09 Nov 2016
By Ipek Ozkardeskaya
Wild volatility in FX as Trump leads
The US dollar plunged against the majority of the G10 currencies, except the CAD (1.40%), AUD (-1.91%) and NZD (-0.89%), on the back of a mispriced performance from the Republican candidate, Donald Trump.
The EURUSD surged to 1.1300, on the back of a sharp US-dollar sell-off. A further depreciation in the US dollar could sustain a rise toward 1.1616 (highest level in 2016). Support is eyed at 1.1195 (200-day moving average) and 1.1140 (100-week moving average).
The yen has been the biggest winner against the US dollar, as the risk appetite tanked on US election results. The USDJPY tanked to 101.18. The oversold market conditions could temporarily bring in upside correction waves, nevertheless, the upside attempts are expected to remain capped. Offers are seen at 102.20 (minor 23.6% retracement on the knee-jerk sell-off) and 102.82 (major 38.2% retrace) for a potential extension of the weakness toward 100.00/99.00 (post-Brexit dip).
The surge in the GBPUSD has been timid, warning traders that the rise in the US political risks would not wipe away the Brexit risks. The strengthening positive momentum in the GBPUSD could encourage a push toward 1.2595 (50-day moving average), 1.2620 (Oct 7th pre-flash crash high), before a more critical 1.2880 (100-day moving average). Buyers are eyed at 1.2375 (major 38.2% retrace on Oct 25th to Nov 4th recovery), if broken, should signal a short-term bearish reversal.
The AUDUSD tanked to 0.7580 on high volatility, low risk appetite. Offers are solid at 0.7664 (Fib 50% level on Oct 28th to Nov 8th rise) and 0.7730, mid-term resistance. Risk seekers could eye dip-buying opportunities approaching 0.7537 level (200-day moving average). Gold rose to $1337 on heavy risk-off trading.
The current risk environment is expected to keep gold buyers alert at $1317 (100-day moving average), before $1300 and $1283 (200-day moving average). A further deterioration in the risk appetite could enhance a rise to $1345/1350 mid-term resistances.
The WTI rebounded from the $43/barrel. The meager risk appetite, combined to OPEC uncertainties should keep the bias on the downside, with temporary positive waves on the back of sizeable US dollar depreciation. Short-term resistances are eyed at $45.53 (minor 23.6% retracement on Oct 19th to Nov 9th decline) before $46.80 (major 38.2% retrace).