two-months highs at 12.00 and EUR/SEK three-month highs at 11.65. Both crosses are sensitive to the US election outcome and the latter to the Riksbank decision on Thursday as well.

Daily Pivots: (S1) 196.10; (P) 197.24; (R1) 198.69; More...

Intraday bias in GBP/JPY remains neutral for consolidations below 199.79. Further rally is expected as long as 55 D EMA (now at 194.26) holds. Above 199.79 will resume the rebound from 180.00 to retest 208.09 high. However, sustained break of 55 D EMA will argue that the corrective rise has completed already, and turn near term outlook bearish for 180.00/183.70 support zone.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 165.25; (P) 165.69; (R1) 166.14; More....

Intraday bias in EUR/JPY remains neutral for consolidation below 166.67. Further rally is expected as long as 164.25 minor support holds. Sustained break of 61.8% retracement of 175.41 to 154.40 at 167.38 will pave the way to retest 175.41 high. However, considering bearish divergence condition in 4H MACD, firm break of 164.25 will indicate short term topping, and turn bias to the downside for 55 D EMA (now at 163.06).

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8355; (P) 0.8399; (R1) 0.8429; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the downside, break of 0.8294 low will resume larger down trend to 0.8201 key support next. On the upside, break of 0.8446 will resume the rebound fro 0.8294 short term bottom towards 0.8624 resistance instead.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 (2022 low), but strong support should be seen there to bring rebound. However, outlook will remain bearish as long as 0.8624 resistance holds even in case of strong rebound. Decisive break of 0.8201 will indicate long term bearish reversal.

Daily Pivots: (S1) 1.6467; (P) 1.6526; (R1) 1.6576; More...

Intraday bias in EUR/AUD remains neutral for the moment/ Further rally is expected as long as 1.6351 resistance turned support holds. On the upside, above 1.6598 will resume the rise from 1.6002 short term bottom to 61.8% retracement of 1.7180 to 1.6002 at 1.6730 next. Sustained trading above there will pave the way to retest 1.7180 high.

In the bigger picture, as long as 1.5996 cluster support holds (38.2% retracement of 1.4281 to 1.7062 (2023 high) at 1.6000), up trend from 1.4281 (2022 low) is still expected to resume at a later stage. However, decisive break of 1.5996 will argue that the medium term trend has reversed and turn outlook bearish.