Accommodative at all costs

GBPUSD – technical overview

The market is in a consolidation phase in the aftermath of the run to fresh 2021 and multi-month highs. At this stage, additional setbacks should be limited to the 1.3200 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high.

• R2 1.3699 – 4 November high – Strong
• R1 1.3600 – Figure – Medium
• S1 1.3424 – 5 November low – Medium
• S2 1.3412 – 29 November low – Medium

GBPUSD – fundamental overview

All of the worry around rising inflation and all of the hawkish bets head into last week's BOE decision, and yet, none of the delivery, with the market getting the opposite from the central bank. BOE Bailey went the other way with policy, falling in line with the other central banks and walking back over to the accommodative side of policy. Key standouts on today’s calendar come in the form of central bank speak from the likes of ECB Lane and Fed’s Clarida, Bowman, and Powell.

USDJPY – technical overview

The longer-term trend is bearish despite the recent run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption back down towards the 100.00 area. It would take a clear break back above 114.55 to negate the outlook.

• R2 115.00 – Psychological– Strong
• R1 114.70 – 20 October/2021 high – Medium
• S1 113.25 – 28 October low – Medium
• S2 113.00 – 12 October low – Strong

USDJPY – fundamental overview

The Yen hasn't been sure how to react in recent sessions, getting sold on the widening yield differential with the US and more record gains in US stocks, but getting bought on broad based US Dollar selling from dovish Fed communications. Key standouts on today’s calendar come in the form of central bank speak from the likes of ECB Lane and Fed’s Clarida, Bowman, and Powell.

AUDUSD – technical overview

The Australian Dollar has been in the process of a healthy consolidation following the impressive run towards a retest of the 2018 high earlier this year. At this stage, there are signs of the market wanting to turn back up and any setbacks should be well supported down into the 0.7200 area. Look for a weekly close above 0.7500 to strengthen the outlook and force a shift in the structure.

• R2 0.7556 – 28 October high – Strong
• R1 0.7471 – 4 November high – Medium
• S1 0.7360 – 5 November low – Medium
• S2 0.7323 – 13 October low – Strong

AUDUSD – fundamental overview

Last week was a rough week for the Australian Dollar. The currency came under pressure to start the week after a dovish RBA communication and then suffered more later on in the week from softer economic data in the form of retail sales and trade. There was some offsetting demand from the record run in US equities, though with this market now super extended, we could see more downside pressure on Aussie in the sessions ahead. Key standouts on today’s calendar come in the form of central bank speak from the likes of ECB Lane and Fed’s Clarida, Bowman, and Powell.

USDCAD – technical overview

Finally signs of a major bottom in the works after a severe decline from the 2020 high. A recent weekly close back above 1.2500 encourages the constructive outlook and opens the door for a push back towards next critical resistance in the 1.3000 area. Any setbacks should be well supported into the 1.2200s.

• R2 1.2499 – 12 October high – Strong
• R1 1.2480 – 5 November high – Medium
• S1 1.2377 – 4 November low – Medium
• S2 1.2288 – 21 October low – Strong

USDCAD – fundamental overview

Friday's round of employment data out of Canada came in softer than forecast, which resulted in a lower Canadian Dollar. Still, setbacks in the Loonie were offset by a recovery in the price of oil. Key standouts on today’s calendar come in the form of central bank speak from the likes of ECB Lane and Fed’s Clarida, Bowman, and Powell.

NZDUSD – technical overview

The market has entered a period of consolidation after running up to a yearly and multi-month high. Back above the April high at 0.7317 would be required to force a shift in the structure.

• R2 0.7300 – Figure – Strong
• R1 0.7219 – 21 October high – Medium
• S1 0.7072 – 5 November low – Medium
• S2 0.7049 – 18 October low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been outperforming on a perceived monetary policy divergence, this after the ECB, RBA, Fed and BOE all came out leaning on the more accommodative side of policy. Meanwhile, we're seeing added demand after PM Ardern indicated Covid restrictions in Auckland would be progressively eased further. Key standouts on today’s calendar come in the form of central bank speak from the likes of ECB Lane and Fed’s Clarida, Bowman, and Powell.

US SPX 500 – technical overview

Longer-term technical studies are looking quite exhausted and the market is showing signs of wanting to roll over after racing to another record high. At the same time, the latest breakout above 4600 introduces the possibility for the next major upside extension through 4800. At this stage, it will take a break back below 4500 to take the immediate pressure off the topside.

• R2 4750 – Psychological – Strong
• R1 4720 – 5 November/Record high – Medium
• S1 4500 – Psychological – Medium
• S2 4482 – 19 October low – Strong

US SPX 500 – fundamental overview

We're trading just off fresh record highs, and yet, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout and risk of rising inflation should weigh more heavily on investor sentiment in Q4 2021.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1600.

• R2 1917 – 1 June high – Strong
• R1 1835 – 15 July high – Medium
• S1 1759 – 3 November low – Medium
• S2 1722 – 29 September low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, and coronavirus fallout. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.