Sample Category Title

Daily Pivots: (S1) 0.9343; (P) 0.9366; (R1) 0.9380; More....

Intraday bias in EUR/CHF remains neutral for the moment as range trading continues. On the downside, break of 0.9332 will resume the fall from 0.9579 towards 0.9209 low. On the upside, break of 0.9506 will turn intraday bias to the upside for 0.9579 resistance and above.

In the bigger picture, fall from 0.9928 is seen as part of the long term down trend. Repeated rejection by 55 D EMA (now at 0.9427) keeps outlook bearish for breaking through 0.9209 low at a later stage. Nevertheless, sustained trading above 55 D EMA will confirm medium term bottoming and bring stronger rebound back towards 0.9928 key resistance.

Daily Pivots: (S1) 0.8319; (P) 0.8337; (R1) 0.8347; More...

Intraday bias in EUR/GBP remains neutral as consolidation from 0.8294 is in progress. Outlook will stay bearish as long as 0.8433 resistance holds. Break of 0.8294 will resume larger down trend to 0.8201 key support next. Strong support could be seen from there to bring rebound.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 (2022 low), but strong support should be seen there to bring rebound. However, outlook will remain bearish as long as 0.8624 resistance holds even in case of strong rebound. Decisive break of 0.8201 will indicate long term bearish reversal.

Daily Pivots: (S1) 1.6306; (P) 1.6334; (R1) 1.6375; More...

Intraday bias in EUR/AUD remains on the upside as rebound from 1.6002 is in progress. Further rise should be seen to 38.2% of 1.7180 to 1.6002 at 1.6452. Decisive break there should confirm that whole fall from 1.7180 has completed with three waves down to 1.6002, after being supported by 1.5996. On the downside, below 1.6291 minor support will turn intraday bias neutral first.

In the bigger picture, as long as 1.5996 cluster support holds (38.2% retracement of 1.4281 to 1.7062 (2023 high) at 1.6000), up trend from 1.4281 (2022 low) is still expected to resume at a later stage. However, decisive break of 1.5996 will argue that the medium term trend has reversed and turn outlook bearish.

Daily Pivots: (S1) 196.63; (P) 197.21; (R1) 198.03; More...

GBP/JPY's rally resumed after brief consolidations and intraday bias is back on the upside. Current rise from 180.00 should target a retest on 208.09 high next. On the downside, below 196.37 minor support will turn intraday bias neutral again first.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 163.98; (P) 164.39; (R1) 164.83; More....

EUR/JPY's rally resumed after brief consolidations and intraday bias is back on the upside. Current rally from 154.40 should target 61.8% retracement of 175.41 to 154.40 at 167.38. Sustained break there will pave the way to retest 175.41 high. On the downside, below 163.79 minor support will turn intraday bias neutral again first.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Yen suffered broad-based selloff during an otherwise quiet Asian session, following the weekend's indecisive snap election that left Japan without a clear governing party. In contrast, Dollar emerged as the main beneficiary despite its own political uncertain, building on its recent upward momentum and gained across the board.. Canadian Dollar and Euro also showed firmness. Conversely, Swiss Franc clearly lagged behind, while Australian and New Zealand Dollars displayed relative weakness.

With the economic calendar empty today, major shifts in market trends are unlikely. However, the upcoming US presidential elections remain a source of volatility, as any unexpected developments could sway investor sentiment. Traders are also gearing up for a week filled with high-impact economic releases, including US GDP, PCE, ISM and NFP, inflation data from Eurozone, Australia and Swiss.

Technically, GBP/AUD's extended rebound suggests that correction from 2.0034 has completed with three waves down to 1.9123. Firm break of 1.9698 resistance will argue that larger up trend is ready to resume through 2.0034. The next move could hinge of Australia quarterly CPI featured this week.

In Asia, Nikkei rose 1.85%. Hong Kong HSI is up 0.07%. China Shanghai SSE is up 0.24%. Singapore Strait Times is down -0.01%. Japan 10-year JGB yield rose 0.0187 to 0.971.

Yen depreciates sharply following inconclusive Japanese election

Yen fell significantly after this weekend's snap election resulted in a fragmented parliament, leaving no single party with a clear mandate to govern. This political uncertainty introduces the prospect of days or even weeks of negotiations as parties attempt to form a coalition, raising concerns among traders about potential change in leadership and policy direction. Despite the political instability, Nikkei rebounded notably, primarily driven by the weaker yen rather than optimism about the electoral outcome.

Election results showed that Prime Minister Ishiba's Liberal Democratic Party and its coalition partner Komeito secured only 215 seats in the lower house of parliament, a substantial decline from their previous 279 seats. The opposition Constitutional Democratic Party of Japan increased its seats to 148 from 98 but still fell short of the 233 required for a majority. Under Japan's constitution, political parties now have 30 days to negotiate and form a governing coalition. The lack of a decisive outcome casts doubt on Ishiba's tenure as premier, especially considering he assumed office less than a month ago.

USD/JPY's rise from 139.57 resumed after brief consolidations by breaking through 153.18 temporary low. Further rally is expected as long as 151.44 support holds. The question is whether USD/JPY could sustain above 61.8% retracement of 161.94 to 139.57 at 153.39. If it can, the next target wil be a retest on 161.94 high.

ECB’s Knot cautions against overly enthusiastic rate cut expectations

Speaking on Saturday, Dutch ECB Governing Council member Klass Knot acknowledged the market’s heightened expectations for ECB rate cuts, noting that this shift occurred after disappointing PMIs and consumption data.

Knot described these expectations as having increased “quite dramatically” but cautioned that the market may have been “a little bit over-enthusiastic.” He highlighted that "We will only know once we do our own calculations again in December."

Knot outlined two contrasting scenarios regarding the ECB's rate path. On one hand, if incoming data reveal a rapid pace of disinflation or signal a notable shortfall in economic recovery, ECB could accelerate policy easing. On the other, if inflation risks shift upwards or data show resilience in growth and inflation, a more gradual reduction of restrictive measures might be warranted.

Knot underscored the importance of retaining “full optionality,” a strategy designed to act as a hedge against unpredictable shifts in the economic outlook. He stressed that ECB’s meeting-by-meeting and data-dependent approach has been effective.

Top-tier global economic data take center stage

The global financial markets are bracing for an array of critical economic data this week, from the world’s major economies. The upcoming US presidential election on November 5 adds a layer of complexity. Any unexpected news related to the election could introduce significant volatility, making it imperative to stay informed.

In the US, attention centers on Q3 GDP growth, PCE inflation, ISM Manufacturing Index, and the highly anticipated non-farm payrolls report. Fed has been increasingly focusing on the employment component of its dual mandate, making the October NFP report particularly significant. Currently, market expectations are for Fed to cut interest rates by 25bps at both the November and December meetings. However, these expectations may be recalibrated based on this week's economic data.

Eurozone is set to release its flash estimate for Q3 GDP and October CPI. While some dovish members of ECB have advocated for discussion of a 50bps rate cut at the December meeting, others have opposed such aggressive easing. The base case remains for a 25bps cut for now. Nevertheless, ECB's decision will hinge on the depth of economic deterioration reflected in the GDP figures and whether inflation is rebounding as policymakers anticipate.

In Japan, BoJ is expected to maintain its current monetary policy stance during its upcoming meeting. The new economic projections will be crucial in gauging the central bank's confidence in achieving its 2% inflation target sustainably. This outlook is critical for timing the next rate hike.

For Australia, Q3 CPI release is expected to be pivotal for RBA's approach to future rate cuts, possibly as early as next year. The inflation data will reveal whether RBA can have the room to relax its vigilant stance against inflation and possibly adjust its guidance in the upcoming meeting. A softer CPI reading could pave the way for a rate cut in early 2025. Additionally, Australia's economic prospects are closely tied to China's performance; thus, China's PMI data will be significant in assessing the impact of government stimulus measures announced since September.

Other noteworthy data releases include Switzerland's CPI and Canada's monthly GDP.

Here are some highlights for the week:

• Tuesday: Japan unemployment rate; German Gfk consumer climate; UK M4 money supply, mortgage approvals; US goods trade balance; house price index; consumer confidence.
• Wednesday: Australia CPI; Japan consumer confidence; Germany CPI flash, unemployment GDP; French GDP flash; Swiss KOF economic barometer, UBS economic expectations; Eurozone GDP flash; US ADP employment, GDP advance, pending home sales.
• Thursday: Japan industrial production, retail sales, BOJ rate decision; New Zealand ANZ business confidence; Australia retail sales building approvals, import prices; China PMIs; Germany import price, retail sales; Eurozone CPI flash; Canada GDP; US jobless claims personal income and spending, PCE Inflation, Chicago PMI.
• Friday: Australia PPI; Japan PMI manufacturing final; China Caixin PMI manufacturing; Swiss CPI, retail sales, PMI manufacturing; UK PMI manufacturing final; US non-farm payrolls, ISM manufacturing.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 163.98; (P) 164.39; (R1) 164.83; More....

EUR/JPY's rally resumed after brief consolidations and intraday bias is back on the upside. Current rally from 154.40 should target 61.8% retracement of 175.41 to 154.40 at 167.38. Sustained break there will pave the way to retest 175.41 high. On the downside, below 163.79 minor support will turn intraday bias neutral again first.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Key Highlights

• EUR/USD declined further below the 1.0820 support.
• It attempted a recovery wave above a connecting bearish trend line with resistance at 1.0810 on the 4-hour chart.
• Gold prices could soon gain pace to climb above the $2,760 resistance.
• Bitcoin eyes upsides above the $68,500 resistance zone.

EUR/USD Technical Analysis

The Euro remained in a bearish zone below 1.0950 against the US Dollar. EUR/USD traded below the 1.0850 and 1.0820 support levels.

Looking at the 4-hour chart, the pair settled below the 1.0850 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). Finally, the pair tested the 1.0760 zone.

A low was formed at 1.0761 and the pair recently attempted to recover. It cleared a connecting bearish trend line with resistance at 1.0810 on the same chart. However, the bears seem to be active below the 1.0850 level.

On the downside, immediate support sits near the 1.0760 level. The next key support sits near the 1.0735 level. Any more losses could send the pair toward the 1.0700 level.

On the upside, the pair could face resistance near the 1.0850 level. The first key resistance is near the 1.0865 level and the 23.6% Fib retracement level of the downward move from the 1.1208 swing high to the 1.0761 low.

A close above the 1.0865 level could set the tone for another increase. The next major resistance could be 1.0925, above which the price could accelerate higher toward the 50% Fib retracement level of the downward move from the 1.1208 swing high to the 1.0761 low at 1.0985.

Looking at Gold, the bulls remain in action, and they seem to be eyeing a fresh rally to a new all-time high above the $2,760 level.

Upcoming Economic Events:

• Dallas Fed Manufacturing Business Index for Oct 2024 – Forecast -9.0, versus -9.0 previous.

Yen fell significantly after this weekend's snap election resulted in a fragmented parliament, leaving no single party with a clear mandate to govern. This political uncertainty introduces the prospect of days or even weeks of negotiations as parties attempt to form a coalition, raising concerns among traders about potential change in leadership and policy direction. Despite the political instability, Nikkei rebounded notably, primarily driven by the weaker yen rather than optimism about the electoral outcome.

Election results showed that Prime Minister Ishiba's Liberal Democratic Party and its coalition partner Komeito secured only 215 seats in the lower house of parliament, a substantial decline from their previous 279 seats. The opposition Constitutional Democratic Party of Japan increased its seats to 148 from 98 but still fell short of the 233 required for a majority. Under Japan's constitution, political parties now have 30 days to negotiate and form a governing coalition. The lack of a decisive outcome casts doubt on Ishiba's tenure as premier, especially considering he assumed office less than a month ago.

USD/JPY's rise from 139.57 resumed after brief consolidations by breaking through 153.18 temporary low. Further rally is expected as long as 151.44 support holds. The question is whether USD/JPY could sustain above 61.8% retracement of 161.94 to 139.57 at 153.39. If it can, the next target wil be a retest on 161.94 high.

Speaking on Saturday, Dutch ECB Governing Council member Klass Knot acknowledged the market’s heightened expectations for ECB rate cuts, noting that this shift occurred after disappointing PMIs and consumption data.

Knot described these expectations as having increased “quite dramatically” but cautioned that the market may have been “a little bit over-enthusiastic.” He highlighted that "We will only know once we do our own calculations again in December."

Knot outlined two contrasting scenarios regarding the ECB's rate path. On one hand, if incoming data reveal a rapid pace of disinflation or signal a notable shortfall in economic recovery, ECB could accelerate policy easing. On the other, if inflation risks shift upwards or data show resilience in growth and inflation, a more gradual reduction of restrictive measures might be warranted.

Knot underscored the importance of retaining “full optionality,” a strategy designed to act as a hedge against unpredictable shifts in the economic outlook. He stressed that ECB’s meeting-by-meeting and data-dependent approach has been effective.

Today's economic developments and market movements.

Key themes: Higher yields and a firmer US dollar resumed on Friday ahead of a slew of key economic data this week and as the US election heads into its final full week of campaigning.

Inflation, labour market and GDP data in the US and Europe will take centre stage, while September quarter domestic inflation data on Wednesday will be crucial for local markets.

Key for most markets will be whether US data can sustain recent strength and reinforce the soft/no landing narrative.

Japan faces some near-term political instability after the ruling Liberal Democratic Party coalition failing to win a majority in parliament for the first time since 2009.

Share markets: The S&P 500 was flat on Friday but finished the week down 1.0%, ending a string of six consecutive weeks in the green. The NASDAQ was firmer, rising 0.6% on Friday to be up 0.2% on the week and extending its string of weekly gains to seven.

The Euro Stoxx 50 eked out a 0.2% gain but was 0.9% lower over the week. In the UK, the FTSE closed down 0.3% on Friday and was 1.3% lower over the week.

The ASX 200 was up 0.1% on Friday but this was not enough to offset earlier losses, leaving the local bourse 0.9% lower over the week.

Interest rates: US yields were modestly higher on Friday. The 2-and-10-year yields were both up 3 basis points to 4.10% and 4.24%, respectively and remain around the top their recent 3-month range.

The implied odds of a November Fed rate cut have pushed out to around 97%, while the chances of a follow-up cut in December have also firmed a little to around 63%.

Aussie bond futures also sold off a touch. The 3-year futures yield is 4 basis points higher at 3.93%, while the 10-year is 5 basis poitns higher at 4.47%. Market’s have futher discounter the chance of an RBA rate cut this year, with the implied odds ritting at 21%. The first cut is fully priced for May 2025, with an earlier April move around 97% priced in.

Foreign exchange: The US dollar continued to consolidate above 104, trading a range of 103.94 to 104.34 before closing at 104.26. Key US GDP, labour market and inflation data this week will be crucial to sustaining the current US dollar upside and keeping the soft/no landing narrative in tact.

The Aussie dollar looks to be forming a tentative base around 0.6600-0.6615. However, key US and domestic data this week has plenty of potential to break key levels both on the upside and downside. Locally, inflation data is likely to show some welcomed progress, which could present a hurdle fo the Aussie subject to developments offshore.

The Euro traded a 1.0839-1.0793 range on Friday but has opened slightly lower in early trade this morning. Local activity, inflation and labour market data this will be important for the Euro, however, absent any upside strength, the US dollar leg will likely be the bigger determinant of price action this week.

The sell-off in the Yen resumed on Friday and has gained some traction at the open this morning following reports Japan’s Liberal Democratic Party and its coalition partner are set to lose their majority following Sunday’s general election. Near-term political uncertainty is likely to weigh on the Yen, leaving it vulnerable to move lower and reigniting caution around potential intervention risks.

Commodities: Crude advanced Friday as traders focussed on the risks of escalation in the Middle East. West Texas Intermediate (WTI) futures closed up 2.3% Friday at US$71.78

Over the weekend, Israel attacked military targets in Iran though Iranian media downplayed the impact of strikes and signalled a measured response.

The US and Israel confirmed they would hold talks in Doha over the weekend. Egypt proposed a two-day cease-fire allowing for the exchange of prisoners and hostages. Bloomberg reported that Russian fuel exports are on course to hit the lowest in at least 8 years amid a sharp drop-in refining activity amid seasonal maintenance and low refining profits.

Metals were mixed despite the strong US dollar and high US yields. Copper closed up 1.0% at US$9,509 while aluminium rose 0.8% to US$2,670. Zinc fell a hefty 2.4% to US$3,099 after the sharp spike earlier in the week took it to a fresh 20 month high.

Iron ore rose modestly Friday, helped by hopes of more fiscal stimulus in China. Futures rose 1.8% to US$103.40. China Iron Ore Steel Association (CISA) called for supply restraint after the recent rally noting ‘there hasn’t been any notable change in orders for steel products’. CISA reported that steel inventory rose 5% into mid-October from the beginning of the month to be 2% above average levels for this time of year.

Australia: There were no major economic data releases on Friday.

Eurozone: Germany’s IFO business climate index edged higher in October to 86.5 as firms current assessment and expectations both improved.

European Central Bank (ECB) measures of inflation expectations drifted lower in September, providing policymakers with further confidence inflation is on a sustainable path lower. 1-year ahead expectations dropped to 2.4% from 2.7% in August, the lowest level since September 2021. 3-year ahead expectations fell to 2.1% from 2.3%, reaching their lowest level since February 2022.

Japan: Japan faces some near-term political instability after the decision by Prime Minister Shigeru Ishiba to call a snap election backfired with the ruling Liberal Democratic Party coalition failing to win a majority in parliament for the first time since 2009.

New Zealand: Consumer confidence slipped 4.1% in October to 91.2. This ended a string of three consecutive months of improving sentiment.

United Kingdom: The GfK consumer confidence index was little changed at -21 in October, a touch above the 5-year average of -25.

United States: US durable goods orders fell 0.8% in September, largely as expected. August was revised down to -0.8% from a flat reading. Core orders (non-defence ex air) showed some resilience, gaining 0.5% in September after a 0.3% rise in August.

University of Michigan consumer sentiment was revised up in the final release for October, from 68.9 to 70.5, leaving the index a touch above September’s 70.1.

1-year inflation expectations eased from 2.9% to 2.7% while the 5-10-year measure remained unchanged at 3.0%. Both inflation expectations measures are historically consistent with inflation at target.