• Yen losses ease up a little in European morning trade
• Japanese yen in the spotlight after weekend election
• Japan parliament reportedly to convene special session to vote on prime minister post
• Crude Oil Technical Analysis – Israel spares Iran’s energy facilities
• Weekly update on interest rate expectations
• ECB’s Wunsch: It is premature to discuss December policy decision
• SNB total sight deposits w.e. 25 October CHF 457.4 bn vs CHF 462.3 bn prior
• UK October CBI retailing reported sales -6 vs 4 prior

Markets:

• EUR leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.5%
• US 10-year yields up 2.5 bps to 4.256%
• Gold down 0.6% to $2,731.59
• WTI crude down 5.7% to $67.65
• Bitcoin up 2.8% to $68,660

The main focus in FX was on the Japanese yen, as it opened with a striking gap lower after the weekend election.

Japan’s ruling LDP party surrendered their outright majority in the lower house and that triggered some uncertainty on the BOJ’s confidence to stick to policy normalisation. That as prime minister Ishiba’s position is called into question following the election outcome.

USD/JPY opened with a gap up at 153.23 in Asia before holding around 153.50-60 levels in the handover to Europe. But as the dust settles, traders are slowly getting a grip on the situation that Japan’s political landscape is still likely to remain as it is for the most part – at least for now.

That saw USD/JPY fall back to around 152.60 currently, eating into the opening gap higher but still up by 0.2% on the day.

Besides that, higher bond yields remain a focal point for broader markets. And that helped to underpin USD/JPY and the dollar as well. But yields did slide off a bit during the session, tempering with the dollar mood.

EUR/USD was keeping around 1.0790-00 mostly before nudging up slightly to 1.0815 now and still largely held back by its 200-hour moving average at 1.0825.

Besides that, other dollar pairs are more muted amid the mixed mood in markets to start the new week.

In the equities space, stocks are running higher as tensions in the Middle East abate following the developments over the weekend. That saw oil prices tumble lower by nearly 6% now and is breathing life into equities, with US futures set to run away with gains at the open later.

This article was written by Justin Low at www.forexlive.com.

• Prior 4

After a brief respite in September, the UK retail sales balance heads back into negative territory for the month of October. The decline is marginal but it’s not a good start to Q4, which is typically seen as one of the hotter seasons in the run up to the year-end holidays.

This article was written by Justin Low at www.forexlive.com.

Crude oil was one of the biggest
movers today as the price gapped sharply lower following the Israel’s
retaliation over the weekend. The reason for the drop is of course the lack
of attacks against energy facilities. That’s something that’s been already known, so we might see a pullack now that this story is in the rear view mirror.

In the big picture, central
bank easing generally leads the manufacturing cycle, so we can expect global
growth to pick up and support the crude oil market. One risk that might be
weighing on the market is the US election as a Trump victory might be bearish
due to increased supply expectations.

It’s worth remembering that
in 2016, crude oil did fall initially on Trump’s victory but eventually rallied
for more than 20% in the following three months on higher global growth
expectations. So, it’s going to be a tricky one, but global growth should
eventually prevail.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil couldn’t break above the key 71.67 level and eventually sold
off hard. The natural target for the sellers should be the support
zone around the 65 handle where we can expect the buyers to step in to position
for a rally back into the top of the yearly range.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor support level defined by the October swing low when
the Israel-Iran tensions began. This is where we can expect the buyers to step
in with a defined risk below the level to position for a pullback into the
downward trendline.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 65 handle.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the big gap lower today following the weekend news of Israel’s retaliation
and lack of energy infrastructure targets. There’s not much to add here as the
buyers will look for a bounce on the 66.50 swing level, while the sellers will
want to see the price breaking lower to increase the bearish bets into the 65
handle. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Job Openings and the US Consumer Confidence report. On
Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims and the US Employment Cost Index data. Finally, on
Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The pair is still up 0.4% on the day at around 152.90 but has fallen back below the opening gap of 153.23 upon the return from the weekend. The opening gap higher owes to the Japan election result. More on that from earlier: Japanese yen in the spotlight after weekend election

The losses in the yen are being arrested for now but it doesn’t materially alter the technical picture for USD/JPY.

The near-term chart above continues to see buyers remain in near-term control, holding well above its 100-hour moving average (red line). The key near-term level is seen at 152.13 currently, so there is some way to go in drawing another test of that again.

The opening gap higher in yen pairs owes much to traders pricing in „uncertainty“ with regards to the Japan lower house election outcome. That also sees prime minister Ishiba’s position get called into question.

However, the political landscape is not likely to change much and for the time being, Ishiba might just scrape through in the upcoming vote which is reported to be on 11 November. I mean, there are no major contenders to oust him for now – not least when the party itself is reflecting a more fragile look.

The LDP and Komeito are still likely to form a majority coalition with the help of the smaller parties. So, bigger picture politics won’t see that drastic a change; even if voters are growing increasingly more frustrated.

As the dust settles, that is perhaps what is leading to traders fading the earlier spike in USD/JPY at the open.

This article was written by Justin Low at www.forexlive.com.

Bitcoin has been rallying
steadily in the last few weeks as Trump winning odds continued to soar in
betting markets. The price eventually consolidated around a key trendline as
the market might want to wait for the election result now before breaking out.

A Trump victory is seen as
bullish for Bitcoin given his embracement of the crypto industry and promised de-regulation.
Harris, on the other hand, did embraced the industry as well, but it’s been
more of a political move to attract voters rather than a strong support.

Bitcoin
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that Bitcoin is trading near a key long term downward trendline
that’s been defining the consolidation that started in March. The buyers will
want to see the price breaking higher to increase the bullish bets into a new
all-time high, while the sellers will likely lean on it to position for a
pullback into the upward minor trendline.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price is consolidating around the highs as the market is probably waiting
for the US election result. From a risk management perspective, the buyers will
have a better risk to reward setup around the minor upward trendline where they
will also find the Fibonacci
retracement levels for confluence.
The sellers, on the other hand, will want to see the price breaking below the trendline
to increase the bearish bets into new lows.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor upward trendline defining the bullish momentum
on this timeframe. The buyers will likely keep on leaning on it to position for
further upside, while the sellers will look for a break lower to increase the
bearish bets into the major upward trendline around the 64K level. The red
lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Job Openings and the US Consumer Confidence report. On
Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims and the US Employment Cost Index data. Finally, on
Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.

This article was written by Giuseppe Dellamotta at www.forexlive.com.