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On Thursday, the US Dollar fell by 87 pips or 0.70% against the Canadian Dollar. The currency pair breached the lower line of a descending channel pattern at 1.2352 within this session.

Technical indicators suggest selling signals on the 4H and daily time-frame charts. Most likely, the exchange rate could continue to trend lower during the following trading session.

However, the currency exchange rate may find support at 1.2350 within Friday's trading session.

On Thursday, the British Pound surged by 87 pips or 0.56% against the Japanese Yen. The GBP/JPY currency pair tested the 156.00 level during the Asian session on Friday.

Technical indicators suggest buying signals on the 4H and daily time-frame charts. Most likely, the exchange rate could breakout through the upper line of an ascending channel pattern within this session.

However, the resistance level at 156.08 could provide resistance for the currency exchange rate during Friday's trading session.

On Thursday, the Australian Dollar rose by 52 pips or 0.70% against the US Dollar. The currency pair tested the upper boundary of an ascending channel pattern during yesterday's trading session.

Everything being equal, the AUD/USD exchange rate could continue to edge higher during the following trading session. The potential target for buyers will be near the 0.7480 level.

However, the upper line of an ascending channel pattern could provide resistance for the currency exchange rate within this session.

On Thursday, the common European currency surged by 72 pips or 0.55% against the Japanese Yen. The currency pair breached the 132.00 level during Thursday's trading session.

All things being equal, the EUR/JPY exchange rate could continue trending higher in an ascending channel pattern during the following trading session.

However, the resistance level at 132.66 might provide resistance for the currency exchange rate within this session.

US stocks rose on Thursday as investors reflected on strong initial jobless claims numbers and corporate earnings. The Dow Jones added more than 515 points while the S&P 500 and Nasdaq 100 rose by 71 and 245 points, respectively. Data published by the Bureau of Labor Statistics (BLS) showed that the number of Americans filing for initial jobless claims declined to a post-pandemic low of 293k while the continuing claims dropped to 2.5 million. Meanwhile, companies like Morgan Stanley, UnitedHealth Group, Walgreens Boots Alliance, and Bank of America reported strong results.

The price of crude oil and other commodities jumped in the evening session as investors continue pricing in a supercycle. Brent crude jumped to a multi-year high of $84 while West Texas Intermediate (WTI) rose to $82. Other commodities like natural gas, copper, nickel, and zinc also rallied. Oil gained even as data by the Energy Information Agency (EIA) showed that inventories rose from more than 2.34 million barrels to more than 6.08 million barrels. The price also reacted to a report by OPEC which downgraded demand slightly in its October monthly report.

The economic calendar will be relatively muted today. The only key data to watch will be the US retail sales numbers. Economists expect that these numbers will show that sales continued rising in September. The core retail sales are expected to have risen by about 0.5%. The US will also publish the latest export and import price data. The earnings season will continue today, with the key companies to watch being Goldman Sachs, Charles Schwab, PNC Financial, and JB Hunt.

EURUSD

The EURUSD pair declined sharply in the overnight session as the US dollar made a comeback. The pair declined from a high of 1.1625, which was lower than yesterday’s high of 1.1625. On the hourly chart, it has tested the key support, which it struggled to move above earlier this week. It has also moved between the lower and middle lines of the Bollinger Bands while the MACD has formed a bearish crossover. Therefore, a break below the current support will send a signal that there are more sellers left. As such, the price could keep dropping to 1.1550.

NDX100

The Nasdaq 100 index jumped sharply as the market reacted to the ongoing earnings season. The index rose to a high of $15,050, which was the highest level on September 28. While rising, it moved above the key resistance level at $15,000. It also rose above the 25-day moving average. The Relative Strength Index (RSI) and the MACD have continued to rise. Therefore, the index will likely keep rising as investors buy the dips.

ETHUSD

The ETHUSD pair made a bullish breakout in the overnight session. It rose to a monthly high of 3,790, which was substantially higher than this month’s low of 3,200. The pair moved above the bullish flag pattern. It also rose above the 25-day and 50-day moving averages. Therefore, the pair will likely keep rising as bulls target the next key resistance at 4,000.

Oil prices are ominously firm.

A weaker US Dollar spurred energy prices higher overnight, helped by Saudi Arabia comments that suggested OPEC+ would not be drawn into ramping up output due to natural gas prices. Only a surprise jump in official US Crude Inventories to 6.10 million barrels took the edge of oil’s rally towards the end of the session. Brent crude finished 0.90% higher at $84.10, and WTI closed 1.15% higher at 81.45 a barrel.

Despite oil prices being at the top of their weekly range, Asia has continued buying this morning, pushing Brent crude 0.45% higher to $84.50, and WTI 0.30% higher to $81.75 a barrel. The fact that Asian markets are content to chase prices higher at weekly highs, instead of lurking on price dips, is a strong signal that energy demand remains robust.

The relative strength indicators (RSIs) on both contracts have moved higher into overbought territory and I still do not rule out a violent $5 to $8 barrel retracement lower as a result. Any sell-off will be as short in duration as the fall, should it occur. Looking at the price action today though, it seems that oil could remains in heavily overbought territory for a few sessions yet.

Brent crude has support at $83.00 and $82.00 a barrel with a rise through nearby resistance at $84.60 a barrel signalling a move to $87.00 by early next week. WTI has support at $80.50 and $79.50 a barrel with resistance nearby at $82.30 a barrel. A close above signals further gains to $85.00 a barrel.

Gold testing important resistance.

A slightly softer US Dollar and improving general investor sentiment lifted gold lifted gold 0.16% higher to $1796.00 an ounce overnight. Intra-day it tested $1800.00 before edging lower. Although the speculative frenzy of the Wednesday was not evident overnight, gold has still manged to maintain all its gains and it now threatening to erode the $1796.00 to $1798.00 100 and 200 DMA resistance zone. Gold edging lower to $1795.00 in a sull Asian session.

Of course, gold’s fate is entirely in the hands of the US Dollar and its direction, trading almost perfecting in an inverse correlation at the momentum. If US Dollar momentum continues to fade throughout today, gold could well move through $1800.00 and onto $1820.00 an ounce. If, for some reason, the US Dollar strengthens again today, gold could well find the short-term fast money running for the exit. That could see a sharp drop through $1780.00 to $1760.00 an ounce.

The dollar index finished almost unchanged at 94.00 overnight but that hide what was quite a choppy session. The index slumped to 93.75 intra-day as risk sentiment leapt higher in markets but retraced all those losses by the session end. With US data and earnings supporting investor sentiment for now, the dollar index looks vulnerable to more softness assuming no negative surprises this evening. The fact that it managed to finish unchanged overnight suggests that its yield-driven, taper-expectation strength remains intact. The dollar index could revisit the overnight lows at 93.75 today, but only a weekly close tonight under 93.50 suggests a deeper correction. Heavy speculative long US Dollar positioning in the futures markets is likely to limit gains today as nervous longs look to exit ahead of the weekend.

The US Dollar has eased in Asia, pushing EUR/USD and GBP/USD 0.10% higher to 1.1610 and 1.3687. EUR/USD remains rangebound between 1.1550 and 1.1650, but GBP/USD has risen through resistance at 1.3680. With more hawkish comments coming from BoE officials still, a retest of the overnight highs at 1.3730 are a possibility, with a weekly close at that level signalling a test of 1.3800 next week. One note of caution on US Dollar weakness is USD/JPY, which has continued to rise to a 22-month high at 113.90 today. The yield differential play is very much alive and a test of 114.50 seems likely next week. Buying of GBP/JPY, AUD/JPY and NZD/JPY is often used to reflected positive sentiment in currency markets and should mean USD/JPY dips remain shallow.

AUD/USD and NZD/USD rode the waves of improved investor appetites overnight. AUD/USD rising 0.50% to 0.7415, its 100-day moving average (DMA), where it remains in Asia. NZD/USD was the star of the night, jumping 1.0% to 0.7035, boosted by a huge jump in its September PMI to 51.70% early this morning. It has climbed again to 0.7050 in Asia with 0.7100 its next technical target. The PMI is a strong statement that business confidence remains high despite Auckland’s deepening Covid-19 woes. Off course, if global investor sentiment heads south into the weekend, both antipodeans will likely unwind all of the overnight gains as quickly as they appeared.

In Asia, the PBOC returned to a neutral USD/CNY fixing at 6.4386 today after modestly weaker CNY fix yesterday. That seems to have done its job with USD/CNY hovering around the fix level at 6.4370, having traded a lot lower in the band recently. It seems that the PBOC’s subtle hint about excessive CNY strength has been heeded by local markets. Nevertheless, I am not expecting a weakening trend to emerge, as export price elasticity is likely rising along with China’s imported energy bill.

The Korean Won has strengthened today after the Bank of Korea spent the week sell dollars to defend the 1200.00 level. The Bok’s Lee said that a November rate hike is possible, and USD/KRW has retreated to 1181.50 as a result. USD/KRW staged a notable downside break through support at 1190.00 yesterday and the worst is probably over for the Won for now. Regional currencies are also stronger today as improved international sentiment weakens the US Dollar.

The CFTC Commitment of Traders report is likely to reveal heavy US Dollar long positioning versus the major currencies still. Some culling of that lop-sided open interest is probably necessary before the US Dollar rally resumes. However, the Fed taper will still rule the roost in Q4, along with increasing uncertainty around energy markets and inflation. That will maintain the supportive environment for US Dollar strength through Q4.

Buy the dip in everything should be the theme of the day in Asia after the FOMO gnomes of Wall Street spent their overnight session doing much the same thing. Market risk sentiment improved noticeably as US banking heavyweights rolled out a procession of strong earnings prints, weekly Initial Jobless Claims fell by much more than expected and US YoY and MoM headline and Core PPI rose by less than expected. Later in the session, the US Crude Inventories nudged the buy everything bulls along with official crude inventories leaping to 6.1 million barrels.

US data overnight swung sentiment back into positive territory, boosted by strong earnings from US banking heavyweights. That saw an impressive rally on Wall Street where the S&P 500 rallied by 1.71%, the Nasdaq powered 1.73% higher, and the Dow Jones climbed by 1.55%. A sign-off of the temporary US debt ceiling extension by President Biden this morning has kept the music playing, with futures on all three indexes rising 0.30% in Asia.

That pent-up buy the dip demand has, unsurprisingly, flowed through to Asian markets to varying degrees. The Nikkei 225 has jumped 1.35% higher, with the Kospi climbing 0.90%. In China, the Shanghai Composite is sounding a more cautious note, rising just 0.10%, but the narrower Shanghai 50 has climbed by 0.50 after the PBOC rolled over CNY 500 bio of one-year financing today. The CSI 300 has climbed 0.30%. Although not a stock market holiday, the Chung Yeung Festival could be impacting domestic investor volumes today. Returning from the same holiday yesterday, Hong Kong’s Hang Seng has risen by 0.65%.

Across Asia, Singapore has risen by 0.50%, while Taipei has leapt by 2,10% with Mainland China Hisense, a major consumer goods manufacturer, saying that chip shortages could last another two to three years. After benefiting from the turmoil of the last few days, some profit taking is evident in other ASEAN markets. Jakarta is 0.20% lower, with Kuala Lumpur unchanged and Bangkok edging down by 0.25%. Manila continues a stellar week, rising by 0.45%. India markets are closed today for a national holiday.

Australian markets, set to rise after the overnight rallies anyway, received a boost that NSW will scrap all quarantine requirements for vaccinated incoming international travellers from November 1st. That continues notable trend of loosening border requirements seen by ASEAN countries this week. The ASX 200 and All Ordinaries are 0.50% higher.

The usual end of week/weekend risk concerns are tempering gains in much of Asia, the ever effervescent retail-driven Japan markets the usual exception. Nevertheless, with the recovery in risk sentiment in New York continuing through Asia, European markets should happily follow-the-leader and start this afternoon’s session on a positive note. Assuming there are no negative data or headline surprises from the US this evening, there should be no reason for equity markets not to end the week on a positive note in New York.

Daily Pivots: (S1) 1.1580; (P) 1.1602; (R1) 1.1620; More...

Outlook in EUR/USD is unchanged and intraday bias stays neutral first. Further fall is still in favor as long as 1.1639 resistance holds. Break of 1.1523 will resume larger fall from 1.2265 to 1.1289 medium term fibonacci level next. On the upside, break of 1.1639 resistance, however, will indicate short term bottoming. intraday bias will be turned back to the upside for stronger rebound, to 55 day EMA (now at 1.1721).

In the bigger picture, sustained break of 1.1602 will argue that rise from 1.0635 (2020 low) has completed at 1.2348. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289. Note also that rejection by 55 week EMA (1.1830) also carries medium term bearish implication. Firm break of 1.1289 will pave the way to retest 1.0635 low. On the upside, though, break of 1.1908 resistance will revive medium term bullishness and turn focus back to 1.2348 high.

Daily Pivots: (S1) 1.3641; (P) 1.3688; (R1) 1.3720; More...

Intraday bias in GBP/USD remains on the upside and outlook is unchanged. Sustained trading above 55 day EMA (now at 1.3712) will target 1.3912 key structural resistance next. On the downside, however, break of 1.3567 minor support suggest that rebound from 1.3410 has completed, and fall from 1.4248 is ready to resume. Intraday bias will be turned back to the downside for 1.3410 and below.

In the bigger picture, fall from 1.4248 is at least a correction to the up trend from 1.1409 (2020 low). Such correction could extend to 38.2% retracement of 1.1409 to 1.4248 at 1.3164 before completion. However, considering the rejection by 1.4376 key resistance (2018 high), sustained trading below 1.3164 will argue that it's indeed a bearish trend reversal and would target 61.8% retracement at 1.2493. Nevertheless, break of 1.3912 resistance will revive medium term bullishness and target 1.4248/4376 resistance zone again.