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Daily Pivots: (S1) 1.5450; (P) 1.5499; (R1) 1.5552; More...

Intraday bias in EUR/AUD remains neutral and outlook is unchanged. Consolidation from 1.5704 could extend and another fall cannot be ruled out. But downside should be contained by 55 day EMA (now at 1.5282) to bring rebound. On the upside, decisive break of 1.5704 will resume larger rise from 1.4281. However, sustained trading below 55 day EMA will bring deeper correction towards 1.4965 resistance turned support.

In the bigger picture, a medium term bottom should be in place at 1.4281, on bullish convergence condition in daily MACD. Further rise would be seen back to 1.6434 key resistance next. Break of 1.4965 resistance turned support is needed to indicate reversal. Otherwise, further rally will remain in favor.

Daily Pivots: (S1) 144.69; (P) 145.17; (R1) 146.00; More....

Intraday bias in EUR/JPY stays neutral and outlook is unchanged. Correction from 148.38 might have completed at 142.54. Break of 147.09 resistance will indicate that larger up trend is ready to resume through 148.38 high. However, on the downside, sustained break of 142.65 will bring deeper fall to 61.8% retracement at 139.11 and possibly below.

In the bigger picture, there is no clear sign of medium term topping yet. Up trend from 114.42 (2020 low) could still resume through 148.38 to 149.76 (2014 high). However, break of 137.32 support argue that a medium term correction has already started to correct the whole up trend from 114.42.

Daily Pivots: (S1) 166.73; (P) 167.38; (R1) 168.64; More...

GBP/JPY's rebound from 163.02 is still in progress and intraday bias stays on the upside. Correction from 172.11 might have completed at 163.20, after hitting 38.2% retracement of 148.93 to 172.11 at 163.25. Further rise would be seen to retest 172.11 high. On the downside, however, below 166.08 minor support will turn intraday bias neutral again first.

In the bigger picture, there is no clear sign of medium term topping yet. Up trend from 123.94 (2020 low) could still resume through 172.11 high at a later stage. However, firm break of 159.71 support will argue that it's already in correction to the up trend from 123.94, and deeper decline would be seen back towards 148.93 support.

Daily Pivots: (S1) 1.3385; (P) 1.3440; (R1) 1.3507; More....

USD/CAD is holding below 1.3494 support turned resistance and intraday bias stays neutral. On the upside, firm break of 1.3494 will indicate that correction from 1.3976 has completed at 1.3224, ahead of 1.3207 cluster support (61.8% retracement of 1.2726 to 1.3976 at 1.3204). Intraday bias will be turned back to the upside for 1.3807/3976 resistance zone. However, on the downside, sustained break of 1.3204/7 will carry larger bearish implication and target 1.2952 support next.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. . However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Daily Pivots: (S1) 0.6566; (P) 0.6625; (R1) 0.6664; More...

AUD/USD is holding above 0.6521 resistance turned support even as retreat from 0.6796 extends. Intraday bias remains neutral and further rally is in favor. On the upside, break of 0.6796 will resume the rise from 0.6169 to 0.6871 fibonacci level. However, sustained break of 0.6521 will argue that whole rebound from 0.6169 is over, and bring deeper fall to retest this low.

In the bigger picture, a medium term bottom is in place at 0.6160 already. But it's too early to call for trend reversal. Nevertheless, even as a corrective move, rise from 0.6169 should target 38.2% retracement of 0.8006 to 0.6169 at 0.6871. Sustained trading above 55 week EMA (now at 0.6923) will raise the chance of the start of a bullish up trend. This week now remain the favored case as long as 0.6521 resistance turned support holds.

Daily Pivots: (S1) 140.77; (P) 141.51; (R1) 142.86; More...

USD/JPY is still bounded in range of 137.66/142.45 and intraday bias remains neutral first. On the downside, break of 137.66 will resume the decline from 151.93, to 133.07 fibonacci level, as a correction to the larger up trend. Nevertheless, firm break of 142.45 will turn bias back to the upside for stronger rebound to 55 day EMA (now at 143.34) and above.

In the bigger picture, a medium term top should be formed at 151.93. Fall from there is correcting larger up trend from 102.58. It's too early to call for bearish trend reversal. But even as a corrective move, such decline should target 38.2% retracement of 102.58 to 151.93 at 133.07, or further to 55 week EMA (now at 130.28).

Daily Pivots: (S1) 0.9549; (P) 0.9574; (R1) 0.9616; More...

While USD/CHF's recovery from 0.9355 extends higher today, upside is limited well below 0.9680 minor resistance. Intraday bias stays neutral first, and further decline is still expected. On the downside, break of 0.9355 will resume the fall from 1.0146 to 0.9287 fibonacci level. Nevertheless, firm break of 0.9680 will bring stronger rebound to 55 day EMA (now at 0.9761).

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 might be a medium term down trend itself. Break of 61.8% retracement of 0.8756 to 1.0146 at 0.9287 will pave the way to 0.8756. In any case, risk will stay on the downside as long as 55 day EMA (now at 0.9767) holds.

Daily Pivots: (S1) 1.0311; (P) 1.0359; (R1) 1.0412; More...

Intraday bias in EUR/USD stays neutral for the moment as consolidation from 1.0481 is extending. As long as 1.0092 resistance turned support holds, further rally is still expected. On the upside, break of 1.0481 will resume the rise from 0.9534 and target 1.0609 fibonacci level. However, sustained break of 1.0092 will turn bias to the downside for 55 day EMA (now at 1.0041) and below.

In the bigger picture, a medium term bottom was in place at 0.9534, on bullish convergence condition in daily MACD. Even as a corrective rise, rally from 0.9534 should target 38.2% retracement of 1.2348 (2021 high) to 0.9534 at 1.0609. Sustained trading above 55 week EMA (now at 1.0566) will raise the chance of trend reversal and target 61.8% retracement at 1.1273. This will now remain the favored case as long as 1.0092 resistance turned support holds.

Market sentiment is fragile on uncertainty regarding whether China would make a U-turn on its Covid reopening plans.

The widening spread between the US 2- and 10-year yields, which hit the widest inversion since the middle of 80s, and between the US 3-month and the 10-year yields warn that recession will be inevitable.

In the past decades, when we had such sustainable inversions - and they are sustainable, a recession followed the next year.

Oil rebounds from $75pb 

Recession fears were already weighing on fragilized oil on Monday morning, when news that OPEC+ would increase oil production by half a million barrels per day on the upcoming December 4th meeting wreaked havoc yesterday.

The barrel of US crude tanked to $75 per barrel, below the September dip.

Later, Saudi denied the report and we are back to $80 this morning.

But the fear of another round of Covid lockdowns, and the broad-based recession pricing shall continue playing against oil bulls.

Still, bulls see two positive factors. First, the US will stop selling its strategic petroleum reserves. And second, the EU sanctions against Russian oil will become effective in December. Both, should support another leg higher in oil.

While the first idea seems plausible - as not only the Americans will have to stop selling their reserves at some point, but also start thinking about refilling them, the effect of the European sanctions on oil are uncertain. According to latest news, Russia already lost around 90% of its European oil market, even before the sanctions began.

Therefore, the outlook for oil remains neutral to slightly negative in the short-run. There is now a double bottom near the $75/76 range, that OPEC+ will fight to hold. On the topside, a recovery above $95 before the year end seems unlikely.

Dollar up, equities down 

Yesterday, the latest German PPI data printed a monthly drop of 4.2% in October. Softer oil and gas prices certainly played a role, but the sharp drop has also been interpreted as a sign of an imminent, or an already-in recession.

The EURUSD dived to 1.0222, and could retreat further, as we see the US dollar picking up momentum since it rebounded from an important technical support last week.

The US dollar index bounced higher after getting very close to the 38.2% retracement level on 2021-2022 rally, and mixed Fed comments tilt the balance to the upside for the greenback.

San Francisco Federal Reserve (Fed) President Mary Daly warned about a too much tightening that could be ‘unnecessarily painful’ for the economy, but that couldn’t send the US stocks in the green.

The S&P500 closed 0.39% lower, while Nasdaq slid more than 1%.

Cryptic fall 

Cryptocurrencies remain under stress of the FTX collapse.

Genesis warns investors that it could file for bankruptcy if it can’t raise cash to save its lending unit that went down along with FTX.

Bitcoin is now below the $16’000 mark. And if those who prefer to hold on to their coins prevent the price from a free fall, it’s hard to convince new money to join the market in the middle of the turmoil.

We could see Bitcoin fall as low as $12’000.

Market movers today

A quiet day in terms of economic data, euro area November flash consumer confidence will be released in the afternoon.

Consensus expects the National Bank of Hungary to maintain its policy rates unchanged at the monetary policy meeting today.

Overnight, we expect the Reserve Bank of New Zealand (RBNZ) to hike its policy rate by 75bp, market remains split between 50 and 75bp with around 66 basis points priced in.

Today, we will also have ECB's Holzmann and Rehn as well as Fed's Mester, Bullard and George on the wires.

The 60 second overview

Inflation: German PPI inflation declined to 34.5% in October from 45.8%, more than expected. The big drop was due to energy and PPI for intermediate goods also eased, however, less positive dynamic for PPI for consumer goods, which is still trending up, especially due to non-durables.

Spanish mortgage relief: The Spanish government will approve mortgage relief measures including extension of loan repayments for up to seven years for more than one million vulnerable households and middle-class families. Around three-quarters of the population are homeowners, with most opting for floating-rate mortgages, which leaves many exposed to increasing interest rates.

Equities: Equities lower yesterday without any clear drivers for lack of appetite. However, looking at the sector performance it shows a rather big discrepancy between the cyclicals and defensives. Consumer staples leading the defensive universe higher while consumer discretionary leading cyclicals lower. Energy sector also lower yesterday but that could have been a lot worse if the Saudi Arabian energy minister had not been out denying a story about an oil output increase. In US Dow -0.1%, S&P 500 -0.4%, Nasdaq -1.1% and Russell 2000 -0.6%. Asian markets are mostly higher this morning and the same goes for both European and US futures.

FI: The inversion of the US and European yield curves continue on the back of comments from Federal Reserve officials that want to keep hiking until inflation is under control although others are indicating a slowing pace of the hikes. The slowing pace was also on ECB Centeno's agenda when he mentioned yesterday that conditions are in place for a rate hike of less than 75bp.

FX: The start to the week has been dominated by USD strength with EUR/USD approaching the 1.02 level. HUF and JPY have traded on the back-foot amid both yields moving back higher while commodity FX had a volatile session driven by oil fluctuations. EUR/NOK and EUR/SEK remain broadly unchanged compared to Friday's close.

Credit: Yesterday was slightly downbeat with iTraxx main 1bp wider to 95.6bp and iTraxx Xover 3.6bp wider to 477.1bp. In spite of the muted sentiment, the primary market started the week on a strong footing with several new prints in the EUR benchmark arena.