In a holiday-thinned market, more political ructions saw “risk-off” trading as Ms. Clintons server saga refuses to go away.
What should have been a quiet day in Asia with Japan on holiday, turned out to be anything but. As I said yesterday, “there’s never just one cockroach,” and so it was with Fox News breaking the following story,
FBI Sources Believe Clinton Foundation Case Moving Towards “Likely an Indictment” Realclearpolitics
The nuts and bolts of it all are they think at least five different governments hacked the server in question, and there are hints of miscreance at the Clinton Foundation. Even taking into account the Fox Networks clear political leaning, (hint: it’s not towards Clinton), a holiday-thinned market needed no prompting, and we saw stock markets marked down as well as general selling of the USD. Mr. Trump may be rubbing his hands with glee, but the markets are increasingly in a Brexit Deja-Vue mode now and are taking no chances repricing risk before next week’s election with a mass rotation out of the USD.
FX
USD/JPY
Along with USD/MXN bore the brunt of today’s news. With no Tokyo, the one-way sell off yesterday continued as the headline hit the wires with USD/JPY falling to 102.50 from 103.50 at one stage. A close under the 100-day moving average at 102.84 will signal more downside. The initial target being the bottom of the Ichi moko cloud at 101.87. The day high and also the top of the Ichi moko cloud at 103.50 provides resistance.
USD/MXN
One of the few currencies that lost ground against the USD. (the other being the Egyptian Pound that floated today!!) The MXN is directly correlated to a Trump win and today’s headline didn’t help that causes sending USD/MXN from 19.30000 to 19.5500 before recovering somewhat. Resistance at 19.4000 now becomes support with the previous highs at 19.92000 the next target. Trading USD/MXN is trading of election headlines and will continue to be so until next Wednesday. You have been warned.
NZD/USD
The mighty Kiwi continues to flap its wings. Sparkling employment numbers yesterday and recovering commodity prices have led to a sudden repricing of future RBNZ rate moves. The RBNZ won’t be happy with the NZD up here and should cut next week. How long and how low rates will remain now becomes a matter of conjecture with the economy humming on all fronts. There may also be a hint of safe haven buying here.
NZD has closed well above its 100-day moving average at 7202, up nearly 140 points in two days. This now becomes support with resistance at 7380 and then 7490.
GOLD
Another big recipient of safe haven flows. Now testing the key 1300/10 resistance zone, the previous breakdown. Apart from previous multiple lows it also contains the 100-day moving average. Momentum indicators have turned higher on good volume, and the RSI is not overbought. A break here opens up trendline resistance at 1330 area. Support comes in at 1291 and then 1276 the 200-day moving average.
Gold will continue to trade at a high correlation to Ms. Clinton’s server sage until election day. Technically the gains will be hard to sustain if she wins but safe haven risk aversion is most certainly in charge right now.
Summary
Whether the news story above turns out to be true or even a game changer, it is clear the market is hypersensitive to anything “server related” and the chances of a Trump win. “Once Brexit-ed, Twice Shy” is the maxim here and the repricing of USD risk looks set to be headline driven and to continue into next week, overshadowing Central Banks and the Non-Farm Payrolls today and tomorrow.
