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Markets advanced higher extending their Friday rally as investors maintain a risk-on mood early Monday. The US dollar suffered further losses against major rivals ahead of the US Midterm elections. There will be a line-up of Fed members’ speeches later in the day ahead of this week’s US inflation data. Commodity pairs suffered weakness as China sticks with Covid Zero Policy amid deteriorating economic outlook.
The New Zealand dollar traded -0.19% lower than the US dollar following downbeat Chinese data. The Chinese Trade Balance [USD] came in less than anticipated at 85.15 billion vs 95.95 billion indicating a deepening slowdown. China says it is sticking with its Covid zero policy scraping out speculations that they were relaxing the measures. This weighed on the Kiwi which established a low at 0.5864 and may face resistance at 0.6000
GBPCHF gained +0.26% after sliding to 1.1257 following a lower unemployment rate in Switzerland. In October the unemployment rate dropped to 1.9% vs the 2.0% expected. Moreso, the risk-on tone underpinned the CHF strength in the short term. The pound rose but the gloomy economic outlook remains a major headwind for near-term bulls. House prices in the UK fell to 8.3% from 9.8% on a yearly basis. The pair bounced off a 1.1250 level, a 3-week support and upside gains are capped by the 1.1450, a previous support-turned-resistance.
EURAUD rallied by +0.32% ahead of Australia’s Westpac Consumer Sentiment. The risk-sensitive Australian dollar lagged, while Euro advanced on positive economic data. The Sentix Investor Confidence rose to -30.9 vs -35.0 surveyed. Traders continue to digest the ECB members’ speeches delivered early morning. Bulls face a near-term barrier at 1.55000 level after bouncing off the critical support level at 1.5350 level, a monthly low. A break above the near-term high could see bulls rally 1.5700 level.
European stocks were steady after a release of mixed Euro area economic data. FTSE100 was down by -0.31% as bulls lose steam below the 7350 level and critical levels to watch for are 7400 resistance and 7200 support. DAX edged higher by +0.87% after breaking the 13500 level and the next target is at 13900 resistance. CAC40 was slightly lower by -0.07% as bulls struggle to break above the 6450 level but with a breach above that level, bulls could reach the 6600 level.
US stock futures rallied as investors shift their focus to the US Midterm elections. S&P500 futures extended gains by +0.69% after bouncing off a 3700 near-term support and bulls face a near-term barrier at the 3800 level. A break above that level could see extended targets at the 3900 psychological level. Nasdaq100 futures surged by +0.65% as bulls attempt to challenge the 11000 near-term barriers and a breach of that level could reinforce the bullish outlook towards the 11600 level. DJIA index futures soared by +0.60% after claiming the 32500 level and the next critical level is the 33000 level.
Gold took a corrective pattern early European session after a big 3% jump on Friday. Bulls retreated from the 1680 level ahead of FOMC member Mester, Barkin and Fed speaker Collins. The 1670 level remains near-term support to maintain the bullish outlook. Bulls could reclaim the 1700 and 1725 levels ahead of US inflation data later this week.
