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Daily Pivots: (S1) 0.7217; (P) 0.7232; (R1) 0.7260; More...

AUD/USD's rebound from 0.7020 resumes by taking out 0.7258. Intraday bias is back on the upside for 0.7314 resistance. Current development argues that a medium term bottom might be in place at 0.7020. Firm break of 0.7314 will confirm this bullish case and target 38.2% retracement of 0.8135 to 0.7020 at 0.7446 next. However, on the downside, break of 0.7159 will turn focus back to 0.7020 low instead.

In the bigger picture, as long as 0.7314 resistance holds, fall from 0.8135 is tentatively treated as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 will target 0.6008 key support next (2008 low). However, firm break of 0.7314 will suggest that whole decline from 0.8135 has completed. And, the corrective pattern from 0.6826 (2016 low) is extending with another rising leg towards 0.8135 before completion.

Daily Pivots: (S1) 113.19; (P) 113.36; (R1) 113.62; More..

With 112.56 minor support intact, intraday bias in USD/JPY stays on the upside. Current rebound fro 111.37 is still mildly in favor to extend to 114.54/73 key resistance zone. On the downside, break of 112.56 minor support will argue the the rebound has completed. And, in that case, the corrective pattern from 114.54 could have started the third leg for 111.37 support and possibly below.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.

Daily Pivots: (S1) 1.0012; (P) 1.0034; (R1) 1.0048; More...

At this point USDCHF remains bounded in range of 0.9968/1.0094 and intraday bias stays neutral. On the downside, break of 0.9968 will extend the correction from 1.0094 short term top towards 0.9848 support next. On the upside, decisive break of 1.0094 as well as 1.0067 key resistance will confirm resumption of larger rise from 0.9186 and should target 1.0342 key resistance next.

In the bigger picture, the pullback from 1.0067 has completed at 0.9541 already. And rise from 0.9186 is likely resuming. Firm break of 1.0067 will pave the way to retest 1.0342 key resistance. We'd be cautious on strong resistance from there to limit upside to bring another medium term fall to extend long term range trading. However, firm break of 0.9848 near term resistance will dampen this view and bring deeper decline back to 0.9541 support and possibly below.

Daily Pivots: (S1) 1.3049; (P) 1.3078; (R1) 1.3135; More...

Intraday bias in GBP/USD remains on the upside for the moment. Rise from 1.2692 is in progress for 1.3257/3297 resistance zone. Such rally is seen as the third leg of consolidation pattern from 1.2661. Hence, we'd expect strong resistance from 1.3316 fibonacci level to limit upside to bring down trend resumption eventually. On the downside, below 1.2951 minor support will turn bias back to the downside for 1.2692 instead.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Daily Pivots: (S1) 1.1398; (P) 1.1419; (R1) 1.1446; More....

EUR/USD's break of 1.1455 suggests that rebound from 1.1302 has resumed. Intraday bias is turned to the upside for 1.1621 resistance. Rise from 1.1302 is seen as the third leg of the consolidation pattern form 1.1300. Hence, upside is expected to be limited by 1.1814 to bring down trend resumption eventually. On the downside, break of 1.1353 minor support will suggests that rise from 1.1302 has completed. In that case, retest of 1.1300 key support should be seen next.

In the bigger picture, price actions from 1.1300 is seen as a corrective pattern. Decisive break of 1.1300 will resume the down trend from 1.2555 to 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. In case the consolidation from 1.1300 extends, upside should be limited by 1.1814 and 38.2% retracement of 1.2555 to 1.1300 at 1.1779. to bring down trend resumption eventually.

Dollar trades broadly lower as results of US mid-term election kick in. At the time of writing, Democrats already claimed victory of 163 seats in the House while Republicans got 159 seats. And the Democrats have already achieved a net gain of more than 23 seats up to regain majority of House. Republicans will keep control of the Senate as widely expected. The question now is how much a majority would the Democrats get. And it seems the larger the majority, the more bearish the greenback is.

Staying in the currency markets, New Zealand Dollar is the strongest one for today as boosted by stellar employment data. Euro and Australian Dollar are the second and third strongest. It seems like disregarding the impact of data, Euro and Aussie are the biggest beneficiary of US elections. Canadian Dollar is the second weakest as also dragged down by free fall in oil prices. Yen follows as the third weakest.

In other markets, DOW closed 0.68% higher at 25635.01 overnight. S&P 500 rose 0.63% while NASDAQ added 0.64%. Treasury yields were mixed with 10 year yield up 0.013 to 3.214. 30 year yield was down -0.006 at 3.426. Asian markets are cheering US results with Nikkei trading up 0.45%, Hong Kong HSI up 1.17%, China Shanghai SSE up 0.26%, Singapore Strait Times up 0.53%.

Technically, EUR/USD's rebound from 1.1302 resumes by breaking 1.1455 temporary top and should be heading towards 1.1621 resistance. That hints that USD/CHF will likely dip through 0.9968 too as correction from 1.0094 extends. GBP/USD's rebound is on track for 1.3297 resistance despite more Brexit jokes. EUR/GBP also finally broke 0.8722 support, despite weak momentum, and should be heading to next support at 0.8620.

NZD surges after surprisingly strong New Zealand job data

New Zealand Dollar surges broadly after surprisingly strong employment data. Unemployment rate dropped -0.5% to 3.9% in Q3 versus expectation of 4.4%. That's the lowest level in a decade since June 2008. Employment rate rose 0.5% to 68.3%, highest since the series began 30 years ago. Participation rate also rose 0.2% during the quarter to 71.1%. Employment grew 1.1% qoq versus expectation of 0.5% qoq.

The set of strong data came in just a day ahead of RBNZ rate decision. RBNZ is widely expected to keep OCR unchanged at 1.75%, without a doubt. The tone of the accompanying statement is the key. RBNZ Governor Adrian Orr has sounded rather dovish in his recent comments, even being open for a cut as next move. The upbeat data will likely be reflected in the communications and thus, at least, remove some bets on RBNZ cut.

UK PM May denied childish document on plan to announce Brexit deal on Nov 19

BBC reported, based on a "leaked" document titled "Brexit Communications Grid Summary" that UK Brexit Minister Dominic Raab is set to announce the full withdrawal agreement on November 19 and put to parliament. And, according to the document, the Parliament would vote on the bill on November 27.

But Prime Minister Theresa May's spokesman quickly came out and denied it. The spokesman said "The misspelling and childish language in this document should be enough to make clear it doesn't represent the government's thinking. You would expect the government to have plans for all situations - to be clear, this isn't one of them."

EU Barnier said no operational Irish backstop, no brexit accord

EU chief Brexit negotiator Michel Barnier reiterated yesterday that “we are still not at the 100 percent” on the Brexit agreement. And, “What is missing is a solution for the issue of Ireland.” He added that “Without an operational backstop there will not be an accord and there will not be a transition period. That is certain.” Besides Barnier also echoed Ireland’s stance that the backstop “cannot have an end-date” and “it must be applicable unless and until another solution is found.”

Elsewhere

Japan labor cash earnings rose 1.% yoy in September, below expectation of 1.2% yoy. German will release industrial production in European session. Eurozone will release retail sales. Swiss will release foreign currency reserves. Later in the day, Canada will release Ivey PMI.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1398; (P) 1.1419; (R1) 1.1446; More....

EUR/USD's break of 1.1455 suggests that rebound from 1.1302 has resumed. Intraday bias is turned to the upside for 1.1621 resistance. Rise from 1.1302 is seen as the third leg of the consolidation pattern form 1.1300. Hence, upside is expected to be limited by 1.1814 to bring down trend resumption eventually. On the downside, break of 1.1353 minor support will suggests that rise from 1.1302 has completed. In that case, retest of 1.1300 key support should be seen next.

In the bigger picture, price actions from 1.1300 is seen as a corrective pattern. Decisive break of 1.1300 will resume the down trend from 1.2555 to 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. In case the consolidation from 1.1300 extends, upside should be limited by 1.1814 and 38.2% retracement of 1.2555 to 1.1300 at 1.1779. to bring down trend resumption eventually.

Economic Indicators Update

Dollar trades broadly lower as US mid-term election results are coming in. The Republicans are set to retain control of the Senate as widely expected. Meanwhile, according to Fox News projections, Democrats would take over the majority in House. The question now is, how big the majority would it be.

Meanwhile, Trump tweeted "Tremendous success tonight. Thank you to all!". It's unsure what success he's referring to. Would it be Democrat's win in House?

https://twitter.com/realDonaldTrump/status/1060022696703070208

Commodity markets are being influenced by the US dollar’s direction as the results of the US midterm elections unfold. An oversupplied market saw oil prices lower, while precious metals held steady. The agricultural sector is seeing harvests affected by the weather.

Energy

CRUDE OIL is falling for a fifth straight week as the supply worries related to the imposition of Iran sanctions ease. The US announced that eight importers had been given temporary waivers from the Iran sanctions, allowing Iranian oil to still flow to those destinations.

Last week saw the biggest weekly decline since early-February and oil touched the lowest since March 19 yesterday bringing the loss from the peak earlier this month to more than 20%. West Texas Intermediate is currently trading at $61.99, with support possibly found at $59.454, the 50% retracement of the rally from June 21 to October 1, and $58.263, the 100-week moving average. The Brent/WTI spread has been holding steady just below the $10 mark.

Weekly API crude stocks data as at November 2 showed another addition to inventories, the third weekly add in a row, this time by 7.83 million barrels. Today’s EIA data is expected to paint a similar picture, with an increase of 2.05 million barrels anticipated.

The EIA has predicted that US crude output will top 12 million barrels per day by mid-2019 as domestic shale output surges. This year’s output is forecast to rise to 10.9 million barrels per day.

NATURAL GAS soared by the most since January 2015 on Monday amid reports that an unusually cold snap is heading for the US next week. The commodity reached its highest point since January 2017 yesterday, and is hovering at 3.497 today.

Agriculturals

Heavy rainfall across the eastern US CORN belt around Mississippi and Ohio is affecting the harvest, which is helping to push corn prices toward three-week highs. Corn is attempting to hold above the 200-day moving average at 3.635 for the second time since August. The previous attempt last month only lasted four days. Corn is currently trading at 3.653.

Last week Bloomberg reported that China’s 2018 corn harvest was the lowest in six years, and it was also noted that corn farmers have yet to make the switch to soybeans, despite high government subsidies being granted. Incentives are being offered to combat the loss of soybean imports due to the US-China trade war.

SOYBEAN prices are currently consolidating last Thursday’s spike higher caused by rumors that the US administration had been tasked with drafting potential terms for a trade agreement with China. Given that there is now a 25% tariff on US imports in China, it was not unreasonable to see a strong rebound. The tariff is having a noticeable impact on trade flows, with China’s soybean imports from the US down 80% y/y in September. In the same period, Brazil’s exports to China increased 30%.

Prices posted the strongest weekly gain in more than two months last week and touched a three-week high of 8.854. Soybeans are now settling at 8.694 with the 100-day moving average at 8.5311.

Heavy rains in Kansas, the US’ biggest WHEAT-producing state, has delayed, and possibly jeopardized, the harvest as the state suffers the wettest October on record. Wheat closed above the 55-day moving average yesterday for the first time in more than two months, and is consolidating around the 100-day moving average at 5.0248 today. Latest reports show that US exports of wheat fell 23% y/y in September.

Rainfall is also affecting the SUGAR harvest in Brazil, with heavy rains forecast for the first half of this month likely to cause delays. Last month Brazil’s exports were down 33%, which was the lowest output for the month of October since 2005, according to Bloomberg calculations.

Sugar is currently trading at 0.12273 and has retreated 5% from the 5 ½ month high struck last month. The 200-day moving average at 0.1186 could be the next support point.

Precious metals

GOLD looks set to fall for a third straight session as the metal struggles to make any headway past technical resistance at 1,235, the 200-week moving average. Speculative investors turned net sellers for the first time in three weeks, according to the latest data snapshot as of October 30 released by CFTC last Friday.

SILVER remains sandwiched between the 100-day moving average at 14.967 and the 55-day moving average at 14.473. It’s currently at 14.55. The gold/silver (Mint) ratio continues to hold above the 55-day moving average at 83.521, as it has done on a closing basis for more than a month.

PLATINUM is capped by the 200-day moving average at 880.10 and this average has contained prices on a closing basis since March 26. The commodity touched the strongest level since June 25 yesterday and is currently trading at 869.83. Speculative long positioning is at its highest since the week of April 24, according to the latest data as of October 30 from CFTC.

Zimbabwe has targeted an increase in mineral exports to $12 billion a year over the next five years, according to the country’s mines ministry. Zimbabwe earned $2.47 billion from exports of minerals in the first half of 2018, according to central bank data, with platinum shipments generating $566.9 million.

PALLADIUM had its first down day in five yesterday, as the recent bull-run appears to have made a near-term peak at 1,150.86 last month. Speculative accounts turned net sellers for the first time in 10 weeks as price momentum stalled, according to the latest CFTC data.

Base metals

COPPER is currently enjoying a rebound from six-week lows but the uncertainty surrounding the US-China tariff war is damping sentiment and raising questions about global demand for the industrial metal going forward. This is evidenced by global PMIs retreating over the past two months. Copper is trading at 2.7219 today with the 100-day moving average acting as resistance at 2.8579.

BBC reported, based on a "leaked" document titled "Brexit Communications Grid Summary" that UK Brexit Minister Dominic Raab is set to announce the full withdrawal agreement on November 19 and put to parliament. And, according to the document, the Parliament would vote on the bill on November 27.

But Prime Minister Theresa May's spokesman quickly came out and denied it. The spokesman said "The misspelling and childish language in this document should be enough to make clear it doesn't represent the government's thinking. You would expect the government to have plans for all situations - to be clear, this isn't one of them."

For your entertainment, here is the full text of the notes:

Brexit Communications Grid Summary

Cabinet reviews the deal this Tuesday, the 6th November. They expect all the details to then leak.

"A moment of decisive progress" will be announced this Thursday. Raab to announce.

The narrative is going to be measured success, that this is good for everyone, but won't be all champagne corks popping.

Then there's recess until 12th.

After the announcement of decisive progress there follows the 10 days of Sherpa meetings with EU 27 and then daily themed announcements.

19th November - "We have delivered on the referendum" PM speaks at the CBI conference.

Saying this deal brings the country back together, now is the time for us all to unite behind it for the good of all our futures etc. She will also hold a business reception.

This is the day both the Withdrawal Agreement and Future Framework will be put to Parliament by way of a statement from Raab who will also do media. Junior ministers are doing regional media all day. Government lining up 25 top business voices including Carolyn Fairburn and lots of world leaders eg Japanese PM to tweet support for the deal.

20th - Theme is Delivering for the Whole of the UK - PM to visit the north and or Scotland and the Commons will debate in business motions the date of the Meaningful Vote.

PM will be back in the house to vote. The Cabinet Office publishes its explainer of the deal and what it means for the public, comparing it to No Deal, but not to our current deal.

Other business leaders to come out and back it eg Adam Marshall from Chambers of Commerce and supportive voices in devolved regions like Andy Street and Andy Burnham. Also hoping to get 3rd Sector voices out supporting it.

21st - Theme is Economy, Jobs, Customs. Philip Hammond to open debate in Commons and Raab to close it. Institute of Directors to speak out.

Hoping for Stephen Martin, Martin McTeague etc

22nd - Theme is immigration - take back control of our borders. Home Sec doing media and visits. Raab on QT in the West mids.

Hope Mike Hawes of SMMT will speak out in favour along with influential voices from the rest of the world saying how great this is for the flow of global talent.

23rd - Theme is money - NHS funding and structural funds. Matt Hancock hospital visit. David Everett to welcome the deal alongside Tech for UK.

24th Theme is Northern Ireland and The Union - no hard border in the UK and the integrity of the Union is protected. PM visits border communities and business in NI and maybe also to Wales to visit agri and export businesses. Karen Bradley doing media.

Trying to get Varadker to support and Anand Menon and Henry Newman too.

25th - Theme is global Britain. We can strike trade deals with RoW (rest of world) security in this one too.

Speech from Liam Fox. Jeremy Hunt on Marr. Hope Miles Celic to come out in support (City UK).

Lining up lots of former foreign secs to come out in support and Mark Littlewood of the IEA.

26th - theme is taking back control of our laws, Raab doing media. PM interview with Dimbleby.

27th - morning theme is agri and fisheries. Gove doing a visit and media.

Evening is the vote. HISTORIC MOMENT, PUT YOUR OWN INTERESTS ASIDE, PUT THE COUNTRY'S INTERESTS FIRST AND BACK THIS DEAL.

No Blue Tsunami

The threat of the Blue Tsunami has officially receded as the GOP will hold the Senate, but nonetheless we need to keep things in perspective in a sense this is only 2018 and not 2020 so time to curb one’s expectations.

Volumes have been high, and equities remain supported suggesting this outcome is positive for risk since the gridlock outcome ultimately will support the president’s mandate and a higher probability of more fiscal stimulus.

The question is where the dollar will settle as the focus remains squarely on both EURUSD and USDJPY. If risk remains positive, we could expect bullish USD views to be played out against these critical currency pairs.

Traders especially love to price in worse case scenarios and bring out history books to prove points. i.e. that a Democratic house is bad for equity markets. OK maybe so but realistically I can’t see how the Democrats would want to be perceived as Killjoys and try to stifle any policy which is supporting the economy. Why not just let the natural course of tax cut fade out, if it does in 2019, and then the Democrats can have a good argument to counter what appears to be a very market friendly Republican policy.

In Asia

The problem for Asia is that President Trump is unlikely to give China a free pass, despite the fact he said he would tone down post-election, I don’t believe one word of that claim.

China will be on Trumps ” naughty ” list and after all, is said and done on the election from we will be pivoting quickly to US-China relations.

So, we will be back to a very muddled outlook for Asia.

However, positioning is flat, so I’m not expecting any significant fireworks in Asia until we get the next escalation or de-escalation of US-China Trade risk.