Asian Open: Pound Sinks Post-BOE, AUD/CHF Falls to 4-week Low

The Bank of England (BOE) became the second central bank to catch out hawkish bets this week, behind the RBA – and both events continue to weigh on their respective currencies.


Sixth straight day of record highs for Wall Street


Asian Futures:

  • Australia's ASX 200 futures are up 20 points (0.27%), the cash market is currently estimated to open at 7,448.00
  • Japan's Nikkei 225 futures are down -100 points (-0.34%), the cash market is currently estimated to open at 29,694.37
  • Hong Kong's Hang Seng futures are down -284 points (-1.13%), the cash market is currently estimated to open at 24,941.19
  • China's A50 Index futures are down -40 points (-0.26%), the cash market is currently estimated to open at 15,584.61


UK and Europe:

  • UK's FTSE 100 index rose 31.02 points (0.43%) to close at 7,279.91
  • Europe's Euro STOXX 50 index rose 23.73 points (0.55%) to close at 4,333.34
  • Germany's DAX index rose 69.67 points (0.44%) to close at 16,029.65
  • France's CAC 40 index rose 37.14 points (0.53%) to close at 6,987.79


Thursday US Close:

  • The Dow Jones Industrial rose 33.35 points (0.09%) to close at 36,124.23
  • The S&P 500 index rose 19.49 points (0.42%) to close at 4,680.06
  • The Nasdaq 100 index rose 201.741 points (1.25%) to close at 16,346.24



Indices: Sixth straight day of record highs for Wall Street

The Nasdaq 100 and S&P hit a new record high for a sixth consecutive session, with S&P being supported by growth stocks and chipmakers rallying after Qualcomm’s (QCOM) strong forecasts helped tech stocks rally a further 1.3%.

The ASX 200 is set to open around 0.27% higher thanks to a positive lead from Wall Street and stubbornly dovish RBA. We’ve seen two solid days of gains since it found support at its 200-day eMA, ad it now appears on track to retest the 7500 handle. Today’s bias remains bullish above the 7388 – 7400 zone.

The Nikkei rose to a 5-week high by yesterday’s close as it tracked technology stocks higher, although it is expected to open around -0.34% lower today and it met resistance at the monthly R1 pivot yesterday.

The China A50 remains caught under a cluster of resistance including the monthly pivot, 200 and 50-day eMA’s, so we see potential for another leg lower before its longer-term basing pattern sees bullish momentum return.


ASX 200 Market Internals:

ASX 200 set to open higher

ASX 200: 7428 (0.48%), 04 November 2021

  • Information Technology (1.19%) was the strongest sector and Energy (-2%) was the weakest
  • 8 out of the 11 sectors closed higher
  • 5 out of the 11 sectors outperformed the index
  • 132 (66.00%) stocks advanced, 58 (29.00%) stocks declined
  • 67% of stocks closed above their 200-day average
  • 59.5% of stocks closed above their 50-day average
  • 61.5% of stocks closed above their 20-day average



  • + 5.78%-NIB Holdings Ltd(NHF.AX)
  • + 5.39%-Chalice Mining Ltd(CHN.AX)
  • + 4.67%-CSR Ltd(CSR.AX)



  • ·-18.4%-Domino's Pizza Enterprises Ltd(DMP.AX)
  • ·-5.15%-Beach Energy Ltd(BPT.AX)
  • ·-5.01%-Inghams Group Ltd(ING.AX)


Forex: BOE catches hawkish GBP bets off guard

The Yen was broadly higher during risk-off trade (for currencies)

JPY was the strongest major on safe-haven flows (and USD a close second) as BOE became the second central bank to catch investors out this week.  The Bank of England held interest rate at 0.1%, although signalled that hikes could materialise over the coming month/s should data come in line with expectations. Voting 7-2 in favour of keeping rates on hold, they seemingly want to more data on how the end of the furlough scheme will play out.

GBP was by far the weakest currency overnight, falling -1.5% against the yen, -1.3% against USD and CHF and -0.8% against EUR. GBP/CHF now trades at its lowest since Feb 2021 and GBP/CAD at its most bearish level since December 2020.

RBA was the first CB to wrongfoot investors this week, ultimately resulting in a weaker Australian dollar (most notably against safe havens). AUD/JPY produced a bearish engulfing candle and fell to a 3-week low as its potential correction noted in October finally picked up pace.

AUD/CHF Falls to 4-week Low


Bearish momentum for AUD/CHF also took hold after it broke trend support post-RBA on Tuesday. The cross now sits at a 4-week low after falling -2.7% from its highs. But there could be further losses to come given traders remain heavily short AUD futures and RBA poured cold water on any expectations for a hike any time soon.

Prices may find support around the monthly S1 pivot as we head towards the weekend, but the trendline break suggests a revisit to the August low. Prices are also beneath the monthly pivot point, 50 and 200-day eMA’s, so our bias remains bearish beneath these resistance levels.


Commodities: Volatile session for oil around OPEC+

It was a volatile session and game of two halves for oil prices around the OPEC+ meeting overnight. Oil prices were initially rising into OPEC announcement that they would stick to their plan of raising output just 400k barrels in December, an outcome markets had placed a 75% probability, and despite calls from the US urging members to drastically increase output to curb inflationary forces. Yet those earlier gains were quickly reversed after it was reported on Saudi-owned Al Arabiya TV that oil output for Saudi Arabia’s was on track to exceed over 10 million barrels for the first day since the pandemic unfolded.



Up Next (Times in AEDT)

Nonfarm payrolls and Canadian employment are the main data sets today

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.