Wednesday November 9th, 2022

The US$ & oil prices steady, equity markets are down, while US yields rise as US Midterms return mixed verdict. The US$ Index steadies near its weakest level in a month as Midterm results challenge expectations for a Republican sweep. Republicans made gains in their drive to take control of congress, but the outcome may not be known for days or even weeks as some results are close and may be challenged. Thursday’s US inflation data is the next key event and will be closely watched after September’s inflation hit a 40-year high. Today sees another light economic docket, focus will remain on the Midterm results and Fed Barkin speech for intraday direction. In other news. Republican wave fails to materialize as US Midterm results roll in (FT). Fresh wave of Ukrainian refugees expected as Russia targets power ahead of winter. Fed Williams flags relative stability of longer run inflation expectations. Chinese copper companies say more mining is needed to boost supply. China’s Guangzhou brings back mass testing to fight city’s worst covid outbreak. In Currency markets. The US$ stems its losses as investors await the US Midterm results. CNY remains under pressure after weak inflation increases growth concerns. CNY is flat, while Asian currencies are down 0.1% on average vs US$. Trading currencies are under pressure with CHF is flat, while JPY down 0.1%, MXN weakens 0.35%, AUD, SEK & NOK fall 0.65%, and NZD tumbles 1% vs US$.

Oil prices slip in early trading as US Crude stockpiles rose more than expected and on growing concerns of covid lockdowns across several Chinese cities. C$ bounces off near 2-month highs (1.3388) as results for the US Midterms come in closer than expected and investors reposition their risk-on stance. Expect C$ to hold within current levels as markets will likely remain sidelined today as Midterm results are confirm and markets get set for Thursdays US inflation report. Support resets to 1.3400 while resistance lowers to 1.3530.

EURCAD is sidelined ahead of BoC Macklem speech & US Inflation report, both out on Thursday. Support holds at 1.3435 while resistance remains at 1.3550.

Euro stalls amid uncertainty over the US Midterm elections. Euro slips from highest level in nearly 2-months as markets await clarity on the US midterm election results. Alongside the Midterm results markets will be focusing on speeches from both Fed & ECB officials today. We expect Euro to stall within its current range as Midterm election results are announced and markets wait for the Thursdays US inflation report. Support resets to .9985 while resistance rises to 1.0100.

GBPEUR tumbles as risk sentiment stalled and uncertainty over the upcoming UK government financial statement. Support lowers to 1.1330 (.8826) while resistance resets to 1.1450 (.8733).

GBP weakens amid risk-aversion. The pound becomes the punching bag for investors as the pound weakens vs its EUR and US$ peers. Uncertainty over the US Midterm election results, caution ahead of Thursday’s US Inflation report and ongoing concern ahead of next week’s UK Governments financial statement have combined to put increasing selling pressure on the pound. Expect to see the pound hold near current lows ahead of Thursdays US inflation report. Support resets to 1.1300, while resistance lowers to 1.1435.