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Short the pound

USD has been broadly weaker against a stronger sterling. UK Brexit Minister Dominic Raab says he can reach a deal by 21 November 21, but that seems likely to be on EU terms. We remain negative on “soft” Brexit developments and view the pound’s recovery as an opportunity to short. An inflation report today and the Bank of England’s monetary policy meeting are likely to highlight uncertainty. Despite tight labour markets, prices are decelerating.

Elsewhere, markets have shifted sideways as Europe takes off for All Saints Day. A bounce in risk sentiment is supported by China’s fiscal easing and solid US economic data (stronger PMI and an expected good ISM read this afternoon). However, recovery is tentative. The Shanghai composite is only slightly higher at 0.13%. EUR/USD recovered off 1.1300, yet the US economic data should derail gains

Swiss economy walks a tightrope

There are reasons for optimism and for pessimism. On the plus side, GDP grew 3.2% in Q2, well above its recent average. But growth seems to be slowing, and the risks of a trade war are weighing on exports. According to Swiss National Bank President Thomas Jordan, a trade war would have a strong impact on the Swiss economy, while the risk of monetary policy mistakes would rise. SNB returns have whipsawed: Q3 saw a loss on foreign currency investments of CHF 12.94 billion, down from a record profit of CHF 33.7 billion in Q3 2017.

Switzerland’s economic outlook remains driven by the development in trade and the mounting debt pile of the SNB, estimated at CHF 700 billion. Switzerland’s safe haven status might prove to be a burden in the coming quarters. For now, inflation continues to advance slightly in October (CPI +1.10% annually and +0.20% monthly). Since the beginning of the 2018, the CHF appreciated by 2.92% and 2.47% against USD and EUR respectively, putting pressure on exporting industry margins and thus putting manufacturing activities downward.

After reaching a 15-month low in the beginning of September of 1.12, the EUR/CHF is bouncing back, approaching the 1.1430 range short-term.

The British pound has soared higher during the European trading session over the recent bullish Brexit news, with the price so far finding strong resistance from the 1.2920 level. The GBPUSD pair has now started to correct lower after the UK economy posted much weaker than expected Manufacturing PMI data. A sustained move below the 1.2852 support level may encourage selling towards the 1.2785 level, while GBPUSD bulls may use pullbacks as buying opportunities.

The GBPUSD pair is bullish while trading above the 1.2852 level, key resistance is now found at the 1.2920 and 1.3000 levels.

If the GBPUSD pair moves below the 1.2852 level, sellers may test towards the 1.2785 and 1.2700 support levels.

The US dollar is testing critical intraday support against the Japanese currency after buyers failed to build bullish traction above the 113.30 level. The USDJPY pair is also struggling as the US dollar index is under heavy selling pressure after reversing below the 97.00 level. Sellers need to hold price below the 112.87 support level while buyers need to break above the former monthly trading high.

The USDJPY pair is only bullish while trading above the 112.87 level, key resistance is now found at the 113.40 and 113.90 levels.

If the USDJPY pair trades below the 112.87 level, sellers are likely to test the 112.45 and 112.15 support levels.

During Wednesday's session, the currency rate passed through the support of the weekly S1 at 1.1310 to bounce off the bottom boundary of the medium descending pattern line at 1.1350. On Thursday morning, the European Single Currency was trading between the 55-hour and the 100-hour SMAs at the 1.1359 mark.

In regards to the near-term future, most likely, the currency rate will trade sideways to stay at the 1.1320 level due to the resistance of the 100-hour SMA.

On the other side, the 55-hour SMA could support the rate during the US ISM Manufacturing PMI data release at 14:00 GMT. The fundamental could push the rate to break the resistance of the 100-hour SMA to trade at 1.1400 level.

During Wednesday's trading session, the British Pound broke the resistance of the 55-hour SMA to end the trading day at the 1.2765 mark. On Thursday morning, the British pound jumped to the 1.2880 level breaking the resistances of the most technical indicators.

In regards to the near-term future, most likely, the British pound will break the resistances of the monthly PP at 1.2900 and the weekly PP at 1.2907 due to the support of the 200-hour SMA together with the support of the 62.20% Fibo.

On the other side, the trading day is mostly focused on the UK fundamentals news which might significantly affect the rate. Moreover, during the data releases, the rate could depreciate against the US Dollar to trade downwards to the 1.2800 level.

During Wednesday's trading session, the currency exchange rate passed through the support of the 55-hour SMA to end the trading day at the 112.73 mark. On Thursday morning, the US Dollar was resisted by the weekly pivot point at 112.96 to trade at the 112.30 mark.

In regards to the near-term future, the US Dollar will be supported by the 61.80 % Fibo and the monthly R1 at 112.73 to break the resistances of the 55-hour SMA and the weekly PP at the 112.96. Most likely, the rate will surge to the monthly R2.

On the other side, the US Dollar could depreciate to pass through the 100-hour and the 200-hour SMAs during the trading session on Thursday.

During Wednesday's trading session, the yellow metal depreciated 591 pips or 0.48% to end the trading day at the 1,216.61 mark. On Thursday morning, the gold broke the resistance of the 55-hour simple moving average to trade at 1,223.66 mark.

In regards to the near-term future, most likely, the gold will be retraced by the 100-hour and the 200-hour simple moving averages to push the yellow metal to trade at the1,220.00 level during the trading session

On the other side, the gold could break the resistances of the 100-hour and the 200-hour SMA's if the US Dollar will depreciate against the yellow metal during the day.

Downside risks have dominated the AUD/JPY currency pair since the beginning of October. The Australian Dollar has depreciated about 4.66% against the Japanese Yen.

The exchange rate is trading in a descending channel pattern, which was formed on October 2 and has pushed the price lower towards a two-year low level at 78.51.

However, the pair has bounced off the two years low level a few days ago, and as a result, the pair breached the upper boundary of the descending channel at 80.31.

Given that a breakout has occurred, the next target for the currency exchange rate will be near the upper boundary of a dominate descending channel at 82.06 during the following trading sessions

The Australian Dollar has been appreciating against the Canadian Dollar since the beginning of October. The AUD/CAD currency pair has increased its trading range by 3.08%.

The exchange rate breached the weekly R1 at 0.9363 during the morning hours of Thursday's session. Currently, the pair is located near the upper boundary of an ascending channel and could be set for a breakout.

If the breakout occurs, the next target for the currency exchange rate will be at a swing high of 0.9491.

However, the pair could reverse from current price level and aim at a support level formed by the 200-hour SMA neat the 0.9290 region during the following session.

AUDUSD triggers price rally and now eyes next resistance at 0.7200 level. On the upside, another resistance lies at the 1.7250 level. A cut through here will turn attention to the 0.7300 level and then the 0.7350 level. Break above here will open the door for a move towards the 0.7400 level. Its daily RSI is bullish and pointing higher suggesting further strength. Support resides at the 0.7100 level where a breach will aim at the 0.7050 level. Below here will set the stage for a run at the 0.7000 level with a cut through here targeting further downside pressure towards the 0.6950 level. On the whole, AUDUSD faces further upside threats with eyes on key resistance.