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• US 100 index holds within bullish area but lacks steam
• Bulls need a close above 20,325-20,500 to strengthen uptrend

The US 100 stock index is about to open mildly lower on Friday despite upbeat US banking earnings, weighed by Tesla’s disappointing guidance on its self-driving robotaxis.

The index stabilized around September’s high and near the constraining ascending line from September 2022 at 20,316 following its bounce off the 20-day exponential moving average (EMA). Technically, the price could enter a consolidation phase as the stochastic oscillator is looking for a negative pivot and the RSI is losing momentum, though with the latter holding comfortably above its 50 neutral mark, buying appetite could stay alive.

The price could gain fresh impetus towards the all-time high of 20,770 if a close above the 20,325-20,500 is achieved. Stretching into uncharted territory, the bulls may face some congestion around the 21,000 psychological mark and then near 21,500.

If downside pressures strengthen, the 20-day EMA could come back into view within the 19,885-20,000 region. A step below this floor may press the price towards the 50-day EMA, which overlaps with the 23.6% Fibonacci retracement of the latest upleg near 19,585. Another failure there could send stronger bearish signals, confirming additional declines towards the 100-day EMA and the 38.2% Fibonacci of 19, 137.

In summary, although the US 100 index hasn't lost its shine yet, it could shift to the sidelines if the 20,325-20,500 resistance territory proves solid.  

Daily Pivots: (S1) 1.0906; (P) 1.0931; (R1) 1.0961; More....

No change in EUR/USD's outlook and intraday bias stays on the downside. Sustained break of 38.2% retracement of 1.0447 to 1.1213 at 1.0920 will argue that fall from 1.1213 is the third leg of the corrective pattern from 1.1274. In this case, deeper decline would be seen to 61.8% retracement at 1.0740 next. On the upside, above 1.0996 minor resistance will turn intraday bias neutral again first.

In the bigger picture, rejection by 1.1274 resistance suggests that corrective pattern from 1.1274 (2023 high) is not completed yet. Instead, decline from 1.1213 might be another falling leg. Sustained break of 55 W EMA (now at 1.0877) will validate this case, and bring deeper fall towards 1.0447 support again.

Daily Pivots: (S1) 1.3023; (P) 1.3058; (R1) 1.3095; More...

Outlook in GBP/USD remains unchanged and intraday bias stays neutral. While corrective fall from 1.3433 might extend lower, strong support should be seen from 1.3000 cluster support (38.2% retracement of 1.2298 to 1.3433 at 1.2999) to contained downside. Above 1.3174 minor resistance will turn bias back to the upside for stronger rebound. However, decisive break of 1.3000 will carry larger bearish implications.

In the bigger picture, as long as 1.3000 support holds, the up trend from 1.0351 (2022 low) is still in progress. Next target is 61.8% projection of 1.0351 to 1.3141 from 1.2298 at 1.4022. However, considering mild bearish divergence condition in D MACD, decisive break of 1.3000 will argue that a medium term top is already in place, and bring deeper fall back to 1.2664 support next.

Daily Pivots: (S1) 0.8542; (P) 0.8578; (R1) 0.8597; More…

Intraday bias in USD/CHF stays neutral for consolidation below 0.8611 temporary top. On the upside, above 0.8611 will resume the rebound from 0.8374 to 38.2% retracement of 0.9223 to 0.8374 at 0.8698. Sustained break there will argue that fall from 0.9223 has completed after defending 0.8332 low. However, firm break of 0.8529 minor support will turn bias back to the downside for retesting 0.8374/8401 support zone instead.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with fall from 0.9223 as the second leg. Strong support could be seen from 0.8332 to bring rebound. Yet, overall outlook will continue to stay bearish as long as 0.9243 resistance holds. Firm break of 0.8332, however, will resume larger down trend from 1.0146 (2022 high).

Daily Pivots: (S1) 148.04; (P) 148.79; (R1) 149.33; More...

Intraday bias in USD/JPY remains neutral for consolidation below 149.58 temporary top. Further rally is expected as long as 145.91 minor support holds. Rise from 139.57 is s seen as the second leg of the corrective pattern from 161.94. Break of 149.58 will target 61.8% retracement of 161.94 to 139.57 at 153.39.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). The range of medium term consolidation should now be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Canada's labour market bucked its weakening trend in September, adding 47k new jobs. Adding to the good news, the gains were entirely full-time (+112k), and in the private sector (+61k). Meanwhile part-time positions gave back their August gains (-65k).

Job gains were strong enough to push the unemployment rate down a tenth to 6.5%, the first improvement since January. Labour force growth was modest in September (+16k), as the participation rate fell two tenths to 64.9%.

Looking across sectors, job gains were concentrated in information, culture and recreation (+22k, 2.6%), wholesale and retail trade (+22k, 0.8%) and professional, scientific and technical services (+21k, 1.1%).

The unemployment rate ticked down in September, driven entirely by youth. The unemployment rate for those aged 15-24 fell a full percentage point to 13.5%, but is still 2.8 percentage points higher than a year ago. Perhaps more telling is that the share of the core working age population (25-54 years) with a job continued to tick down. It has fallen 1.6 percentage points relative to the start of 2023.

In one gray cloud in the report, total hours worked fell again in September (-0.4% month-on-month), and are up 1.2% over the past year. Wage growth cooled to 4.6% year-on-year in September.

Key Implications

A move down in Canada's unemployment rate is good news, and the two year bond yield is up a few tenths on the news. However, September's jobs report does not change the picture of a labour market that has cooled notably since the Bank of Canada started raising interest rates. Data rarely moves in a straight line, and we would need to see a few more months of strength before we declare an improving trend.

The Bank of Canada's next interest rate decision is in less than two weeks, and another cut is widely expected. Some market participants are leaning towards a larger half point move after the Fed's larger cut, but September's job data will likely pare those bets back a bit. We look for another quarter-point interest rate cut on October 23rd.

Daily Pivots: (S1) 1.3695; (P) 1.3735; (R1) 1.3782; More...

Outlook in USD/CAD is unchanged and intraday bias stays on the upside for the moment. Sustained trading above 61.8% retracement of 1.3946 to 1.3418 at 1.3559 will extend the rise from 1.3418 to 1.3946 high again. On the downside, below 1.3702 minor support will turn intraday bias neutral first.

In the bigger picture, sideway consolidation pattern from 1.3976 (2022 high) might still extend further. While another decline cannot be ruled out, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

Trading in the early US session is relatively subdued, with little momentum driving market moves. Canadian Dollar, despite an initial attempt to rally on the back of stronger-than-expected job data, has not been able to attract sustained buying interest. The market continues to price in further easing from BoC, as expectations mount that the central bank will lower interest rates to a neutral level within a year's time, from the current 4.25%. This sentiment persists even as Canada's labor market displays resilience.

Meanwhile, Dollar has shown little reaction to PPI data released. US equity futures indicate a flat open as traders prepare for a long weekend, a scenario that typically leads to cautious positioning. On the bond front, 10-year Treasury yield has extended its near-term rally, pushing past the 4.1% mark. While rising yields have offered the greenback a mild lift against Yen, the critical 150 level for USD/JPY remains unbroken, as traders appear reluctant to test the psychological threshold before the weekend.

In Europe, at the time of writing, FTSE is down -010%. DAX is up 0.21%. CAC is up 0.08%. UK 10-year yield is up 0.0333 at 4.249. Germany 10-year yield is up 0.034 at 2.293. Earlier in Asia, Nikkei rose 0.57%. Hong Kong was on holiday. China Shanghai SSE fell -2.55%. Singapore Strait Times fell -0.32%. Japan 10-year JGB yield fell -0.007 to 0.952.

US PPI at 0.0% mom, 1.8% yoy in Sep

US PPI for final demand was unchanged for the month in September, below expectation of 0.1% mom rise. PPI services rose 0.2% mom but PPI goods fell -0.2% mom. PPI less foods, energy, and trade services rose 0.1% mom.

For the 12-month period, PPI rose 1.8% yoy, down from prior 1.9% yoy, but above expectation of 1.8% yoy. PPI less foods, energy, and trade services rose 3.2% yoy.

Canada's employment grows 46.7k in Sep, unemployment rate falls to 6.5%

Canada's employment grew 46.7k in September, above expectation of 34.5k. Full-time employment rose 112k or 0.7% mom, largest gain since March 2022. Part-time work fell -65k or -1.7%.

Unemployment rate fell from 6.6% to 6.5% better than expectation of 6.6%. Participation rate fell -0.2% to 64.9%. Total hours worked, however, fell -0.4% mom. Average hourly wages rose 4.6% yoy, slowed from 5.0% yoy.

UK GDP grows 0.2% mom in Aug, matches expectations

UK GDP grew 0.2% mom in August, matched expectations. Services output grew by 0.1% mom. Production output grew by 0.5% mom. Construction output grew by 0.4% mom.

In the three months to August compared with the three months to May, GDP grew 0.2%. Service output rose 0.1%. Production output showed no growth. Construction output rose 1.0%.

New Zealand BNZ PMI rises to 46.9, but stays in contraction for 19th month

New Zealand’s BusinessNZ Performance of Manufacturing Index rose slightly from 46.1 to 46.9 in September, marking the third consecutive month of improvement. Despite this, the sector remains in contraction for the 19th straight month, with the index still well below the long-term average of 52.6.

Catherine Beard, Director of Advocacy at BusinessNZ, highlighted that while it’s positive to see the highest PMI result since April, the sector faces a "long and slow road" to recovery.

The components painted a mixed picture: production improved from 46.6 to 48.0, while employment dipped slightly from 46.8 to 46.6. New orders also inched higher from 47.3 to 47.8, but deliveries fell further from 45.8 to 45.6.

Negative sentiment among respondents is gradually improving, with 63.5% expressing pessimism in September, down from 64.2% in August and significantly lower than the 76.3% seen in June. The main concerns continue to revolve around weak demand, with many businesses citing a lack of orders and sales as key issues.

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.3695; (P) 1.3735; (R1) 1.3782; More...

Outlook in USD/CAD is unchanged and intraday bias stays on the upside for the moment. Sustained trading above 61.8% retracement of 1.3946 to 1.3418 at 1.3559 will extend the rise from 1.3418 to 1.3946 high again. On the downside, below 1.3702 minor support will turn intraday bias neutral first.

In the bigger picture, sideway consolidation pattern from 1.3976 (2022 high) might still extend further. While another decline cannot be ruled out, strong support should emerge above 1.2947 resistance turned support to bring rebound. Rise from 1.2005 (2021 low) is still in favor to resume at a later stage.

US PPI for final demand was unchanged for the month in September, below expectation of 0.1% mom rise. PPI services rose 0.2% mom but PPI goods fell -0.2% mom. PPI less foods, energy, and trade services rose 0.1% mom.

For the 12-month period, PPI rose 1.8% yoy, down from prior 1.9% yoy, but above expectation of 1.8% yoy. PPI less foods, energy, and trade services rose 3.2% yoy.

Full US PPI release here.

Canada's employment grew 46.7k in September, above expectation of 34.5k. Full-time employment rose 112k or 0.7% mom, largest gain since March 2022. Part-time work fell -65k or -1.7%.

Unemployment rate fell from 6.6% to 6.5% better than expectation of 6.6%. Participation rate fell -0.2% to 64.9%. Total hours worked, however, fell -0.4% mom. Average hourly wages rose 4.6% yoy, slowed from 5.0% yoy.

Full Canada employment release here.