Roller coaster FX ride as US Election results come in

Wednesday 4 November 2020

I hope my US Election preview proved useful amid all the drama unfolding in the past few hours, and indeed still unfolding as I write this, with Trump claiming victory along with accusations of fraud and threatening to go to the Supreme Court. Given his recent appointment of Amy Coney Barrett is anyone really surprised by that? Still an unprecedented and bizarre press conference from Trump this morning though.

The inevitable uncertainty of the Election with the final numbers/result perhaps not known for a few days yet has seen market sentiment revert back to risk-off and associated USD buying amid hopes of large economic stimulus after a strong Greenback sell-off last night. Once again I am not focussing on the detail, just the prevailing/anticipated FX flows.

Elsewhere we are expecting comments today from Frost and Barnier re Brexit trade talks, with positive tones being reported but we're a long way from the finishing line still. Meanwhile the rising COVID concerns continue to fester and add to the general risk-averse sentiment.

UK Services PMI data at 09.30 GMT in the mix and important due to the sector's 80+% contribution to GDP but focus will start to shift to tomorrow's decisions from the BOE and US Fed amid the US Election backdrop. Heady times indeed.

GBPUSD posted highs of 1.3139 having broken up through decent resistance at 1.3000, 1.3080 and 1.3125 but now posting lows of 1.2915 as I type as the roller coaster ride continues. EURGBP found support around 0.8950 as GBPUSD fell sharply from its highs and now back up through 0.9000 to test the 0.9020-30 recent highs in its own price action vortex.GBPJPY capped at 137.25 but holding 135.60 on the risk-off retreat so far.

No change in my basic view and I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever. Patience continues to be a virtue and entry level key as always. I still see dip demand though with markets and risk sentiment still in a state of uncertainty overall.Brexit remains the very big elephant in the room and the negative impact of COVID still undermining.

USDJPY has had its own rollercoaster ride amid the variable risk and USD tones/Election unknowns and rallied strongly from 104.40 before capping at 105.34 but holding 104.75-80 on the latest retreeat this morning. EURJPY has also been up n down between 122.00-123.00 and providing good two-way business. EURUSD made steady progress to 1.1770 on yesterday's rally only to retreat sharply to test 1.1600 support in Asia before finding dip buyers again as Europe got underway and now posting 1.1675 as I type. USDCHF held 0.9080 but equally finding sellers above 0.9180 as EURUSD rallies this morning with EURCHF on the back foot but SNB casting its shadow still.

AUDUSD saw a solid rally to test good supply at 0.7220-25 on the softer USD before falling back to test 0.7050 helped by firmer USD tones and risk-off AUDJPY supply. USDCAD found support at 1.3100 again as USD sentiment turned up and oil price softened and helped a rally back up through 1.3180 triggering accelerated gains to test 1.3300 before retreating again.

Markets are ever-fickle so don't forget to contact me if there's areas of trading that you might need some further help with.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates:  07.37 GMT

GBPUSD   1.2947

EURUSD   1.1638

EURGBP   0.8991

GBPEUR   1.1121

GBPAUD   1.8289

GBPCAD   1.7188

GBPJPY   135.74

GBPZAR   21.1398

GBPHKD   10.0339

USDJPY   104.88

USDZAR   16.3284

EURJPY   122.03

EURCHF   1.0668

EURHKD   9.0225

AUDUSD   0.7075

USDCAD   1.3282

USDCHF   0.9167