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Daily Pivots: (S1) 0.6458; (P) 0.6480; (R1) 0.6516; More...

Intraday bias in AUD/USD stays neutral and more consolidations could be seen above 0.6439. Further decline is in favor as long as 55 D EMA (now at 0.6543) holds. Below 0.6439 will target 0.6413 cluster support (38.2% retracement of 0.5913 to 0.6706 at 0.6403. Decisive break there will indicate bearish reversal after rejection by 0.6713 fibonacci level. Nevertheless, sustained trading above 55 D EMA will keep the rise from 0.5913 intact, and bring retest of 0.6706 high.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. Outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and pave the way to 0.6941 structural resistance for confirmation.

Daily Pivots: (S1) 1.3998; (P) 1.4033; (R1) 1.4057; More...

Intraday bias in USD/CAD remains neutral and more consolidations could be seen below 1..407. But further rally is expected as long as 1.3930 support holds. Current development suggest that rise from 1.3538 is reversing whole fall from 1.4791. Above 1.4078 will target 61.8% retracement of 1.4791 to 1.3538 at 1.4312.

In the bigger picture, price actions from 1.4791 medium term top is likely just unfolding as a correction to up trend from 1.2005 (2021 low). Based on current momentum, rise from 1.3538 is the second leg, and a third leg should follow before up trend resumption. That is, range trading is set to extend for the medium term. For now, this will remain the favored case as long as 1.3725 support holds.

I was off last week and couldn’t believe the amount of news that landed on the headlines in just a week.

First, trade tensions between the US and China are fully back after China restricted rare earth metal exports to the US and the US threatened China with 100% tariffs — before Scott Bessent said later in the week that there could still be a trade truce for another three months. Bessent will meet Chinese leaders this week — hopefully to ease the latest flare-up.

Meanwhile, China kept its rates unchanged today and printed a set of stronger-than-expected production and GDP figures. Yet, growth expanded at the slowest pace in a year, while retail sales grew at the weakest pace in a year. Chinese equities kicked off the week with a small rebound from Friday on optimism over the upcoming trade talks, while the HSI is up 2.4%, led higher by a solid rebound in tech stocks this Monday, with Alibaba up 5% in Hong Kong at the time of writing.

Elsewhere in tech, TSMC is testing all-time highs in Taiwan after posting — last week — a fresh quarterly profit record and improved outlook on sustained AI demand. ASML in the Netherlands also printed strong earnings, further backing the AI rally and lofty valuations. Then, there was a fresh deal between OpenAI and Oracle, while Applied Materials was hit by new export restrictions toward China — a reminder that trade risks are never too far. But remember that Nvidia expects to make more than $54 bn in revenue last quarter, excluding China. So, Chinese risks — though present — are largely priced in. Plus, the prospects of lower Federal Reserve (Fed) rates continue to support valuations.

Speaking of which, Fed Chair Powell gave a fresh hint last week about an upcoming rate cut by the end of this month — and his words were the only solid indication of what the Fed might do in the absence of economic data as the US government remains shut. The probability of a 25 bp cut by month-end is now seen as nearly 100%. The good news is that the US Bureau of Labor Statistics will release September CPI data on Friday, giving investors something to rely on before the late-October Fed decision. The headline CPI is expected to have rebounded past the 3% mark, while the core CPI figure will likely remain steady above 3% - higher than the Fed’s 2% inflation target. But, because the Fed is now believed to have unofficially shifted its inflation comfort zone closer to 3%, and assuming the US jobs market continues to weaken, that 3% inflation shouldn’t derail expectations for a Fed cut this month, even less so as credit worries are somehow building under the rug.

Big US banks announced strong — even record — quarterly results last week on robust trading revenue and rising deal-making, but rising credit concerns weighed heavier. Zions and Western Alliance, two regional US banks, said they were victims of suspected fraud on loans tied to distressed property funds. The news landed after last month’s implosion of auto lender Tricolor and the bankruptcy of parts supplier First Brands. JPMorgan Chase CEO Jamie Dimon seized the opportunity to add fuel to the fire by comparing these failures to cockroaches, warning that “there are probably more.” But don’t panic just yet: the credit exposures of banks are thought to be sufficiently isolated to avoid sector- or system-wide risk. And three regional banks reported results on Friday — and no new cockroaches, phew. As such, Thursday’s sell-off in bank stocks eased on Friday, keeping the KBW index above its 100-day moving average, and US futures are positive at the time of writing following a strong open in Asia on trade-truce hopes between the US and China this week.

It was however amusing to see that — contrary to popular fear — Big Tech wasn’t behind last week’s volatility; banks and credit worries were! Still, the S&P 500 closed the week 1.7% higher, supported by tech stocks, as the Nasdaq 100 rallied almost 2.5%. In the absence of major data — and hopefully with easing credit fears — attention will remain on earnings: Netflix, Coca-Cola, GM, P&G and Intel are due to report in the US, while STMicroelectronics, UBS, Barclays and Dassault Systèmes will be ones to watch in Europe.

On the political front, the US government remains shut. In Japan, the ruling LDP’s nearly 13-year coalition with Kōmeitō ended last week, but the Ishin party is joining forces with the LDP to pave Takaichi’s way toward the top seat — a development that could keep the USDJPY above the 150 mark.

In Europe, French PM Sébastien Lecornu survived two no-confidence votes by shelving pension reform last week. But that move will necessarily force the French government to find savings elsewhere — all with a deteriorating credit rating, as S&P Global downgraded France to A+ from AA-. The EURUSD will likely remain under pressure.

And in the UK, Rachel Reeves was relieved to see gilt yields fall amid last week’s flight to safety — making her think that, if she improves the narrative around Britain, she might just improve the country’s fortunes. But wait before buying the story — and sterling — ahead of the Autumn Budget announcement.

In focus the week

Today is quiet on the data front. The week ahead will focus on inflation, with the UK print on Wednesday likely being a deciding factor for whether a Bank of England rate cut is on the table in November. On Friday, the euro area October flash PMI report will be released, followed by the delayed US September CPI reading and US October flash PMIs.

Economic and market news

What happened overnight

In Japan, newly elected LDP president Sanae Takaichi looks to have found her new coalition government. With the support from the Japan Innovation Party (Ishin), Takaichi should have enough votes to secure another LDP-led government in a parliamentary vote tomorrow. Ishin wants social security reform, lower VAT and a smaller parliament. LDP staying in power means that the largest opposition party, The Constitutional Democratic Party, which has previously advocated for the Bank of Japan to lower its inflation target and hike interest rates faster, will not gain influence. The yen weakened on the outlook of a dovish PM, a move also supported by global risk-on sentiment this morning.

In China, the monthly data release showed Q3 GDP growth slowing to 4.8% y/y from Q2 5.2% y/y in line with consensus expectations. Industrial output growth was the main surprise at 6.5% y/y (cons: 5.0%) from 5.2% in August. The domestic economy remains weak, with house prices down by 2.2% y/y and private consumption continuing to struggle.

What happened over the weekend

In the Middle East, Israel stuck Hamas targets in Gaza in retaliation for an armed attack which killed two Israeli soldiers. Israel has halted incoming aid until Monday, and the truce remains uneasy. Hamas announced its commitment to the ceasefire and stated it was unaware of any attacks in the region where the Israeli soldiers were killed.

In the euro area, the final HICP print confirmed the flash release of 2.2% y/y in September while core inflation was revised up slightly to 2.35% y/y from 2.34% y/y. The uptick in headline inflation in September was mainly due to energy base effects. We expect it to fall back to 2.0% y/y in the final quarter of the year as the energy outlook remains soft, while core inflation is expected to stay at 2.3% y/y.

In Sweden, the September labour force survey was slightly weak. The labour force declined to 5.238M from 5.320M in August, while the unemployment rate fell by 0.1% to 8.7% m/m. Earlier last week, labour market data from SPES offered some encouraging signs. SPES figures for September showed lower unemployment and an improvement in labour demand, while redundancy notices increased only slightly and continued to trend downwards.

Equities: Equities rebounded in the US on Friday to close out a volatile week dominated by earnings and renewed concerns around potential credit losses in the US banking sector. Financials were at the centre of attention, notably, insurance was the weakest performing industry of the week, while banks did better, backed by solid results from the large US banks. Those earnings helped stabilize sentiment and provided some support to the sector overall, even as worries linger around smaller regional lenders. In the US on Friday, Dow +0.5%, S&P 500 +0.5%, Nasdaq +0.5%, Russell 2000 -0.6%. Asian equities are trading notably higher this morning, led by cyclical and export-oriented names after more conciliatory comments from Trump ahead of renewed US-China trade discussions this week. In Japan, markets are rallying close to 3% as an LDP-led government under Takaichi looks increasingly likely, notably, without any material yen reaction so far this morning. Futures are pointing higher in both the US and Europe.

FI and FX: US yields generally edged higher on Friday, despite a downward trend through most of last week, as markets showed signs of relief with risk assets rebounding following recent concerns around regional banks' credit exposure. Despite several sources of uncertainty, markets continue to perform notably well. In the days ahead, attention will turn to another round of US-China trade talks, led by Vice Premier He Lifeng and Treasury Secretary Scott Bessent. On the data front, the continued absence of key government releases due to the shutdown will see one notable exception - Friday's September CPI print. The US repo market came under pressure last week. Most noticeably, the SOFR fixing rose outside the Federal Reserve's target range for the EFFR. EUR/USD fell below 1.17 after trending higher for most of the week amid broad USD weakness. EUR/CHF broke firmly below 0.93 during Friday's session as concerns about US regional banks surfaced. Markets are still digesting the announcement of central bank certificates in Norway. As expected, the primary reaction has been in basis markets and so far, the FRA/Nowa widening has been close to our expectations.

Daily Pivots: (S1) 0.9219; (P) 0.9247; (R1) 0.9276; More...

Intraday bias in EUR/CHF stays on the downside for the moment. Current fall is resuming larger down trend and should target 61.8% projection of 0.9660 to 0.9218 from 0.9452 at 0.9179. Firm break there will target 100% projection at 0.9010. Near term outlook will now stay bearish as long as 0.9311 support turned resistance holds, in case of recovery.

In the bigger picture, outlook remains bearish with EUR/CHF staying well inside long term falling channel after multiple rejection by 55 W EMA (now at 0.9390). Firm break of 0.9204 will resume the whole down trend from 1.2004 (2018 high). Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Break of 0.9452 resistance is needed to be the first sign of medium term bottoming.

Daily Pivots: (S1) 0.8664; (P) 0.8695; (R1) 0.8710; More…

Range trading continues in EUR/GBP and intraday bias remains neutral for the moment. On the downside, break of 0.8654 will resume the fall from 0.8750. Decisive break there will indicate bearish reversal and target 38.2% retracement of 0.8221 to 0.8750 at 0.8548. Nevertheless, on the upside, break of 0.8750/2 will resume the rise from 0.8221 towards 0.8867 fibonacci level.

In the bigger picture, rise from 0.8221 medium term bottom is seen as a corrective move. While further rally cannot be ruled out, upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Considering bearish divergence condition in D MACD, firm break of 0.8631 support will be the first sign that this corrective bounce has completed. Sustained trading below 55 W EMA (now at 0.8549) will confirm, and bring retest of 0.8221 low.

Daily Pivots: (S1) 1.7868; (P) 1.8015; (R1) 1.8093; More...

Intraday bias in EUR/AUD remains neutral for the moment, and more consolidations could be seen first. On the upside, sustained break of 0.8155 resistance will affirm the case that larger up trend is resuming. Further rise should be seen to retest 1.8554 high next. However, break of 1.7818 will dampen this bullish view and turn focus back to 1.7569 support instead.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern, which might have completed already. Firm break of 1.8554 will resume larger up trend from 1.4281 (2022 low), and target 61.8% projection of 1.5963 to 1.8554 from 1.7569 at 1.9170. Nevertheless, break of 1.7569 support will delay the bullish case and extend the correction from 1.8554.

Daily Pivots: (S1) 174.91; (P) 175.44; (R1) 176.06; More...

Intraday bias in EUR/JPY remains neutral for the moment. On the upside, break of 176.44 resistance will suggest that pullback from 177.91 has completed, and bring retest of this high. Further break of 177.91 will resume larger up trend to 61.8% projection of 161.06 to 173.87 from 172.24 at 180.15 next. However, break of 174.80 and sustained trading below 175.03 resistance turned support will indicate that it's already in a larger scale correction, and target 172.24 support.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Firm break of 172.24 support will suggests that it has turned into consolidations again. But still, outlook will continue to stay bullish as long as 55 W EMA (now at 167.43) holds, even in case of deep pullback.

Daily Pivots: (S1) 201.20; (P) 201.72; (R1) 202.76; More...

Intraday bias in GBP/JPY remains neutral for the moment. On the upside, above 203.41 will suggest that pullback from 205.30 has completed, and bring retest of this high. Firm break there will resume larger rally to 61.8% projection of 184.35 to 199.96 from 197.47 at 207.11. However, break of 200.67 and sustained trading below 201.24 resistance turned support will raise the chance of bearish reversal, and bring deeper decline to 197.47 instead.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, decisive break of 197.47 will dampen this view and could extend the corrective pattern with another fall.

Asian equities advanced today, led by the sharp rally in Japan where Nikkei hit record highs after political uncertainty finally cleared. The ruling Liberal Democratic Party struck a coalition agreement with the Japan Innovation Party, ensuring LDP leader Sanae Takaichi will become Japan’s first female prime minister. Investors cheered the prospect of a stable government and continuity in pro-growth economic policy.

The coalition deal, expected to be signed Monday evening between Takaichi and JIP leader Hirofumi Yoshimura, effectively secures Takaichi’s victory in Tuesday’s parliamentary vote. Her ascent is seen as a boost to market confidence, removing the leadership vacuum that had weighed on sentiment in recent weeks. Nikkei’s record-setting performance reflected renewed optimism toward domestic policy coordination and reform momentum.

Economists expect Takaichi to favor fiscal stimulus and resist further monetary tightening, a stance consistent with recent LDP priorities. Such positioning is typically negative for Yen and Japanese bonds but supportive for equities and corporate profits.

Sentiment was also lifted by slightly better-than-expected Chinese GDP data. Growth slowed to 4.8% in Q3, the weakest in a year but still above forecasts. Industrial output accelerated sharply, offsetting deeper weakness in property and private investment. While the overall picture remains uneven, the resilience reinforced the perception that Beijing remains on track to meet its “around 5%” growth target.

Diplomatic news further helped risk appetite. A phone call between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng last Friday was described as productive, with both sides agreeing to continue discussions in Malaysia later this week. The constructive tone fueled hopes of avoiding the threatened 100% tariffs scheduled for November 1.

Across FX markets, risk currencies outperformed. Kiwi led gains after local CPI data showed inflation holding at the top of the RBNZ’s target band, followed by Aussie and Euro. In contrast, the Dollar, Yen, and Swiss Franc weakened as investors rotated into higher-beta assets. Sterling and Loonie traded in the middle of the field.

In Asia, at the time of writing, Nikkei is up 2.90%. Hong Kong HSI is up 2.22%. China Shanghai SSE is up 0.57%. Singapore is on holiday. Japan 10-year JGB yield is up 0.038 at 1.669.

BoJ's Takata repeats call for rate hike warns inflation risks overshooting

BoJ board member Hajime Takata reinforced his hawkish stance today, arguing that Japan has roughly achieved the 2% inflation goal and now risks overshooting it. In a speech, Takata said steady gains in wages and prices show the economy is strong enough to withstand further normalization, calling the current environment a “prime opportunity to raise interest rates.”

Takata was one of two board members who dissented at the September meeting, when the BoJ voted to keep its policy rate at 0.5%. He instead proposed a 25bps hike to 0.75%.

Citing the BOJ’s October Tankan survey and feedback from branch managers, Takata said improvements in employment and income are supporting private consumption. He emphasized that both wage and price-setting behaviors have changed materially, signaling that Japan’s economy has entered a new phase after decades of deflationary mindset.

NZ CPI jumps to 3% in Q3, hits top of RBNZ target band

New Zealand’s inflation pulse picked up in the Q3, highlighting lingering price pressures that could restrain the RBNZ from cutting rates too aggressively. Headline CPI rose 1.0% qoq, above forecasts of 0.8% and sharply higher than 0.5% pace in Q2. On an annual basis, inflation climbed from 2.7% yoy to 3.0% yoy, matching expectations but reaching the top of the central bank’s target band and its highest level since mid-2024.

Much of the rebound came from tradeable prices, which rose 2.2% yoy versus 1.2% previously, suggesting imported cost pressures are resurfacing. By contrast, non-tradeable inflation eased slightly from 3.7% yoy to 3.5%, hinting at some moderation in domestic demand.

Even so, the composition of inflation is concerning: housing and utilities accounted for nearly one-third of the total rise in the annual CPI. Electricity prices jumped 11.3%, rents increased 2.6%, and local authority rates surged 8.8%.

With these three categories making up just 17% of the CPI basket, the data underline how sticky living costs have become. For the RBNZ, which only recently delivered an outsized 50bps rate cut to counter slowing growth, this renewed inflation uptick narrows its policy flexibility.

NZD/USD bounces slightly in consolidations, CPI fails to shift bearish outlook

New Zealand Dollar found modest support after Q3 CPI data showed inflation rising back to the top of the RBNZ’s 1–3% target band. The 3.0% annual print, while firmer than Q2’s 2.7%, was largely in line with expectations and matched the RBNZ’s own August forecast. While the data limits the case for another large rate cut like the 50bps one at last meeting, it doesn't materially alter the easing bias.

The RBNZ has signaled confidence that inflation will gradually ease toward 2% by mid-2026 as economic slack expands. The latest data confirm that while imported, or tradeable, inflation picked up, non-tradeable inflation — the domestically driven component — continued to cool, reinforcing the central bank’s belief that underlying pressures are softening. That leaves the door open for another 25bps cut later this year.

Technically, NZD/USD has just hit 100% projection of 0.6119 to 0.5799 from 0.6006 at 0.5686 last week. Considering bullish convergence condition in 4H MACD too, a short term bottom is likely formed at 0.5681. Some consolidations is likely in the near term, with prospect of stronger recovery.

But outlook will stay bearish as long as 0.5844 resistance holds. Firm break of 0.5681 will resume the whole fall from 0.6119 to 161.8% projection at 0.5488, which is close to 0.5484 key support (2025 low so far).

China GDP growth slows to 4.8% in Q3, property slump deepens

China’s GDP expanded 4.8% yoy in the Q3, the slowest pace in a year but still slightly ahead of expectations for 4.7%. Even so, with cumulative growth of 5.2% over the first nine months, China remains on track to meet its full-year target of “around 5%”.

Industrial production provided a bright spot, climbing 6.5% yoy in September, up sharply from August’s 5.2% and well above expectations of 5.0%. Retail sales also beat expectations of 2.9% yoy slightly, rising 3.0% even as the pace slowed from 3.4%, pointing to modest resilience in consumption.

Yet beneath the surface, the investment picture deteriorated further. Fixed-asset investment slipped -0.5% year-to-date yoy. Property investment fell -13.9%, extending the sector’s prolonged drag on growth. Private investment declined -3.1%, marking a deeper contraction than earlier in the year, and even ex-property investment slowed from 4.2% to 3.0% growth.

The data reaffirm that while parts of the industrial economy are stabilizing, domestic demand and investor sentiment remain fragile.

Inflation week with CPI from the US, UK and Canada

Other than trade policy, this week’s economic narrative revolves around one word: inflation. Consumer price data from the US, UK, Canada and New Zealand headline a critical stretch that will test the conviction of rate-cut expectations across the world’s leading central banks.

With the US government shutdown still in place, investors are bracing for a rare week where one report — Friday’s CPI — could carry disproportionate weight. For the Fed, the timing is crucial. The September CPI figures, gathered before the shutdown began on October 1, will likely be the only federal dataset available before the October 28-29 FOMC meeting.

Consensus forecasts see headline inflation ticking up to 3.1% yoy from 2.9%, with core unchanged at 3.1%. Such results would not disrupt the strong market consensus for a 25bps rate cut this month, though the data could still influence the debate over a follow-up move in December.

In the UK, inflation is again threatening to upend the BoE’s easing roadmap. September CPI is forecast to hit 4.0%, doubling the 2% target. BoE hawks, led by Chief Economist Huw Pill, have been vocal about the risk of premature rate cuts, a stance reinforced by the IMF’s warning that the UK faces the most persistent inflation among G7 peers.

The November BoE meeting remains finely balanced, but another inflation overshoot could make it politically difficult for the BoE to resume cuts this year. .

In Canada, policymakers face a similar dilemma. A surprisingly robust September jobs report has already reduced the odds of a back-to-back rate cut at the upcoming BoC meeting. The September CPI data will provide the final input before a decision, with any renewed inflation momentum likely to reinforce the case for a pause.

Rounding out the week, PMI releases from Australia, Japan, the Eurozone, the UK and the US will offer the broadest read yet on global demand conditions — with the US prints carrying extra weight as one of the few near-term gauges of economic activity during the data blackout.

Here are some highlights for the week:

• Monday: New Zealand CPI; China rate decision, GDP, industrial production, retail sales, fixed asset investment; Germany PPI; Canada IPPI and RMPI.
• Tuesday: New Zealand trade balance; Swiss Trade balance; Canada CPI.
• Wednesday: Japan trade balance; UK CPI, PPI.
• Thursday: Canada retail sales; Eurozone consumer confidence.
• Friday: Australia PMIs; Eurozone PMIs; UK retail sales, PMIs; US CPI, PMIs.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 201.20; (P) 201.72; (R1) 202.76; More...

Intraday bias in GBP/JPY remains neutral for the moment. On the upside, above 203.41 will suggest that pullback from 205.30 has completed, and bring retest of this high. Firm break there will resume larger rally to 61.8% projection of 184.35 to 199.96 from 197.47 at 207.11. However, break of 200.67 and sustained trading below 201.24 resistance turned support will raise the chance of bearish reversal, and bring deeper decline to 197.47 instead.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, decisive break of 197.47 will dampen this view and could extend the corrective pattern with another fall.