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Daily Pivots: (S1) 1.2446; (P) 1.2479; (R1) 1.2523; More...

Intraday bias in GBP/USD remains neutral for the moment. Another recovery could be seen, but upside should be limited by 1.2618 support turned resistance to bring another fall. Firm break of 1.2432 will resume the decline from 1.3141 and target 100% projection of 1.3141 to 1.2618 from 1.2799 at 1.2276.

In the bigger picture, fall from 1.3141 medium term top is seen as a correction to up trend from 1.0351 (2022 low). Deeper decline would be seen to 38.2% retracement of 1.0351 to 1.3141 at 1.2075. Strong support would be seen there to bring rebound on first attempt. But outlook will be neutral at best as long as 1.3141 resistance holds, and consolidation from there is set to extend, until further development.

Daily Pivots: (S1) 0.8908; (P) 0.8930; (R1) 0.8959; More....

Intraday bias in USD/CHF remains neutral for the moment. Deeper retreat cannot be ruled out. But downside should be contained above 0.8743 support to bring another rally. On the upside, firm break of 0.8951 will extend the rise from 0.8551 to 0.9146 cluster resistance.

In the bigger picture, rebound from 0.8551 medium term bottom is currently seen as a correction to the downtrend from 1.0146 (2022 high). Further rally would be seen to 0.9146 cluster resistance (38.2% retracement of 1.0146 to 0.8551 at 0.9160). Strong resistance could be seen there to limit upside, at least on first attempt.

Daily Pivots: (S1) 147.08; (P) 147.41; (R1) 147.80; More...

Intraday bias in USD/JPY remains neutral as consolidation from 147.88 is extending. In case of another pull back, near term outlook will remain bullish as long as 144.43 support holds. On the upside, firm break of 147.88 will resume larger rise from 127.20, to retest 151.93 high.

In the bigger picture, while rise from 127.20 is strong, it could still be seen as the second leg of the corrective pattern from 151.93 (2022 high). Rejection by 151.93, followed by break of 137.22 support will indicate that the third leg of the pattern has started. However, sustained break of 151.93 will confirm resumption of long term up trend.

Daily Pivots: (S1) 0.6389; (P) 0.6412; (R1) 0.6443; More...

No change in AUD/USD's outlook as range trading continues. Intraday bias remains neutral for the moment. While stronger recovery might be seen, outlook will stay bearish as long as 0.6520 resistance holds. On the downside, break of 0.6356 will resume larger fall to 100% projection of 0.7156 to 0.6457 from 0.6894 at 0.6195.

In the bigger picture, current development argues that the down trend from 0.8006 (2021 high) is still in progress. Decisive break of 0.6169 will target 61.8% projection of 0.8006 to 0.6169 to 0.7156 at 0.6021. This will now remain the favored case as long as 0.6894, in case of strong rebound.

Daily Pivots: (S1) 1.3518; (P) 1.3552; (R1) 1.3584; More....

Intraday bias in USD/CAD stays neutral as correction from 1.3693 is extending. Overall, further rally is expected as long as 1.3488 support holds. Above 1.3693 will resume the rally from 1.3091 to 1.3860 resistance, and then 1.3976 high. However, firm break of 1.3488 will turn bias to the downside for deeper decline.

In the bigger picture, price actions from 1.3976 are viewed as a corrective pattern only. Upon completion, rise from 1.2005 (2021 low) would resume through 1.3976. Next target is 61.8% projection of 1.2005 to 1.3976 from 1.3091 at 1.4309. For now, this will remain the favored case as long as 55 D EMA (now at 1.3465) holds.

Daily Pivots: (S1) 0.8577; (P) 0.8604; (R1) 0.8618; More...

Intraday bias in EUR/GBP is turned neutral again with current retreat. But outlook is unchanged that price actions from 0.8502 are a consolidation pattern. Above 0.8629 would bring stronger recovery, but upside should be limited 0.8700 to bring larger decline resumption. On the downside, below 0.8522 will bring retest of 0.8491 support.

In the bigger picture, the down trend from 0.9267 (2022 high) is seen as part of the long term range pattern from 0.9499 (2020 high). Fall from 0.8977 is seen as the third leg. As long as 0.8700 resistance holds, further decline is still expected. Break of 0.8491 will resume the fall towards 0.8201 (2022 low). Nevertheless, firm break of 0.8700 will now be a sign of bullish reversal.

Daily Pivots: (S1) 1.6675; (P) 1.6735; (R1) 1.6770; More...

Intraday bias in EUR/AUD remains neutral first as it could take out 1.6647 support decisively. On the downside, firm break of 1.6647 will extend the corrective fall from 1.7062 to 1.6259/6601 support zone. On the upside, firm break of 1.6887 resistance should confirm that correction from 1.7062 has completed at 1.6647. Further rally should be seen through 1.7062 to 1.7377 projection level.

In the bigger picture, the rise from 1.4281 (2022 low) is in progress. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. For now, outlook will stay bullish as long as 1.5846 support holds, even in case of deep pull back.

Daily Pivots: (S1) 157.94; (P) 158.30; (R1) 158.59; More....

Intraday bias in EUR/JPY remains neutral and outlook is unchanged. On the upside, firm break of 158.51 resistance will argue that larger up trend is ready to resume through 159.75, to 163.06 projection target. On the downside, sustained trading below 55 D EMA (now at 156.63) will argue that fall from 159.75 is a larger scale correction. Deeper fall would be seen back towards 151.39 support.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 100% projection of 124.37 to 148.38 from 139.05 at 163.06. Sustained break there will pave the way to retest long term resistance at 169.96. This will remain the favored case as long as 151.39 support holds, even in case of deep pull back.

Daily Pivots: (S1) 183.47; (P) 183.93; (R1) 184.66; More...

As long as 185.76 resistance holds, further decline is expected in GBP/JPY. Break of 182.66 will resume the fall from 186.75. Sustained trading below 55 D EMA (now at 182.39) will argue that it's already in a larger scale correction and target 176.29 support next. On the upside, break of 185.67 resistance will indicate that the pull back from 186.75 has completed. Further rise should then be seen through 186.75 to resume larger up trend.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 195.86 (2015 high). This will remain the favored case as long as 176.29 support holds, even in case of deeper pull back.

Market movers today

The ECB meeting is the main event today, with the rate decision at 14.15 CET followed by Lagarde's press conference at 14.45 CET. We expect a 25bp hike, which will be mirrored 1-to-1 by Danmarks Nationalbank.

On the data front, August inflation data will be released for Sweden. We expect headline CPIF inflation to cool clearly in y/y terms to 4.9% (from 6.4%) and CPIF excluding energy to 7.3% (from 8.0%).

From the US, August PPI and retail sales data are due for release. While headline retail sales have been supported by higher gasoline prices, early spending data suggests that control group sales growth have weakened sharply from July.

Overnight, data on China's August retail sales, industrial production and fixed investments growth will be released, consensus is looking for modest improvement after weak summer prints.

The 60 second overview

We expect the ECB to hike by 25bp at today's meeting. The market pricing is 16bp (up 3bp since yesterday) following the Reuters story on an upward revision to the 2024 inflation forecast in today's staff projections. In our opinion, this is a natural (and expected) consequence of rising energy prices since the latest projection round in June. The key factor for today's decision will be the projected core inflation path until 2025. We expect the forecast to reflect strong underlying inflation dynamics driven by tight labour market conditions. Combined with the latest (strong) inflation data, this should justify hiking a final 25bp. We also expect an advancement of the end to full reinvestment process of PEPP currently guided for December 2024 to be on the cards. Regardless of whether the ECB decides to hike or not, we expect Danmarks Nationalbank to follow the rate decision 1-to-1.

The US August Core CPI surprised to the upside at +0.3% m/m (forecast +0.2%, July +0.2%), while headline CPI was lifted by higher oil prices largely as expected (+0.6%; July +0.2%). The uptick was driven by faster services inflation, where especially airfares' contribution rose sharply. But even so, underlying price pressures seem to have remained slightly higher than anticipated in early Q3. Reflecting this, Atlanta Fed's Sticky CPI growth picked up to 4.7% m/m AR, up from June low of 2.9% yet still clearly below September peak of 8.2%. Core goods prices were largely unchanged, while shelter contribution continued to moderate reflecting delayed pass-through of past easing in rent growth. While the Fed is not happy to see a pick-up in the key core services components, markets were not spooked by the release, as short-dated UST yields declined after the release. The Fed is still very likely to stay on hold next week, but focus remains on the November/December meetings, where markets see the probability of another rate hike essentially as a coin-flip. Read more about our latest inflation views from our monthly Global Inflation Watch - Underlying price pressures remain sticky, 13 September.

Euro area industrial production declined 1.1% m/m in July (cons: -0.9%). The decline was driven by Germany, Italy and Spain while French production rose in July. The euro area industry has suffered the entire year and the recent business surveys suggest that this should continue in the coming months. Especially the outlook for Germany looks weak given the large decline in factory orders we saw in July. This is especially evident in the auto sector, where new orders are down by 20% since the turn of the year. Apart from declining demand in general, the increasing competition from Chinese producers is a headache for the European car producers. Yesterday, the European Commission launched an investigation into Chinese electric vehicles, which according to President von der Leyen is 'distorting our market' due to 'huge state subsidies'.

Equities: Back and forth leads no way for equities. That's how is has felt this week where equities have mostly been reversing the moves from the day prior. Hence, yesterday it was equities higher driven by cyclical growth while energy was lower. However, we got a much bigger common top-down driver yesterday with the US CPI number. After thinking twice, or getting through the sub-components, investors decided this was a good CPI report with signs of further slowing in core inflation. As expected, this resulted in the relief risk-on move benefiting the tech and growth universe the most while inflation winner, materials and energy lagged. In the US yesterday Dow -0.2%, S&P 500 +0.1%, Nasdaq +0.3% and Russell 2000 -0.8%. The risk-on tone is continuing in Asia this morning lead by Japanese stocks. US and European futures are higher as well while keys for the equity market have been handed over to ECB.

FI: European government bond yields rose significantly yesterday morning on the back of the Reuters story claiming that the ECB will revise up its inflation forecast for 2024 in the new staff projections. Money markets are pricing in 16bp ahead of today's ECB meeting, up 6bp since Monday. 2Y Bund yields rose by 5bp, while the long end was little changed. The 10Y Italian yield spread to Germany widened by 4bp throughout the session. In the US, Treasury yields fell 4-5bp across the curve despite the strong US core CPI print.

FX: EUR/USD declined below 1.0750 on strong US CPI and risk-off sentiment. USD/JPY climbed slightly higher to around the 147.5 mark. EUR/GBP fell below 0.86 after initially moving higher on weaker-than-expected UK GDP. EUR/SEK edged a bit higher to around 11.95, while EUR/NOK is around 11.50.

Credit: Yesterday, credit markets were positive following the US CPI announcement with iTraxx Main going 1.1bp tighter to 70.3bp while Xover tightened by 5.4bp to 393.7bp. In addition, primary market activity is still going, however a slower pace is observed.

Nordic macro

August inflation for Sweden is expected to show a significant drop in general, CPIF slowing by 1.5 p.p. to 4.9 % y/y while CPIF excl. Energy slows by 0.7 p.p to 7.3 % y/y. The latter is still 0.4 p.p. above Riksbank's forecast, however. As for detail, we expect clothing, car fuel, hotel/restaurants and "other goods and services" to add 0.4 p.p. to the monthly CPIF rate while transportation services and recreation is likely to subtract the same amount. Looking at details from Norway and Denmark earlier this week, risks are seemingly tilted to the downside vs our Swedish forecast.

In Norway, economic growth levelled off in H1, and we expect Norges Bank's regional survey (out this morning) to show this trend continuing into H2. We expect aggregate output growth to come out around 0.1-0.2% for the next quarter. Given the strong pressures in the economy and on wages and prices, it will perhaps be equally important to see whether capacity utilisation continues to decline and whether labour shortages are becoming less precarious.