📰 The US votes on Tuesday, November 3, and this week you could see the election in the prices.
Some things Washington eased. On Friday, the White House dropped some of its 50% tariffs on Canadian goods, and Trump said a trade deal with Canada is “very close.” Other things it pushed back. On Thursday, Trump said the US “may do it a little bit further” in Iran, and reports say US and Israeli officials have drawn up plans for new strikes after the midterms, though Trump hasn’t approved them. The State Department also ordered non-essential staff out of Saudi Arabia as Houthi attacks on the kingdom continued.
Markets priced the second half. At least 18 ships have been hit in the Strait of Hormuz in two weeks, and Brent rose about 6.8% on the week, pushing above $117 on Friday, its highest since April. Higher oil means higher inflation, and higher inflation keeps a December Fed hike in play. That’s why gold, the classic war trade, slipped below $4,000 in the middle of a war. The Nasdaq had its worst day since June on Thursday, after Meta showed how much the AI build-out now costs.
This week, five central banks decide in three days, starting with New Zealand on Tuesday night. Here’s where each of our markets stands.
⚜️ XAU/USD (Gold)
In this war, oil is acting like the safe haven. Gold isn’t.
Gold fell about 3.8% this week, closing Friday just under $4,000, its lowest since late July, even as the Gulf grew more dangerous.
The war is reaching gold through inflation, not fear. Higher oil prices keep the Fed in hiking mode. Markets see almost no chance of a hike on Wednesday, but better than 80% odds in December. That weighs on gold, which pays no interest.
The dollar adds pressure. When the State Department pulled staff from Saudi Arabia, traders bought dollars rather than gold. The dollar index remains near 101.6.
Central-bank buying is helping cushion the decline, according to analysts. But renewed US strikes or attacks spreading toward the Suez Canal could revive the fear trade quickly.
On the daily chart, gold has made lower highs since its late-August peak near $4,690, with both moving averages above price and pointing down.
XAUUSD Daily Chart
$4,060–4,210: broken October range
Around $3,998: Friday’s close
$3,945–3,965: next support zone (blue), formed by June and July lows
Around $3,800: our point of interest if support breaks
The fundamentals line up with the chart: firm December hike expectations and a strong dollar keep the summer lows in focus. Thursday’s PCE print is the next key test, a hot reading could push gold through support; a soft one could help it hold.
Our Bias: lower while December hike odds stay high and the dollar holds.
What would break it: the Fed pushing back on December, soft PCE, or a major Gulf escalation triggering a flight to safety.
📈 NQ / ES (Nasdaq & S&P 500 Futures)
The AI race has a new problem: paying for it.
Meta’s revenue rose 26% to $64.6 billion this week. It didn’t matter. Spending on data centres and chips hit $34.9 billion, free cash flow turned negative, and a new class of non-voting shares raised expectations of further AI fundraising. Meta fell about 7% on Thursday, dragging the Nasdaq down 2.6%, its worst day since June.
The war added pressure. Talk of renewed strikes on Iran lifted oil, reinforcing inflation and borrowing costs just as investors questioned the cost of the AI build-out.
The Nasdaq 100 ended the week down 0.79%, and the S&P 500 lost 0.5%. Yet the Dow gained 0.4% and small caps rose 2%. An S&P 500 measure excluding AI stocks is up about 6.6% this month, while the regular index is slightly down. Money is rotating out of AI.
On the daily charts, NQ is testing the level we flagged last week, while ES approaches its own.
[Left] NQ and ES [Right] Daily Chart
NQ: closed around 29,118, inside the daily FVG at 29,000–29,150. This is its third test since August, with Friday’s low dipping below it.
Below the FVG: 27,500, the August low, becomes our next downside level.
ES: closed around 7,660, with support at 7,565–7,610 (green), then the August low at 7,399.
Both: trading below their moving averages.
The warning appeared in mid-October: ES made a slightly higher high while NQ made a lower high. That divergence pointed to weakness concentrated in tech before Thursday’s sell-off.
Wednesday is the next key test. Alphabet and Microsoft report after the Fed decision, followed by Amazon on Thursday. Evidence that AI revenue is catching up with spending could support NQ’s FVG; further pressure on cash flow could help break it.
Our Bias: lower on NQ while concerns over AI spending persist. ES holds up better as selling remains concentrated in tech.
What would break it: stronger AI monetisation, or a calmer Gulf bringing oil and yields down.
🇯🇵 USD/JPY
Our swing short is working, and Tokyo is giving it a reason to.
We called the position on X last week near 157.98. The yen gained about 0.7% this week, with USD/JPY touching 156.08 on Friday, a one-month low.
Japan’s inflation helped drive the move. Core inflation rose to 2.1% in September, strengthening the case for another BOJ hike. Markets expect no change on Friday, October 30, but price about an 80% chance of a December hike.
Politics adds support. Finance Minister Katayama reiterated Japan’s readiness to intervene, while July 31’s joint yen buying showed Washington’s backing. Both governments remain uncomfortable with the pair near 160.
The main risk is energy. With Brent above $115, Japan’s reliance on imported oil puts pressure on the yen. September’s trade deficit was roughly three times the forecast.
On the daily chart, the resistance shelf held.
USDJPY Daily Chart
158.80–160.70: resistance zone (blue), linked to July’s intervention
Entry: 157.98, posted on X
Invalidation: daily close above 159.07
Target: 153.45, above September’s lows near 152.90, offering roughly 4R
Friday’s close: around 156.83, below both moving averages and about 115 pips in our favour
Friday’s long lower wick shows buyers stepped in near 156.08. A bounce toward 158 would leave the idea intact; a daily close above 159.07 would invalidate it.
Japan’s inflation and December hike expectations support the short, while intervention risk limits enthusiasm for chasing the pair higher. Wednesday’s Fed decision and Friday’s BOJ meeting are the next tests.
Our Bias: lower while inflation keeps a December BOJ hike in play.
What would break it: a dovish BOJ, a more hawkish Fed, or an oil spike that outweighs support for the yen.
🇨🇦 USD/CAD
Last week we flagged a potential buy at the 50% level near 1.4028. Price reached it, but the reasons behind the long have weakened. Three things supported Canada this week.
Alberta voted to stay. Around 76% voted against starting a path to separation, according to unofficial results, easing political risk for the loonie.
Trade tensions cooled. The White House removed some tariffs on Canadian goods while adding others, and Trump said a deal was close. Relations remain strained, but progress toward an agreement weakens the political case for a higher USD/CAD.
Oil rose for a third straight week, supporting Canada’s biggest export.
On the daily chart, price is testing the area we’ve been waiting for.
USDCAD Daily Chart
Range: 1.3760–1.4294
Top resistance: 1.4260–1.4294
Potential entry: 1.4028, the 50% retracement, alongside the yellow moving average
Friday: dipped near 1.3970, around the 61.8% retracement, before closing near 1.4010
Invalidation: to confirm
Friday’s long lower wick shows buyers responded below the 50%, but price still closed beneath it. The blue moving average near 1.4070 is the next overhead hurdle.
The long now rests more on rates. The Fed’s 3.75–4.00% rate remains above the Bank of Canada’s 2.25%. Canadian inflation was below forecast at 3.1%, with core measures averaging 1.9%, supporting a hold.
Wednesday tests both sides, with the Fed and Bank of Canada announcing decisions on the same day.
Our Bias: Neutral for now. The rate gap supports the long, but improving trade relations and stronger oil favour the loonie.
What would invalidate the long: a signed US–Canada deal before November 3, or the Bank of Canada signalling a December hike.
🧩 Final Word
Washington is running on a midterm clock. Before November 3, it’s easing the things voters feel, like tariffs on Canadian goods. After November 3, it may do the things markets fear, like new strikes on Iran. Markets are already pricing the second part: oil is up, rate hike bets are holding, and gold is falling in the middle of a war.
That’s how we read each setup. We’re short USD/JPY because Tokyo and Washington still want a stronger yen. We’re watching the FVG on NQ because the war keeps the cost of AI high. We’re watching gold’s summer lows because this war is showing up as inflation. And on USD/CAD, we’re at our level, but we’re giving geopolitics the respect it earned this week.
Five central banks, three tech giants and an election in eight days. None of it has to go our way. Every level above has a line that tells us when it hasn’t.
Stay Informed, Stay Patient, and as always… Happy Trading!
— The UE Market Letter Team 👁️🗨️
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