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World markets rose yesterday after Donald Trump said that he had a phone call with China’s Xi Jinping. In the tweet, he said that they will discuss trade in the G20 meeting in Argentina later this month. This brought relief among market participants regarding trade. They believe that the two leaders will reach an agreement about how to end the ongoing trade conflict. Previously, the US had said the discussion will only take place if China had a list of the concessions it is willing to make about trade.

The Australian dollar halted its gains against the USD in the Asian market. This happened after Australia released the retail sales and PPI data. The retail sales for September rose by 0.2%, which was lower than the expected gain of 0.4%. It was also lower than the previously-released data of 1.0%. Retail sales data is closely watched because it is an important measure of consumer spending. The PPI data for the second quarter rose by 2.1%, which was higher than the 2.0% that traders had expected. On a QoQ basis, they rose by 0.8%, which was higher than the consensus forecast of 0.2%. Today, the AUD/USD pair’s movement will depend mostly on the US dollar. This is because traders will receive the official jobs numbers from the Labor Department.

The price of crude oil fell sharply yesterday as the US and OPEC flooded the oil market ahead of the US mid-terms. Yesterday, data from OPEC showed that its members had increased production to the highest level since 2016. The biggest gainers in production were Saudi Arabia, UAE, and Libya. Recent data from the US also show that the country is increasing its production sharply. All this has happened ahead of the Iranian sanctions that will begin on Sunday night. A new report showed that the US will use satellite data to track the Iranian sanctions. Before, the country was able to avoid the sanctions by using unmarked ships to transport the oil.

EUR/USD

The EUR/USD pair halted gains yesterday as traders wait for the official US jobs numbers and German manufacturing PMI. In the Asian session today, the pair remained around the 23.6% Fibonacci Retracement level of 1.14100. This level is along the upper band of the Bollinger Bands while the ADX is at 37 and moving higher. There is a likelihood that the pair will continue the upward movements today and test the 38.2% Fibonacci Retracement level of 1.1500. If it moves lower, it will likely move to below 1.1300.

AUD/USD

The AUD/USD pair halted the sharp upward movements started yesterday. It is now trading at the 0.7200 level, which is slightly lower than yesterday’s high of 0.7215. With no data expected again from Australia, the US jobs numbers will be the main movers today. The momentum indicator shows that the upward trend could continue. This is also shown by the double Exponential Moving Average indicators. If it continues the upward trend, the pair will likely test the 0.7250 level.

XBR/USD

The price of crude oil declined sharply in the Asian session. It reached a low of 72.60, which was the lowest level since August 20. This was a continuation of the downward trend that started in October 10. The pair will likely continue the downward momentum as evidenced by the Ichimoku Kinko Hyo and the momentum indicators shown below. The RSI is at the oversold territory, which is an indicator that the XBR/USD pair will drop further before it recovers. It will likely do this when it reaches the important support level of 70.

General Trend:

• US President Trump said to have asked cabinet to draft possible China trade deal
• Apple declines post earnings, weighs on Nasdaq Futures in Asian trading
• Australia ASX 200 underperforms, energy sector lags
• CSR declines over 8%, H1 profits declined
• Macquarie Group rises over 3% after H1 results
• KDDI gains after refraining from announcing price cuts
• Australian retail sales miss estimates in Sept and Q3
• Japanese companies expected to report earnings include Nippon Steel and Isuzu Motors
• Fast Retailing is due to report monthly SSS
• Alibaba due to report on Friday

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.4%
• (AU) AUSTRALIA SEPT RETAIL SALES M/M: 0.2% V 0.3%E
• (AU) AUSTRALIA Q3 RETAIL SALES EX INFLATION Q/Q: 0.2% V %0.4%E
• (AU) AUSTRALIA Q3 PPI Q/Q: 0.8% V 0.3% PRIOR; Y/Y: 2.1% V 1.5% PRIOR (multi-year high)
• (AU) Australia sells A$1.0B v A$1.0B indicated in April 2029 bonds, avg yield 2.6631%, bid to cover: 3.00x
• (AU) Treasurer Frydenberg announces changes to Petroleum Resource Rent Tax - Local Press
• (NZ) Reserve Bank of New Zealand (RBNZ): Names new assistant governors, effective from Dec
• (NZ) New Zealand Oct ANZ Consumer Confidence: 115.4 v 117.6 prior

China/Hong Kong

• Shanghai Composite opened +1.7%, Hang Seng +2.2%
• (CN) China Pres Xi: Pres Trump and I want to expand China-US trade cooperation; US-China economic teams should strength their contacts - Chinese press
• (CN) US President Trump: China President Xi wants to make 'fair' trade deal; will make the 'right' deal with China
• (CN) China PBoC sets Yuan reference rate at: 6.9371 v 6.9670 prior
• (CN) China PBoC Open Market Operations (OMO): Skips OMO v skipped prior
• (CN) China Orient Asset said to consider creating funds to support listed companies - Chinese Press
• (CN) China to increase financial support to private and small firms - Chinese Press
• (CN) China Securities Regulator CSRC said to study listing of yuan (CNY) forex futures - US financial press

Japan

• Nikkei 225 opened +0.3%
• (JP) Japan PM Abe: Conditions for postponing 2019 sales tax increase include global economic crisis and 'huge' natural disaster; Wrong to persist in raising sales tax in 2019 if economy hit by 'big shock on scale of Lehman crisis'
• (JP) Japan Finance Min Aso: The last time the sales tax was raised there was consumption volatility, reiterates this time we would like to level economic activity
• (JP) BoJ announcement related to daily bond buying operation: Raises daily purchases of 1-3 and 3-5 yr JGBs after announcing earlier this week that monthly bond purchases would be tweaked for the 3rd straight month in Nov
• (JP) Japan Oct Monetary Base End of Period: ¥506.9T v ¥505.2Te; Y/Y: 5.9% v 5.9% prior
• (JP) Japan Trade Union Confederation (Rengo) said to seek 2% base pay increase in 2019 - Japanese Press

Korea

• Kospi opened +1.1%
• (KR) Bank of Korea (BOK) Gov Lee Ju-Yeol: Market interest rates stabilized despite equity sell-off, FX volatility was also limited during stock sell-off
• (KR) South Korea President Moon approval rating declines to 55% v 58% prior - Gallup Poll

North America

• US equity markets ended higher: Dow +1.1%, S&P500 +1.1%, Nasdaq +1.8%, Russell 2000 +2.2%
• GM: Oct US sales said to decline ~4% v -6.7%e - US financial press

Europe

• (UK) EU Brexit negotiators reportedly mulling a Northern Ireland compromise plan to give UK stronger guarantees that customs border won't be necessary along Irish Sea - FT
• (UK) Former UK PM Cameron said to consider return to politics - UK Press
• (US) JPMorgan's Dimon: warns of a sovereign debt crisis in Europe - Handelsblatt

Levels as of 01:30ET

• Nikkei 225, +2.8%, ASX 200 +0.1%, Hang Seng +3.6%; Shanghai Composite +2%; Kospi +3.1%
• Equity Futures: S&P500 +0.5%; Nasdaq100 flat, Dax +1%; FTSE100 +1.1%
• EUR 1.1418-1.1390 ; JPY 113.03-112.55 ; AUD 0.7252-0.7192 ;NZD 0.6690-0.6639
• Dec Gold -0.3% at $1,234/oz; Oct Crude Oil flat at $63.67/brl; Dec Copper +1.1% at $2.752/lb

Market movers today

In the US, we get the job reports for October. We estimate non-farm payrolls rose by 190,000 - tightening the labour market and putting upward pressure on wage growth, thus we expect average hourly earnings rose +0.25% m/m, bringing this year's annual growth to 3.2%.

In Denmark, currency reserve figures for October will attract some attention since the Danish krone (DKK) has been hovering on the week side of the central parity rate throughout most of October. The numbers will reveal whether or not the central bank intervened by buying DKK during the month.

Today's Riksbank minutes could be market mover, where we look after any hints as to whether the Board members preferred December or February.

We expect Norwegian unemployment rate to land at 2.3%.

Selected market news

Risk appetite improved yesterday on the news that US-China trade talks are progressing. A reported phone call between Presidents Donald Trump and Xi Jinping showed that the door is still open for US-China trade talks and has improved prospects of a meeting between Xi and Trump on the side lines of the G20 Summit in Argentina in mid-November. Talks are going 'nicely' US President Donald Trump wrote on Twitter, while Chinese state media also reported about constructive discussions.

US equities ended the day higher with the S&P500 and Dow Jones indices gaining more than 1%. In Asia, the momentum in the equity rally has eased over night, but most regional indices are still up with markets in South Korea and China in the lead.

In the FX market, the CNY strengthened while the USD sold off on the news that US-China trade talks are progressing. Besides trade talks, weak US ISM manufacturing data and lower US yields also weighed on the USD which underperformed against all G10 currencies. EUR/USD bounced back above 1.14 after testing a 2018 low at 1.1302.

Oil prices have continued to sell off past days despite stabilisation in equity markets. Key drivers have been data showing US selling strategic reserves in the market and new data out Thursday showing a rise in OPEC output led by Libya and Saudi Arabia. Going into October the market was positioned for a tightening of global oil supply, but these concerns have since eased due in part the factors mentioned above.

The Bank of England voted unanimously to keep the Bank Rate unchanged at 0.75% yesterday and did not make any big policy signal shifts either. We still expect the Bank of England to hike around once a year and our base case is that the next hike will arrive in May 2019, so after the UK formally leaves the EU. Our view is that a 'no deal Brexit' would most likely hit the economy also through lower demand due to lower business confidence, which would most likely force Bank of England to ease monetary policy by cutting the Bank Rate. See Bank of England Review - Hiking cycle continues but depends on Brexit deal ,1 November.

Bank of America corporation ticker symbol: BAC short-term Elliott wave analysis suggests that a decline to $27.26 low ended intermediate wave (3). The internals of that decline unfolded in 5 waves impulse structure in lesser degree cycles. Up from there a 3 wave bounce to $29.19 high ended intermediate wave (4) as double three structure. Down from there, the stock declined lower in another lesser degree 5 waves structure. That completed the intermediate wave (5) lower at $25.91 low. Which then also completed primary degree wave ((C)) & the cycle degree wave IV pullback.

Above from there, the stock is expected to resume the upside in cycle degree wave V ideally. Or should do a larger 3 wave bounce to correct the cycle from 3/12/2018 peak. Currently, the rally from $25.91 low is nesting higher as impulse structure looking to extend higher 1 more push higher to end intermediate wave (1). Afterwards, the stock is expected to do a pullback in intermediate wave (2) in 3, 7 or 11 swings before further upside extensions are seen provided the pivot at $25.91 low stays intact. We don’t like selling the stock as we are expecting BAC to turn higher against $25.91 low pivot.

BAC 1 Hour Elliott Wave Chart

For the 24 hours to 23:00 GMT, the EUR rose 0.77% against the USD and closed at 1.1405.

In the US, data indicated that the US final Markit manufacturing PMI climbed to a level of 55.7 in October, compared to a level of 55.6 in the previous month. The preliminary figures had recorded an advance to 55.9. Moreover, the nation’s seasonally adjusted initial jobless claims declined to a level of 214.0K, less than market expectations for a fall to a level of 212.0K. Initial jobless claims had registered a revised reading of 216.0K in the previous week. Additionally, the US ISM manufacturing activity index slid to a six-month low level of 57.7 in October, for the second consecutive month and compared to a level of 59.8 in the previous month. Market participants had envisaged the index to drop to a level of 59.0. Meanwhile, construction spending recorded a flat reading on a monthly basis in September, meeting market expectations.

In the Asian session, at GMT0400, the pair is trading at 1.1399, with the EUR trading 0.05% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.1350, and a fall through could take it to the next support level of 1.1301. The pair is expected to find its first resistance at 1.1436, and a rise through could take it to the next resistance level of 1.1473.

Looking forward, investors would closely monitor the Markit Manufacturing PMI for October set to release across the euro-bloc in a few hours. Later in the day, the US trade balance, factory orders and durable goods orders, all for September along with non-farm payrolls, unemployment rate and average hourly earnings, all for October, will garner significant amount of investors’ attention.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP rose 1.76% against the USD and closed at 1.2998, on Brexit deal hopes and following hawkish comments from the Bank of England (BoE) Governor, Mark Carney.

In the economic news, UK’s manufacturing PMI eased to a level of 51.1 in October, more than market expectations for a drop to a level of 53.0. In the previous month, the PMI had registered a revised level of 53.6. Moreover, the nation’s seasonally adjusted Nationwide house prices index remained flat on a monthly basis in October, defying market expectations for an advance of 0.2%. The index had recorded a rise of 0.3% in the prior month.

The BoE, in its October monetary policy meeting, maintained its key interest rate at 0.75%, meeting market expectations and decided to maintain the quantitative easing through asset purchases at GBP435.00bn. Additionally, the central bank reiterated that any future rate hikes will be at a gradual pace and to a limited extent. However, officials cautioned that economic outlook of the country remains sensitive to the effects of Brexit.

In the Asian session, at GMT0400, the pair is trading at 1.2988, with the GBP trading 0.08% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.2872, and a fall through could take it to the next support level of 1.2757. The pair is expected to find its first resistance at 1.3069, and a rise through could take it to the next resistance level of 1.3151.

Moving forward, traders would await UK’s Markit construction PMI for October, scheduled to release later in the day.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the JPY and closed at 112.64.

In the Asian session, at GMT0400, the pair is trading at 112.69, with the USD trading slightly higher against the JPY from yesterday’s close.

The pair is expected to find support at 112.50, and a fall through could take it to the next support level of 112.31. The pair is expected to find its first resistance at 112.94, and a rise through could take it to the next resistance level of 113.19.

Moving forward, investors would await the Bank of Japan’s monetary policy meeting minutes along with machine orders and trade balance data, all set to release next week.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.59% against the CHF and closed at 1.0023.

On the macro front, Switzerland's consumer price index (CPI) rose 1.1% on an annual basis in October, at par with market expectations. In the prior month, the CPI had recorded an advance of 1.0%. Additionally, the SECO consumer confidence index slightly advanced to a level of -6 in October, compared to market consensus for an unchanged reading. In the previous month, the index had recorded a reading of -7.

On the other hand, the nation's SVME manufacturing PMI eased to 57.4 in October, compared to market expectations for a fall to 58.7. The SVME manufacturing PMI had registered a level of 59.7 in the previous month.

In the Asian session, at GMT0400, the pair is trading at 1.0018, with the USD trading 0.05% lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9989, and a fall through could take it to the next support level of 0.9961. The pair is expected to find its first resistance at 1.0058, and a rise through could take it to the next resistance level of 1.0099.

Trading trend in the Swiss Franc today is expected to be determined by Switzerland's retail sales for September, set to release in a while.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.52% against the CAD and closed at 1.3087.

Data showed that Canada's manufacturing PMI eased to a level of 53.9 in October, marking its lowest level since January 2017 and compared to a level of 54.8 in the preceding month. However, the nation's leading indicator remained unchanged at 0.1% on a monthly basis in September.

In the Asian session, at GMT0400, the pair is trading at 1.3096, with the USD trading 0.07% higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3060, and a fall through could take it to the next support level of 1.3025. The pair is expected to find its first resistance at 1.3140, and a rise through could take it to the next resistance level of 1.3185.

Going ahead, investors would keep an eye on Canada's unemployment rate for October and trade balance data for October, set to release later in the day.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the AUD rose 1.71% against the USD and closed at 0.7202.

LME Copper prices declined 0.1% or $3.0/MT to $6070.0/MT. Aluminium prices rose/declined 0.7% or $15.0/MT to $1961.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7198, with the AUD trading 0.06% lower against the USD from yesterday's close.

Overnight data showed that Australia's producer price index (PPI) advanced 2.1% on a yearly basis in 3Q 2018, compared to a gain of 1.5% in the previous quarter. Furthermore, the nation's seasonally adjusted retail sales climbed less-than-anticipated by 0.2% on a monthly basis in September, following a rise of 0.3% in the preceding month.

The pair is expected to find support at 0.7137, and a fall through could take it to the next support level of 0.7075. The pair is expected to find its first resistance at 0.7237, and a rise through could take it to the next resistance level of 0.7275.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.