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Daily Pivots: (S1) 0.9930; (P) 0.9964; (R1) 1.0001; More...

Intraday bias in EUR/USD stays neutral for consolidation below 1.0092. Further rise is in favor as long as 0.9847 minor support holds. Break of 1.0092 will target 38.2% retracement of 1.1494 to 0.9534 at 1.0283. However, break of 0.9847 will turn bias back to the downside for 0.9534/9630 support zone instead.

In the bigger picture, the case of medium term bottoming at 0.9534 building up, with bullish convergence condition in daily MACD. While it is too early to call for trend reversal, firm break of 0.9998 opens up stronger rebound back to 55 week EMA (now at 1.0630) even as a corrective rise. However, sustained trading back below 55 day EMA (now at 0.9938) will revive medium term bearishness for another fall through 0.9534 low.

Daily Pivots: (S1) 1.1538; (P) 1.1581; (R1) 1.1658; More...

Intraday bias in GBP/USD stays neutral for consolidation below 1.1644. Further rise is expected as long as 1.1256 minor support holds. On the upside, break of 1.1644 will resume rise form 1.0351 to 100% projection of 1.0351 to 1.1494 from 1.0922 at 1.2065. However, break of 1.1256 will turn bias back to the downside for 1.0922 support and below.

In the bigger picture, fall from 1.4248 (2018 high) is part of the long term down trend from 2.1161 (2007 high). Outlook will stay bearish as long as 1.1759 support turned resistance holds. Parity would be the next target on resumption. Nevertheless, firm break of 1.1759 will confirm medium term bottoming, and open up stronger rise back to 55 week EMA (now at 1.2392).

Daily Pivots: (S1) 0.9901; (P) 0.9941; (R1) 0.9998; More...

USD/CHF is staying in consolidation from 1.0146 and intraday bias remains neutral. Further rally is still expected with 0.9779 support intact. On the upside, break of 1.0146 will resume larger up trend to 1.0283 projection level. However, firm break of 0.9779 will be a sign of reversal, and bring deeper decline back to 0.9478 support instead.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Next target is 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9779 support holds, even in case of deep pull back.

Daily Pivots: (S1) 146.36; (P) 147.11; (R1) 148.23; More...

Intraday bias in USD/JPY remains neutral as consolidation from 151.93 is extending. Another fall could be seen, but downside should be contained by 38.2% retracement of 130.38 to 151.93 at 143.69 to bring rebound. On the upside, above 149.69 minor resistance will bring stronger rebound back towards 151.93 high. But upside should be limited there to continue the corrective pattern.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). 147.68 (1998 high) was already met and there is no clearly sign of topping yet. In any case, break of 140.33 support is needed to be the first sign of medium term topping. Otherwise, further rise is in favor to next target at 160.16 (1990 high).

Daily Pivots: (S1) 0.8552; (P) 0.8601; (R1) 0.8631; More...

Intraday bias in EUR/GBP remains on the downside at this point. Fall from 0.9267 is in progress and should target 0.8201/8388 support zone. For now, near term outlook will remain bearish as long as 0.8779 resistance holds, in case of recovery.

In the bigger picture, current development suggests that fall from 0.9267 is a down leg inside long term range pattern. Deeper fall could be seen towards 0.8201/8338 support zone. But strong support should be seen there to bring reversal.

Daily Pivots: (S1) 1.5450; (P) 1.5509; (R1) 1.5601; More...

Intraday bias in EUR/AUD stays neutral as consolidation from 1.5704 is extending. Deeper decline cannot be ruled out. But downside should be contained by 55 day EMA (now at 1.5163) to bring rebound. On the upside, break of 1.5704 will resume the rally from 1.4281.

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) 0.9881; (P) 0.9913; (R1) 0.9957; More....

EUR/CHF is staying in consolidation from 0.9953 and intraday bias remains neutral. In case of another fall, downside should be contained by 0.9798 support to bring rebound. Break of 0.9953 will resume the rise from 0.9407 to 100% projection of 0.9407 to 0.9798 from 0.9641 at 1.0032.

In the bigger picture, a medium term bottom should be in place at 0.9407. Further rally is expected as long as 0.9641 support holds, even as a corrective rebound. Next target 38.2% retracement of 1.1149 to 0.9407 at 1.0072. Reaction from there, as well as 55 week EMA (now at 1.0128) will reveal whether the trend is reversing.

Daily Pivots: (S1) 145.94; (P) 146.66; (R1) 147.68; More....

EUR/JPY is staying in consolidation below 148.38 and intraday bias remains neutral. In case of another fall, downside should be contained 140.88/144.06 support zone to bring another rally. Break of 148.38 will resume larger up trend to 100% projection of 133.38 to 145.62 from 137.32 at 149.56, which is close to 149.76 long term resistance.

In the bigger picture, the up trend from 114.42 (2020 low) is still in progress for 149.76 (2014 high). Decisive break there will pave the way to 161.8% projection of 114.42 to 134.11 from 124.37 at 156.22. This will now remain the favored case as long as 137.32 support holds.

Despite the broadly disappointing Big Tech earnings, and the heavy selloff we saw in most Big Tech stocks, US equities ended last week on a positive note, thanks to record profits from US Big Oil companies, and a much better than expected reaction to Apple results.

Big oil reveal big profits

Exxon Mobil posted the strongest quarter of its 152-year history. The company tripled its earnings compared to the same time last year, and made an almost $20 billion profit in Q3 on the back of higher production and soaring nat as prices. Exxon shares rallied almost 3%, and they recorded their best month on record with a nice 27% jump over the month.

Chevron, on the other hand, made a bit more than $11 billion, a bit less than last quarter, but better than market expectations and almost double the amount it made a year ago. Together with Exxon, they made a combined $30bn in just three months. The stock gained more than 1%.

In the UK, Shell also announced $9billion revenue last quarter, increased its dividend by 15% and announced a $4 billion share buyback program. The stock broke above the June-October horizontal range, to the upside. BP is due announce earnings tomorrow and will likely have a similar surprise for its investors.

In the meantime, the American crude consolidates above the 50-DMA, but failed to clear the $90 offers last week, as recession fears prevent a further rally from developing.

Higher oil prices mean higher inflation. Higher inflation means tighter Fed, and other central banks, and tighter central bank policies mean less growth, which in return means less demand for oil - even though, oil demand is expected to increase to record levels next year, and there is not enough oil, or enough willingness from oil producers to satisfy that extra demand.

Therefore, the downside in oil is as strongly capped as the upside. Solid support is seen around $78/82 region, and oil will be posting its first monthly advance since May.

Powell could again slap the Fed doves

Released last Friday, the US PCE index, which is a gauge of inflation closely monitored by the Federal Reserve (Fed) remained flat at 6.2% over the year, while the core PCE continued increasing, but happily less than expected.

The US core PCE now stands at 5.1% - that’s more than twice the Fed’s 2% policy target. Therefore, even though the data was less scary than many feared, it will hardly change the Fed’s plan to hike the rates by another 75bp this week, which is given some 80% probability at the start of this week.

What’s more important than the rate hike itself is what the Fed will be doing next. While some Fed members voiced possibility of slowing the pace of rate increases over the past weeks, there is a good chance that Jerome Powell slashes the dovish hopes this week, as he has done earlier this year. If that’s the case, we could see positive market vibes evaporate.

Bad news

Russia decided to pull out of a deal to allow Ukrainian crop shipments, blaming strikes on its naval fleet, which it said was due to drone attacks that were launched from Odessa. Turkey and the UN will be trying hard to save the pact, but we already see wheat futures jump more than 5% this morning - which is also bad for inflation expectations.

China on other hand missed both the manufacturing and services PMI expectations; both PMI indices slipped below 50, to the contraction zone in October due to Covid restrictions in major cities, and many cities are still dealing with lockdown measures, and Xi Jinping made sure to emphasize that he will continue to fight… the virus.

In Brazil, Lula won the election bearing Bolsonaro by less than 2 percentage points. The latter said he refuses the defeat, which means that we will see some more political uncertainty in Brazil in the coming weeks.

Market movers today

Today we get euro area HICP figures for October. Following the higher than expected prints out of Germany, Italy and France we expect an increase to 10.8% from 9.9% in September.

We also get Q3 flash GDP figures for the euro area. Following some better than expected country figures last week, we expect 0.3% qoq growth.

This week, markets' main focus will be on the US with both FOMC meeting and jobs report. We think it is too early to turn soft for the Fed, and we look for a 75bp hike and hawkish communication. We expect to see a relatively strong jobs report with another 220,000 employed.

We also have the Bank of England meeting this week. Markets lean towards a 75 bp rate hike.

The 60 second overview

Inflation: European inflation continues to surprise on the upside. On Friday German CPI for October rose to 10.4% from 10.0% in September. The HCPI measure jumped from 10.9% to 11.6%. In Italy the jump in inflation was even bigger as October HICP rose from 9.4% in September to 12.8% in October. Spain, however, was the "positive" surprise with headline inflation rising "just" 7.3% in October down from 9.0% in September. Part of the explanation is that Spanish energy inflation is now lower reflects the drop in natural gas and power prices in October that contrary to e.g. Germany feeds quickly into consumer prices. Today, we will see the euro area HCPI figures. Taking into account the numbers on Friday we expect a jump from 9.9% to 10.8%.

Brazil: Luiz Inácio Lula da Silva beat the incumbent Jair Bolsonaro in a heated second round of Brazil's presidential election. Lula won 50.9% percent of the votes versus Bolsonaro's 49.1%. Thanks to an electric voting system, the result was ready after three hours of counting. The electric voting system is only one of the things criticised by Bolsonaro during his election campaign, and many fear he may not accept a defeat but could instead instigate his voters to protest, in the worst case, triggering broad social unrest and instability. Lula is a 77-year old left-winger who served as Brazil's president from 2003 until 2010. His pledge to end illegal deforestation of the Amazon is good news for the global fight against climate change. Yet, his reputation has been tarnished by accusations of corruption despite the court annulling his convictions. During his last time in power, a commodity price boom helped him push through successful social reforms that led to a substantial reduction in poverty. This time around, we can expect more centrist and moderate policies as Lula will have to govern a much divided country together with a broadly right-leaning Congress.

Bond sell-off: The higher than expected CPI numbers on Friday triggered a new move higher in European yields with 10Y bunds up 14bp to 2.10% and a new repricing of the ECB. The market is now pricing in roughly a peak in ECB rates at 2.75%. It was below 2.60% after the ECB meeting on Thursday that was perceived "dovish" by the market. That said, yields and rate expectations are still significantly lower than they were two weeks ago. The next couple of months we see further upside. However, as we discuss in Yield Outlook: Pressure on long yields to set to ease as central bank rates and inflation approach a turning point that we published on 28 October, the market is now looking for a change in central bank rhetoric (a pivot) and a peak in inflation which should point towards stable to lower yields in 2023. In respect of that, note that the Dutch ECB member Knot yesterday openly admitted that a recession is likely though he still calls for a 50 or 75bp hike in December.

Japan: On Friday, the Japanese government announced a USD270 billion (5.5% of GDP) spending package to ease inflation pains. This includes subsidies to cut utility bills. Electricity bills will be cut by roughly 20% from January to September next year, which will pull inflation lower. The package will largely be financed by an extra budget and thus more debt.

Equities rose Friday led by a strong US cash session where most indices ended close to day-high. Huge sector differences with the tech sector 3% higher and consumer discretionary 1%. These two cyclical sectors are normally strongly positive correlated but on Friday the effect of earnings reports sent the two sectors in opposite directions. The general take on earnings results hand-in Friday was positive, which probably boosted sentiment. With 53% reported of the S&P 500 companies, we have the earnings surprise factor at 3.5%. This is below the historical average despite revenues once again coming in at super solid surprise factor at 1.4%, which is way above the historical average. US equities on Friday, Dow +2.6%, S&P 500 +2.5%, Nasdaq +2.9% and Russell 2000 +2.3%. Asian markets higher this morning with China mainland being a negative outlier. European futures are higher this morning while US futures are mixed.

FI: The main event this week is the Federal Reserve meeting on Wednesday, where the consensus expectation is for a rate hike of 75bp. This is fully priced in the market rates, and the focus will be on the comments regarding policy outlook and the terminal rate. On top of this, there is the Bank of England meeting on Thursday and the US labour market report on Friday.

FX: EUR/USD slid back down below parity on Friday, where short-term EUR interest rates rebounded. USD/JPY rose close to 148 due to high oil price and higher US Treasury yields.

Credit: Credit markets were back in a positive mood on Friday weighing prospects of further relief to rates markets. Itrax main tightened 1.7bp to close at 116.6bp while Itrax main tightened 11.9bp to close at 542.8bp (the tightest level since mid-September).

Nordic macro

Sweden: In Sweden, we get wage data for August at 08:00 and at 14:30 Stefan Ingves participates in a panel discussion about price stability at Danmarks Nationalbank. We do not expect new signals there. Perhaps better chance for that tomorrow when he gives a speech about the economic outlook. Tomorrow we also have PMI figures and on Wednesday the Riksbank's company survey is published, which will give interesting anecdotal evidence how the economy is faring.