Stocks Continue to Drift North, GBP Slides on Election Polls

US-China Optimism Keeps Sentiment Supported, Pound Slips on Polls

The dollar traded mixed against the other G10 currencies on Tuesday and during the Asian morning Wednesday. It gained versus GBP, CHF, AUD and JPY, while it underperformed versus SEK and CAD. The greenback was found virtually unchanged against EUR, NZD and NOK.

USD/JPY — Technical Outlook

After breaking its short-term tentative downside line taken from the high of November 8 th, USD/JPY continues to slowly grind higher, while trading above its short-term tentative upside support line drawn from the low of October 3 rd. The pair managed to overcome last week’s high, at 109.07 and seems to be holding its course north, for now. The RSI and the MACD are both pointing higher, which suggests that there might still be some upside left. This is why we will take somewhat of a bullish approach and aim for slightly higher areas, at least in the short-run.

GBP/USD — Technical Outlook

Overall, GBP/USD is still trading above a short-term tentative upside support line drawn from the low of September 3 rd. But from around the end of October, the pair is struggling to form a higher high and it is finding it difficult to get out of a range, which is roughly between the 1.2768 and 1.2985 levels. For now, we will stay neutral and wait for the rate to exit that range, before we examine a further directional move.

As for the Rest of Today’s Events

Alongside the core PCE index, we will get personal income and spending data for October. Personal income is expected to have risen +0.3% mom, the same pace as in September, while spending is expected to have accelerated somewhat to +0.3% mom from +0.2%. That said, given that the monthly earnings rate for the month declined to +0.2% from+0.4%, we see the risks surrounding the income forecast as tilted to the downside. With regards to spending, the forecast for improvement is supported by the month’s retail sales, which rebounded.

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