Markets turned risk-on after the US midterm result, with crude oil leading the move lower. WTI and Brent broke a two-month double top, with WTI sitting at $87 and Brent at $97; that leaves a roughly $10 spread, still above typical levels but narrower than before. The commentary linked the oil drop to hopes of greater US political stability, while noting Congress would only gain the ability to restrict war funding in January. The focus for the next session shifts to US Non-Farm Payrolls and Canadian jobs data, with NZD volatility flagged for Monday following Saturday’s election.
Equities wobbled then steadied: the NASDAQ fell as expected, while the S&P 500 moved in the same direction, yet the Dow Jones Industrial Average drew renewed demand as oil, tariffs and rates influence its constituents. In FX, a Democratic win coincided with a weaker USD, though lower oil prices and equity rotation were also cited as drivers and a potential Fed rate rise next month could reverse that. GBP was described as firm on projected rate increases, while CAD stayed strong versus most peers despite softer WTI. CFDs and FX are leveraged products, and capital may be at risk.
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Energy, Equity and Currency Strategy After Midterms
We suggest watching for a confirmed break below $87 on WTI and $97 on Brent before opening further short positions in energy derivatives. The current $10 price spread between Brent and WTI remains wider than the historical norm of $3 to $5, signaling temporary dislocation. Until legislative funding changes take effect in January, we should manage energy trades around technical support levels rather than political headlines alone.
We see strong tactical opportunities in blue-chip indices like the Dow Jones as capital rotates away from tech sector uncertainty. Historically, US equities experience a post-election boost, with the S&P 500 rising an average of over 14% in the 12 months following midterm cycles. We should look to trade catch-up moves across US indices while keeping leverage modest during this transition phase.
We need to stay cautious on USD short positions ahead of tomorrow’s Non-Farm Payrolls report, which could trigger a sharp dollar rebound. Historical market data shows that strong jobs figures frequently push the US Dollar Index up by 50 to 100 pips when central bank rate hikes remain on the table. Since monetary policy will drive greenback pricing into next month, we should use tight stop-losses on all USD pairs.
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Pound, Loonie, and Kiwi: Tactical Currency Setups
We recommend riding the strength in GBP against weaker majors following today’s rate hike, while treating GBPCHF as a range-bound trade until its one-month consolidation breaks. For CAD setups, we should be aware that Canadian employment data tomorrow could create short-term spikes despite underlying Loonie strength. Aligning trades with central bank yield differentials will give us a cleaner edge across these currency crosses.
We ought to prepare for elevated gap risk in NZD crosses when trading opens on Monday following Saturday’s election. Historical post-election trading sessions frequently experience initial liquidity gaps of 30 to 50 pips in the Kiwi dollar. We should lower position sizes on NZD setups over the weekend to protect capital against sudden market gaps.
