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Daily Pivots: (S1) 0.8652; (P) 0.8692; (R1) 0.8748; More...

Intraday bias in EUR/GBP stays neutral for the moment. Further decline is expected with 0.8869 resistance intact. On the downside, break of 0.8577 will resume the fall from 0.9267, and target 61.8% projection of 0.9267 to 0.8647 from 0.8869 at 0.8486.

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) 1.5551; (P) 1.5616; (R1) 1.5686; More...

Despite some loss of upside momentum, further rise is expected in EUR/AUD with 1.5429 support intact. Next target is 161.8% projection of 1.4281 to 1.4965 from 1.4716 at 1.5823. On the downside, break of 1.5429 minor support turn bias back to the downside for deeper pull back.

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) 0.9781; (P) 0.9801; (R1) 0.9821; More....

Intraday bias in EUR/CHF stays mildly on the upside despite some loss of upside momentum. Current rise from 0.9407 should target 61.8% projection of 0.9407 to 0.9798 from 0.9641 at 0.9883. Decisive break there will solidify the case of medium term bottoming and target 100% projection at 1.0032. For now, this will remain the favored case as long as 0.9641 support holds.

In the bigger picture, considering bullish condition in daily MACD, firm break of 0.9864 resistance will confirm medium term bottoming at 0.9407. Stronger rally should then be seen to 55 week EMA (now at 1.0138), even as a corrective rebound. Nevertheless, rejection by 0.9864 will bring down trend resumption through 0.9407 next.

UK CPI rose 0.5% mom in September, above expectation of 0.4% mom. In the 12 months to September, CPI accelerated from 9.9% yoy to 10.1% yoy, above expectation of 10.0% yoy. That's the highest level since around 1982 based on modelled estimates. CPI core also rose from 6.3% yoy to 6.5% yoy, above expectation of 6.4% yoy.

ONS said: "Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between August and September 2022. The continued fall in the price of motor fuels made the largest, partially offsetting, downward contribution to the change in the rates."

Food and non-alcoholic beverage prices accelerated from 13.1% yoy to 14.6% yoy. After 14 consecutive months of acceleration, current rate is estimated to be the highest since 1980.

Also released, RPI came in at 0.7% mom, 12.6% yoy versus expectation of 0.5% mom, 12.4% yoy. PPI input was at 0.4% mom, 20.0% yoy. PPI output was at 0.2% mom, 15.9% yoy. PPI output core was at 0.7% mom, 14.0% yoy.

Full CPI release here.

Daily Pivots: (S1) 1.3657; (P) 1.3734; (R1) 1.3810; More...

Intraday bias in USD/CAD remains neutral as consolidation from 1.3976 is still extending. Outlook will stay bullish as long as 1.3501 support holds. Firm break of 1.3976 will resume larger up trend, and target 200% projection of 1.2005 to 1.2947 from 1.2401 at 1.4285.

In the bigger picture, up trend from 1.2005 (2021 low) is still in progress. Based on current impulsive momentum, it could be resuming long term up trend from 0.9056 (2007 low). Whether it is or it isn't, retest of 1.4689 (2016 high) should be seen next. This will now remain the favored case as long as 1.3222 resistance turned support holds.

Daily Pivots: (S1) 0.6270; (P) 0.6305; (R1) 0.6344; More...

Intraday bias in AUD/USD remains neutral and further decline is expected with 0.6362 support turned resistance intact. Firm break of 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155 will target 138.2% projection at 0.5781. Nevertheless, break of 0.6362 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD, and bring stronger rebound back to 0.6539 resistance.

In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.6680 support turned resistance holds. Next target is 0.5506 low. Medium term momentum will now be closely monitored to gauge the chance of break of 0.5506.

Daily Pivots: (S1) 0.9759; (P) 0.9805; (R1) 0.9891; More...

Range trading continues in EUR/USD and intraday bias remains neutral. Deeper decline is expected with 0.9998 resistance intact. Below 0.9630 will bring retest of 0.9534 low first. Firm break there will resume larger down trend. However, break of 0.9998 will confirm short term bottoming and turn bias back the upside for stronger rebound.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, break of 0.9998 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish even with strong rebound.

Daily Pivots: (S1) 1.1247; (P) 1.1329; (R1) 1.1401; More...

Intraday bias in GBP/USD remains neutral as sideway trading continues. On the upside, break of 1.1494 will resume the rise from 1.0351 to 61.8% projection of 1.0351 to 1.1494 from 1.0922 at 1.1628. On the downside, below 1.0922 will turn bias back to the downside for 1.0351 low instead.

In the bigger picture, fall from 1.4248 (2018 high) is resuming long term down trend from 2.1161 (2007 high). Next target is 100% projection of 2.1161 to 1.3503 from 1.7190 at 0.9532. There is no scope of a medium term rebound as long as 1.1759 support turned resistance holds.

Daily Pivots: (S1) 0.9915; (P) 0.9986; (R1) 1.0027; More...

Intraday bias in USD/CHF stays neutral as it's bounded in range of 0.9914/1.0072. Further rise is still mildly in favor. On the upside, break of 1.0072, and sustained trading above 1.0063, will confirm larger up trend resumption. Next target is 1.0283 projection level. However, break of 0.9914 support will indicate rejection by 1.0063, and turn bias back to the downside for 0.9779 support first.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Sustained break of 1.0063 will target 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 0.9369 support holds, even in case of deep pull back.

Market movers today

In the UK, September inflation figures are released. We expect headline to increase by 0.2p.p to 10.1% yoy which would be 0.2 p.p above Bank of England's (BoE) latest inflation forecast. We see a slightly smaller increase in core inflation to 6.4% yoy (from 6.3%). Markets are currently pricing in 300bp hikes from BoE until November next year, which we think is too aggressive. Today's figures could however add further pressure on the current market pricing.

In the US, September Housing starts are expected to continue declining following the weak NAHB housing market indicator released yesterday, which fell to the lowest level since May 2020.

Fed's Kashkari and Evans will be on the wires. This week's speeches mark the final communication from the Fed before the blackout period begins on Saturday ahead of the November meeting.

Overnight, Australian labour market data is released, key info for the Reserve Bank of Australia.

The 60 second overview

Macro: German ZEW expectations showed a small rebound amid less gloomy outlook on energy markets. The current situation assessment declined in October, though. Overall, ZEW still provides a clear recession signal and sets the scene for another round of weaker PMIs for October.

Bank of England: The FT story from yesterday is "inaccurate", according to a spokesperson from BoE. That is, the BoE had not decided to delay sales of government bonds. Later, BoE pushed the date one day forward to 1 November due to fiscal announcements on 31 October.

China: Data releases in China on GDP etc. have been postponed until after the Congress of the Communist Party (CPC). It seems CPC wants full attention on the Congress, but it sends a signal that the data are probably not great.

Energy: Brent crude oil traded below USD90 per barrel yesterday not least on the postponement of (potentially weak) data, from the world's top crude oil importer, China. Reports that the US will continue releasing oil reserves was another factor. Today, President Biden will announce the sale of an additional 15 million barrels in December. In Europe, natural gas prices remain around EUR60 per MwH, the lowest levels in more than a year.

Equities continued the rebound but lost some of its steam. US indices closed up 1%. Risk on, but this time with value cyclicals outperforming, such as industrials and materials. VIX has moved lower over the past week, but only mildly so and is still way above 30. This is an example of the positioning tailwind driving this rebound. US futures are 1% higher this morning too.

FI: It was a volatile session with the new 7y German bond sale barely oversubscribed at only 1.04x. Hawkish comments from Villeroy in the morning superseded the UK developments but in the end, UK was yet again the catalyst for most directional moves in Euro space.

FX: Energy importing currencies in EUR, CZK and PLN had a strong session yesterday only surpassed by the spike in NZD as a consequence of higher-than-expected inflation. GBP, ZAR and NOK all traded on the back foot while USD/JPY continues to edge higher. USD/CNY hovers just around 7.20.

Credit: Credit markets had a slightly positive tone - supported by a general risk-on sentiment. That said, the level of turn-over in the corporate bond market was still relatively low. During Tuesday, the iTraxx main tightened marginally to 125bp while Xover tightened 5bp to 599bp.