Daily Market Outlook, November 7, 2022

“ A whipsaw end to the week in the US on Friday, following the mixed Non Farm payrolls release which saw the Dollar post one of its largest declines in the past seven years. Chinese authorities did little to boost risk appetite as they reaffirmed their commitment to zero Covid policies over the weekend, this restatement came as infections in the region rose to the highest levels since May. Overnight data out of China also confirmed a softer trade surplus as tepid global demand continues to weigh on exports, however, even against this backdrop Asian equity markets have retained a firmer tone overnight and US futures are pointing to a positive start to the week. The week ahead will be dominated by US midterm election results on Tuesday evening, followed by US inflation on Thursday. The midterm elections are seen as a close call, with the Republican party seen as favourites to secure control of the Congress, with the Senate race seen as too close to call, historically, markets prefer political gridlock, if the Republicans seize control of both houses this would significantly hamper Biden’s fiscal plans and likely put the ball back into the Fed’s court, with respect to providing economic support, this would most likely be interpreted as having dovish connotations for Fed policy and a positive for markets. Thursday’s CPI release is likely to confirm a month on month increase of 0.5% which will leave inflation as the Fed’s principal cover for higher rates for longer, for those looking for signs of peak inflation, prints closer to 0.2% month on month will be needed to confirm a turn, once again supporting the promise of a future Fed pivot, which has proved elusive so far…see more of my thoughts on the week ahead in my weekly market outlook video”

Overnight Headlines

Fed Watchers Put ‘Finger In The Air’ And See Rate Peak Above 5% - BBG
Economy Of Extremes Looms Over US Voters On Midterm Election Eve - BBG
Democrats Catch Up To GOP On Enthusiasm In Final Poll Before Midterms - NBC News
Following The Fed Goes Out Of Fashion In ‘Messier’ World Economy - BBG
BlackRock’s Rieder: Fed May ‘Overdo It’ With Rate Increases - BBG
Biden Predicts Democrat Midterms Win, Says Economy Improving - RTRS
Biden And Trump End Midterms On 2024 Collision Course - Politico
Dollar Gains As China Sticks To Stringent Covid Policy, Souring Risk Sentiment - RTRS
More Pound Pain Coming As BoE Shifts To Recession From Inflation - BBG
China Ends Stronger-Than-Expected Yuan Fixings Amid Covid Bets - BBG
Crypto ‘FOMO Effect’ Emboldens Bulls; Bitcoin Topped $21,000 Again - BBG
Ethereum Insiders To Get Fee Cuts That Others Won’t In Upgrade - BBG
Gold Retreats From Three-Week High As Firmer Dollar Dulls Appeal - RTRS

Technical & Trade View

SP500 Bias: Intraday Bullish Above Bearish Below 3800

Technicals

Primary resistance is 3800
Primary downside objective is 3680
Next pattern confirmation, acceptance below 3700
Acceptance above 3810 opens a test of 3835
20 Day VWAP bullish, 5 Day VWAP bearish

EURUSD Bias: Intraday Bullish Above Bearish below .9860

Option Expiries: 0.9750 (1.19BN), 0.9800 (1.88BN), 0.9820-25 (430M), 0.9850-60 (732M), 0.9880 (470M), 0.9935-45 (743M), 0.9950-55 (648M), 0.9975-80 (310M), 1.0000 (442M)

Technicals