US: Election mispricing is the dishevelled retreat - Deutsche Bank
Alan Ruskin, Macro Strategist at Deutsche Bank, suggests that the Monday?s activity provided some strong clues on potential FX price action were Clinton to win the Presidency.?The market response strongly suggests that while a Clinton victory will play moderately USD positive versus G4 currencies, favored EM long carry trades financed by the USD and the other majors will continue to do well.If Clinton is elected the next President, in the 24 hours following the election, we would broadly anticipate a repeat of the percentage changes achieved on Monday. Follow-through beyond that will likely prove limited.On the flip side, a Trump victory would in the initial instance, probably lead to a reversal of Monday?s FX moves, but likely multiplied by a factor of at least two times for G4 currencies, and at least three times for EM and higher beta currencies.The question, however, is whether currencies are now underpriced for a Trump victory? Obviously this is in part contingent on the probability attached to a Trump win. One way to assess this is to look at the strikes on a zero cost risk reversal - calculated by matching a 25 delta call against a put struck at a price that implies zero cost.Zero cost risk reversal strike ranges that look like they have a Clinton victory covered, but not a Trump win, include: USD/JPY, USD/CAD, and pretty much all USD/EM, notably USD/MXN and USD/CNY.As an example, in the next week, USDJPY likely does not have scope to immediately run much above Y106 on a Clinton victory, but could easily head well below 102.40 on a Trump win. On a Trump win, USD/China could easily follow the course seen after Brexit, where CNY weakness was tolerated while the market was distracted with other events. Riskies extending beyond a week are preferred here. Among the stand-outs over the past 24 hours, is the subdued reaction of USD/CAD relative to the kind of move priced in by O/N vol for the election. The reasoning is that on a Clinton victory USD/CAD is caught between two opposing forces.On the one side, Clinton is associated with a stronger USD versus the G4 majors, not least because a December Fed rate hike is more likely. But this is counterbalanced by a Clinton ?risk on? move helping the CAD while similarly, Clinton?s stance on NAFTA is also seen as CAD positive. Don?t expect such restraint, if Trump wins and drives both a risk off move, and a real threat to NAFTA.Similarly on USD/MXN, over the next week, spot is not expected to spend any extended time below 18.00 even on a Clinton win, while 25 delta call strike just below 19.5 will likely be exceeded by some margin over a week on a Trump win, even with Banxico contingency plans.?

GBP/USD correction higher ended at 1.2555? Commerzbank
The recent spike to the mid-1.2500s could represent the end of the correction higher in Cable, suggested Karen Jones, Head of FICC Technical Analyst at Commerzbank.?GBP/USD has failed on a move to 1.2555 - it is interesting to note that all the daily and intraday charts continue to indicate that this move higher is corrective only and the market should fail here. Initial support is 1.2335, the 19th October high. Recent lows remain 1.2090/83. Failure here would mean a continuation of the descent and should trigger losses to the May 1985 low at 1.1855. Our intraday Elliott counts are suggesting a decline to 1.1630?.?Above 1.2555, there is scope for a test of the 1.2798/1.2840 6 th July low and 38.2% retracement of the entire move down from June?.

USD/JPY poised for further consolidation UOB
According to strategists at UOB Group, USD/JPY keeps pointing to a continuation of the sideline theme between 103.00 and 105.20.?The high of 104.62 fell short of the target indicated at 104.65/70 yesterday. While upward momentum appears to have slowed a tad, a move above 104.65/70 seems likely. That said, the next resistance at 105.20 is unlikely to come into picture for now. On the downside, 104.00 is acting as a strong support?.?While the undertone for USD is clearly positive, it is too early to expect the start of a fresh bullish phase. Any further upmove is expected to face stiff resistance at 105.20 ahead of the recent high of 105.50/55 which is a very strong level. All that said, the immediate upward pressure stays intact as long as the pull-back were to hold above 103.00 (103.50 is already a strong short-term support)?.

AUD/USD major resistance lines up at 0.7760 UOB
Strategists at UOB Group noted AUD/USD faces strong resistance in the 0.7760 area in the near term.?AUD broke above the major 0.7705/10 resistance during late NY session and surged to a high of 0.7728 in Sydney earlier. The up-move is accompanied by strong momentum and extension towards 0.7735/40 seems likely (next resistance at 0.7760). Only a move back below 0.7690 would indicate that the upward pressure has eased?.?While the move above 0.7705/10 (high of 0.7728 at time of writing) indicates that the underlying strength for AUD has improved, strong resistances are stacked closely together at 0.7735 and 0.7760 (high in September and August respectively). These levels have offered strong resistances previously and are expected to continue to frustrate AUD bulls. That said, in the next few days, this pair is expected to stay underpinned unless there is a move back below 0.7640?.

WTI picking up pace, testing $45.00
Crude oil prices are extending the weekly upside on Tuesday, currently sending the barrel of West Texas Intermediate back to the vicinity of the $45.00 mark.After bottoming out in fresh 2-month lows in the mid-$43.00s during last week, the barrel of WTI has triggered a decent correction higher along with a pick up in the risk-on sentiment, particularly after the FBI has cleared Democratic candidate H.Clinton over her emails.Prices for the black gold keep trading on a firm fashion during the first half of the week, as market participants remain positioned for a potential win by H.Clinton today. Recall that most election polls see Clinton up by 2-4 pts.Other than the US elections, oil traders will also remain vigilant on the API?s weekly report on crude oil supplies following last week?s large increase in stockpiles.Regarding positioning, WTI speculative net longs have retreated to 5-week lows just above 354K contracts during the week ended on November 1, according to the latest CFTC report.At the moment the barrel of WTI is gaining 0.09 % at $44.93 facing the immediate hurdle at $46.22 (100-day sma) followed by $47.11 (55-day sma) and finally $48.48 (20-day sma). On the other hand, a breakdown of $43.77 (200-day sma) would expose $43.57 (low Nov.4) and finally $42.55 (low Sep.20).

US Dollar looks to regain 97.70, US elections eyed
The US Dollar Index, which tracks the buck vs. its main rivals, has managed to bounce off session lows in the 95.55/50 band, now approaching 97.70.The index is giving away part of the strong advance seen at the beginning of the week, now posting small losses around the 97.70 region after bottoming out in the mid-97.00 earlier in the session.USD remains cautious ahead of the still pretty divided consensus on who could be the next US President today. Recent polls, however, continue to favour Democratic candidate H.Clinton by 2-4 pts, although it will undoubtedly be a very close call.On the domestic data front, US NFIB?s Business Optimism Index and JOLTs Job Openings are due later in the NA session, ahead of the speech by Chicago Fed C.Evans (2017 voter, dovish) and the weekly report on crude supplies by the API.Reinforcing the so far positive start of USD, speculative net longs have climbed to the highest level since mid-August 2015 during the week ended on November 1, as shown be the latest CFTC report.The index is losing 0.10% at 97.69 facing the immediate support at 96.94 (low Nov.4) followed by 96.53 (55-day sma) and finally 95.66 (6-month support line). On the flip side, a breakout of 99.09 (high Oct.25) would open the door to 99.95 (high Jan.21) and then 100.60 (high Dec.3).


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