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Midterms

US dollar index holds key support ahead of US inflation reportThe US dollar was falling ahead of the midterm elections in anticipation of a Republican Senate and / or House. As the Dems have performed better than expected, we have seen a reversal of these pre-emptive moves on the eve of the US inflation report. Expectations are for core CPI to soften (slightly) - but what if it doesn't? Inflation elsewhere continues to surprise to the upside, and with the dollar holding above key support then the path of least resistance could be higher, unless Reps take 'da house' and Senate ad inflation comes in softer than expected. DXY held above the 109.60 support zone and produced a 2-bar bullish reversal. A bullish divergence has also formed with the RSI (2). Bulls could seek to enter long on retracements within yesterday's candle and place a stop beneath the cycle lows and target the monthly pivot point. But I'd also be looking for evidence of a swing high up to ~112 - but for now the near-term bias remains bullish.
TVC:DXYLong
by CityIndex
Oil to be $100+ - How midterm results will affect OilHello everyone, I've been looking at #USOIL for a while now and I want to share my setup with you. A quick look at the fundamentals of Oil market along with a beautiful chart for oil tells me there is no stopping oil in the short term. Some reasons for bullish Oil: - Potential legislation to tax Oil giants floated by Biden in the closing days of midterm - Dem victory means less incentive to pump oil, increasing risk of new Oil investment (due to potential Climate Legislation) which decreases the supply - Strategic oil reserve at all time low: Biden will stop releasing strategic oil (to lower gas prices) as the midterms are finished - Russian oil is no where to be seen on the western market - Canada unable to supply more oil as we go into winter - Iran nuclear deal is dead: Indian and Chinese demand will fall on the Saudis - MBS not increasing the Oil supply as Dems had good midterm election And so many more. Oil fundamentals are very bullish. I'm expecting a return to 2022 high of $120 this winter which is not unexpected. Take a look at my previous Oil setup: Let me know what you think!
FX:USOILLong
by soheilsdgh
1
ZZZzzzZZZzzz at 3800Good morning! Here we are, Election Day has passed and we get the CPI report tomorrow. Couple things about the Mid Terms. Generally, the markets like it when Democrats have partial control and Republicans partial control. The expectations are, that the Republicans will win the House. If that happens, that could be a good thing for the markets. At the time of writing, Republicans have 199, Democrats 172 and 64 are undecided for the House. Gotta see how that plays out. Because here's the thing. Let's say the Republicans take the House and the Democrats keep the Senate, the markets might actually like that. And with Big Tech taking a beating after all these earning announcements, they're low enough to bid on and that could push the markets higher. Whoever that dude at Morgan Stanley was last week, saying that we could see 4000 or 4100 in the near term, might actually be right if it plays out this way. But remember, longer term, we have significant headwinds and this is still a Bear Market. CPI report is accumulative, like a moving average. If you add up all the monthly CPI numbers, it gives you the annualized CPI. It's going to stay high because at the beginning of this year, we were seeing CPI numbers at about 1%. So when we add all these monthly's up, we're going to get a high number. Obviously, over time, this will come down. Which is why expectations are to get to 4% by early Q2 or abouts. So, if the Republicans' don't take the House, and the CPI report is hot. What does that mean for the markets? Well, we could head back down starting tomorrow or Friday. Either way, these are two possible outcomes that could play out. Plan for the Day: We're technically still in No Man's Land but with a slightly more Bullish lean right now. IF I decide to chase this up to 4000, or 4100, I will do so cautiously and wait for an exhausting point in the rally. We might just hang out here at 3800 today until all the results come in and then tomorrow we could see the true direction. I'll sit on my hands again and just watch the market. Be patient, stay disciplined and trade the market in front of you. Happy Trading!
SP:SPX
by MMOTA_
Euro backtracks after strong rallyEUR/USD has reversed course today and is in negative territory. In the North American session, the euro is trading at 1.0043, down 0.30%. The US dollar has rebounded after a 3-day slide against the major currencies. The dollar downswing started on Friday after a lukewarm employment report raised expectations that the Fed will deliver a "modest" 50-basis point, rather than a 75 bp move at the December meeting. This was followed by a short covering move on Monday which sent the dollar sharply lower, as risk appetite jumped ahead of the US midterms and Thursday's inflation report. The euro made the most of the dollar's weakness, rising 250 points in an impressive 3-day rally. The US dollar has rebounded against the majors today, including the euro. With the Federal Reserve remaining aggressive, even a 0.50% should be enough to give the dollar a boost, as rate differentials continue to widen. Inflation is running at a double-digit clip in the eurozone, but it's doubtful that the ECB will keep pace with the Fed, as the eurozone economy remains weak and higher rates are likely to tip the economy into a recession. The markets are keeping an eye on the US midterm elections, which are tighter than expected, as the Democrats are fighting to retain control of both the House and the Senate. Investors are focussing on Thursday's October US inflation report, which will be a key factor in Fed rate policy. Inflation is expected to have eased slightly, with headline inflation dropping to 8.0% (8.2% prior) and core inflation slowing to 6.5% (6.6%).  A drop in the October reading will raise expectations for the Fed to raise rates by 0.50% at the December meeting. EUR/USD faces resistance at 1.0134 and 1.0293 There is support at 1.0047 and 0.9888
Editors' picks
by OANDA
7
AUD/USD resumes rally with massive gainsThe Australian dollar has posted sharp gains, as the US dollar is lower against the majors in the North American session. AUD/USD is trading at 0.6542, up 0.97%. Australia's NAB Business Confidence for October slipped to zero, down from 5 points in September. The significant decline is reflective of a drop in orders, higher rates at home and a gloomy global negative outlook. The soft data comes on the heels of Westpac Consumer Sentiment, which plunged by 6.9% to 78 points, its lowest level since April 2020, when the Covid pandemic had just started. Inflation is galloping at a 7.3% clip, China's economy is weakening and the energy crisis in Europe is likely to worsen in the winter. These headwinds are not about to go away, which does not bode well for the Australian economy. The Australian dollar has fallen sharply in 2022, although we're seeing a rebound, with gains of 2.9% on Friday, courtesy of the US nonfarm payrolls, and strong gains today as well. The US dollar's decline on Friday and again today are against all the majors, which means that this is a case of US dollar weakness rather than Australian dollar strength. I would be surprised if the Aussie can hold onto these recent gains, as the currency faces plenty of headwinds. In the US, the midterm elections are being held today, which is widely being viewed as a referendum on President Biden's performance. The economy is giving mixed signals and Biden's popularity is sagging, which could result in the Republicans taking control of both the House and the Senate. If the Republicans grab either one, it will translate into deadlock in Washington and a weakened President Biden. The election could move the US dollar if we see a Democratic surprise or a clean sweep by the Republicans. AUD/USD is testing resistance at 0.6545. Next, there is resistance at 0.6631 There is support at 0.6411 and 0.6329
by OANDA
The US midterm elections - assessing the prospect for volatilityAs we look ahead to the US midterms on 9 November, the question traders ask is whether it has the potential to be a risk event and promote increased cross-market volatility – as part of the risks assessment, the election has implications on whether to reduce trading exposures over the event. Anecdotally it feels like traders aren’t giving the elections too much importance and are looking far more intently at this week’s FOMC meeting and US CPI (11 Oct) – it’s hard to disagree with that stance as trading ‘peak rates’ is the dominant trading thematic - where bad news is good for risky assets, and good news (especially labour market data) is bad for risky assets. However, the makeup of Congress does matter for US economics, even more so given the US is increasingly headed towards a recession and could require fiscal support. As we move ever closer to the 2024 Presidential elections, there is little doubt a split Congress will increase the brinkmanship between the two parties. However, whether this leads to significant market volatility is debatable. When will we get a result? An important aspect of the midterms is timings and when exactly we will have a clear understanding of who will control the Senate and the House – the market naturally wants certainty and an immediate outcome – this is unlikely and trading the midterms means reacting to news as it comes in state by state. With so many choosing to vote by mail, we know that in some states it's only when the polls close on election night that the mail votes are counted. It may be too close to call in some states, and we must wait for the full mail vote to be counted – this suggests we may not actually get a firm result for the Senate and House on election night. The playbook We explain the dynamics of the US midterms in our recent piece - “Trading the midterm elections – what’s important for traders: - pepperstone.com - we can assess what seats are contestable and how many seats each party needs to obtain to win each chamber. The betting markets have Republicans winning both the House and Senate As it stands, PredicIt have the House and Senate going to the Republicans (REP) comfortably – betting markets have a 90% probability the REP claims the House and a 73% chance of controlling the Senate. In the eyes of the market, it’s not even a debate that the REPs claim the House, it’s a lock. The battle for the Senate is where we could see some uncertainty, and while the REPs are expected to be victorious it's not a done deal. So, the strong base case in the market’s eyes, is that we have Biden in the White House and REPs controlling both chambers of Congress. This outcome has implications that can affect markets, so let’s consider the following: Fiscal policy • In a world where inflation is very high governments are already constrained on future stimulus, especially if it leads to increased bond issuance. However, as the probability of a recession increases the need for government assistance also rises, so President Biden may propose a stimulus package, but the REPs would likely reject it in either the House or Senate. In theory, from a fiscal perspective, this scenario is a modest USD negative. • In the far less probable scenario where the DEMs maintain control of Congress and the White House - should the economy need it, then they would be able to pass a sizeable fiscal package – in a recessionary backdrop with rising unemployment, supporting deteriorating economics would soon take priority over inflation – this outcome would therefore be USD positive as it could lift US Treasury yields. Borrowing constraints • With REP potentially controlling Congress, we consider the possibility of another debt ceiling and govt shutdown debacle – in recent times the market has become quietly comfortable with both issues and a re-run of the volatility seen in 2011 seems highly unlikely. However, if the REPs tow a fiscal prudence line and push for reduced govt spending then we could easily be facing a brinkmanship event and a game of who blinks first. While most of the volatility will be centred on ultra-short-term US debt instruments (T-bills), a standoff on the debt ceiling would be USD positive, although the clearer trade would be shorting equities – and as we push close to the debt ceiling deadline the equity market would become ever more nervous and de-risk. Geopolitics • It's hard to draw a clear conclusion on this from a market perspective and while we can look at the US’s relationship with China and Russia, there doesn’t seem to be a clear market catalyst here. In theory, a REP-controlled Congress and Biden in the WH is a modest USD negative, while conversely, the debt ceiling debate is bullish for the USD. So with no dominant directional catalyst, traders will continue to trade the ‘peak rates’ theme but will keep a close eye on the midterms for voting trends and in case it does surprise and proves to be a volatility event. However, with a recession a rising probability and the government unlikely able to support through fiscal channels, it puts all the emphasis back on the Fed – that means their reaction function will need to be sharper and they will need to be ready to shift policy more aggressively if the economy is to rapidly go downhill. In some ways this politicises the Fed, with the economy shaping up to be the key agenda for the 2024 Presidential election.
PEPPERSTONE:USDX
by Pepperstone
DJI: Prediction with midterms.Alright so I know that this site is all TA. BUT news and events are major factors as well. So First, the graph shows an upward trend.The alligator is becoming bullish and so is the awesome oscillator. So I WOULD say go LONG. HOWEVER the midterms are closing in! And I do not care about your beliefs only the results. If the democrats win, then they are gonna obstruct the Trump admin and the republicans. SO EXPECT A DROP IF THE DEMOCRATS WIN. If the republicans HOLD THE MAJORITY, then expect that the CURRENT FORECAST for the DJI is BULLISH. Share what you think. Long or Short? Please provide feedback! Don't forget to like if you liked this! :D
DJ:DJI
by TLS-TN
SPX - 50W Moving Average in PerilWhats up Traders - As always, the explanation is on the chart. Just some food for thought and concern. I am NOT the only one talking about this by a long shot. Keeping an eye on things, and like most seasoned traders, We are trading with extreme caution right now - - Macro Headwinds - - China - Trade-war / Tariffs November Election / Midterms Saudi Arabia Political Nonsense FED Interest Rates Flattening Yield curve Earnings Season - Seeing reduced outlooks by companies reporting so far. End of the Year Profit Taking Season I dont like it.
SP:SPX
by WillNixTrading