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Note modified Sweden call: after the surprisingly high Swedish September inflation numbers last week, we have revised our inflation forecast. It now runs very close to the Riksbank for the coming quarters. As a result, we have changed our call on the Riksbank from 'one hike in December and done' to 'one hike in December AND another 25bp hike in July next year'. For more information see here .

Market movers today

Brexit remains in focus also today: extended discussions around the Brexit strategy are likely to dominate today's UK cabinet meeting after negotiations with the EU broke down again over the weekend. Markets will keep an eye on any indication that signal a softening stance of the DUP party on the Irish border issue ahead of the EU's Brexit working dinner tomorrow.

Furthermore, risk sentiment in global markets remains shaky, not least due to rising geopolitical tensions around Saudi Arabia and Italian risks simmering in the background. The Italian government will start holding first discussions on the budget law today after having submitted its budget proposal to the EU yesterday evening.

German ZEW expectations for October will give a first indication of the economic momentum in Q4 and we will watch out for whether the recent recovery in the forward looking expectations component continues in October, despite lingering headwinds from the external and political side.

The UK labour market report for August is due out. We expect annual earnings growth to stay around the 3% mark, with the unemployment rate remaining stable at 4.0%.

Selected market news

Global risk sentiment got off to a nervous start this week as investors evaluate whether the recent sell-off marks the beginning of a bear market or just a temporary correction. Yesterday, the big US equity indices ended the day in the red amid a late session selling with most notably the S&P500 staying below the psychologically important 200-day moving average. As of now, Asian indices are posting small yet fairly consistent gains across the board this morning. As has been the case over the past week, the USD continues to follow global risk appetite and is slightly stronger in the early session. Long US yields - the key catalysts behind the souring risk sentiment, in our view - are little changed.

While it is still too early to call this a turning point - indeed we still pencil in choppy trading near term - our view remains that this is not the beginning of a persistent bear market, as among other things, underlying growth remains too strong. For more colour on the outlook for global equities we recommend listening to the latest podcast edition of Macro Strategy Views , where our global head of Research Thomas Harr discusses the equity outlook with our equity strategist Mattias Sundling (duration 17 minutes).

The Brent crude oil price has crept back up to USD81/bbl on improved risk sentiment. Yesterday, Donald Trump signalled a preparedness to accept Saudi Arabian denials of responsibility in the disappearance of Khashoggi in Istanbul. The recent rise in US-Saudi tensions have prompted Mike Pompeo to visit Riyadh today and any headlines on the matter are likely to stir volatility in front-dated oil contracts.

For the 24 hours to 23:00 GMT, the EUR rose 0.28% against the USD and closed at 1.1583.

In the US, data showed that the US NY Empire State manufacturing index climbed to a level of 21.1 in October, more than market consensus for a rise to a level of 20.0. In the prior month, the index had recorded a level of 19.0. Moreover, the nation’s business inventories rose 0.5% on a monthly basis in August, at par with market expectations. Business inventories had recorded a revised gain of 0.7% in the preceding month. Additionally, US advance retail sales jumped 0.1% on a monthly basis in September, following a similar rise in the previous month. Market participants had anticipated for advance retail sales to rise 0.6%.

In the Asian session, at GMT0300, the pair is trading at 1.1574, with the EUR trading 0.08% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.1543, and a fall through could take it to the next support level of 1.1511. The pair is expected to find its first resistance at 1.1606, and a rise through could take it to the next resistance level of 1.1637.

Looking forward, traders would await the Euro-zone’s trade balance data for August and ZEW economic sentiment for October, followed by Germany’s ZEW current situation for October, all set to release in a few hours. Later in the day, the US industrial production for September and NAHB housing market index for October, will garner significant amount of investor attention.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.33% against the USD and closed at 1.3156.

In the Asian session, at GMT0300, the pair is trading at 1.3145, with the GBP trading 0.08% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.3105, and a fall through could take it to the next support level of 1.3064. The pair is expected to find its first resistance at 1.3184, and a rise through could take it to the next resistance level of 1.3222.

Moving ahead, traders would closely monitor developments on the Brexit front along with UK’s ILO unemployment rate, average weekly earnings for August and jobless claims change for September, all scheduled to release in a while.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.34% against the JPY and closed at 111.78.

In the Asian session, at GMT0300, the pair is trading at 112.00, with the USD trading 0.20% higher against the JPY from yesterday’s close.

The pair is expected to find support at 111.69, and a fall through could take it to the next support level of 111.38. The pair is expected to find its first resistance at 112.25, and a rise through could take it to the next resistance level of 112.50.

In absence of key economic releases in Japan today, investor sentiment would be determined by global macroeconomic events.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.39% against the CHF and closed at 0.9870.

On the macro front, Switzerland's producer and import price index advanced 2.6% on an annual basis in September, undershooting market expectations for an advance of 3.1%. In the previous month, the index had registered a rise of 3.4%.

Meanwhile, the nation's total sight deposits rose to a level of CHF577.6 billion in the week ended 12 October, from CHF577.5 billion in the previous week

In the Asian session, at GMT0300, the pair is trading at 0.9883, with the USD trading 0.13% higher against the CHF from yesterday's close.

The pair is expected to find support at 0.9851, and a fall through could take it to the next support level of 0.9818. The pair is expected to find its first resistance at 0.9913, and a rise through could take it to the next resistance level of 0.9942.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.25% against the CAD and closed at 1.2986.

The Bank of Canada (BoC), in its business outlook survey for the three months ended mid-September indicated strong growth in firms supported by domestic and foreign demand. Moreover, the central bank expects to raise the interest rate in the next policy rate decision.

In economic news, Canada’s existing home sales unexpectedly slid 0.4% on a monthly basis in September, compared to an advance of 0.9% in the prior month. Market participants had envisaged existing home sales to remain unchanged.

In the Asian session, at GMT0300, the pair is trading at 1.2993, with the USD trading 0.05% higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2948, and a fall through could take it to the next support level of 1.2904. The pair is expected to find its first resistance at 1.3044, and a rise through could take it to the next resistance level of 1.3096.

Amid lack of economic releases in Canada today, traders would focus on global macroeconomic events for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the AUD rose 0.41% against the USD and closed at 0.7137.

LME Copper prices declined 0.5% or $29.0/MT to $6296.0/MT. Aluminium prices declined 0.8% or $17.0/MT to $2028.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7130, with the AUD trading 0.10% lower against the USD from yesterday’s close.

The minutes of the Reserve Bank of Australia’s (RBA) October monetary policy meeting indicated that policymakers reiterated that the next move in interest rate is more likely to be upwards but central bank is in no rush for a near-term move in monetary policy. Furthermore, the officials noted that the global economic conditions proved positive for the economy, amid continuous trade upheaval.

Elsewhere in China, Australia’s largest trading partner, the nation’s consumer price index (CPI) advanced 2.5% on a yearly basis in September, in line with market expectations. In the prior month, the CPI had recorded a gain of 2.3%. Moreover, China’s producer price index (PPI) rose 3.6% on an annual basis in September, at par with market consensus. In the previous month, the PPI had climbed 4.1%.

The pair is expected to find support at 0.7105, and a fall through could take it to the next support level of 0.7080. The pair is expected to find its first resistance at 0.7152, and a rise through could take it to the next resistance level of 0.7174.

Trading trend in the Aussie today is expected to be determined by Australia’s Westpac leading index September, slated to release overnight.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Gold rose 0.49% against the USD and closed at USD1230.80 per ounce, amid broad weakness in US dollar and US equities.

In the Asian session, at GMT0300, the pair is trading at 1229.70, with gold trading 0.09% lower against the USD from yesterday’s close.

The pair is expected to find support at 1223.63, and a fall through could take it to the next support level of 1217.57. The pair is expected to find its first resistance at 1236.33, and a rise through could take it to the next resistance level of 1242.97.

The yellow metal is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Silver rose 0.48% against the USD and closed at USD14.74 per ounce, tracking gains in gold prices.

In the Asian session, at GMT0300, the pair is trading at 14.73, with silver trading 0.07% lower against the USD from yesterday’s close.

The pair is expected to find support at 14.63, and a fall through could take it to the next support level of 14.54. The pair is expected to find its first resistance at 14.81, and a rise through could take it to the next resistance level of 14.89.

The white metal is showing convergence with its 20 Hr average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, Crude Oil declined 0.80% against the USD and closed at USD71.66 per barrel.

In the Asian session, at GMT0300, the pair is trading at 71.89, with oil trading 0.32% higher against the USD from yesterday's close, amid easing trade tensions between US and Saudi Arabia.

The pair is expected to find support at 71.08, and a fall through could take it to the next support level of 70.27. The pair is expected to find its first resistance at 72.47, and a rise through could take it to the next resistance level of 73.05.

Moving ahead, investors will keep a close watch on the weekly crude inventories data from the American Petroleum Institute (API), due later in the day.

Crude oil is trading above its 20 Hr and 50 Hr moving averages.