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Daily Pivots: (S1) 0.7019; (P) 0.7075; (R1) 0.7106; More...

AUD/USD fell notably after rejection by 4 hour 55 EMA. But downside is held above 0.7040 low so far. Intraday bias remains neutral first. Another rebound cannot be ruled out yet. But upside should be limited well below 0.7314 resistance to bring down trend resumption eventually. On the downside, firm break of 0.7040 will resume whole down trend from 0.8135 to 61.8% projection of 0.7676 to 0.7084 from 0.7314 at 0.6948 next.

In the bigger picture, fall from 0.8135 is tentatively treated as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 will target 0.6008 key support next (2008 low). However, break of 0.7500 support turned resistance will argue that the corrective pattern from 0.6826 is going to extend with another rising leg before completion.

Daily Pivots: (S1) 1.2972; (P) 1.3022; (R1) 1.3116; More...

USD/CAD's rebound from 1.2781 extends to as high as 1.3068 so far. Focus is now on 1.3081 resistance. Decisive break there will be the first sign of completion of whole choppy fall from 1.3385. In that case, near term outlook will be turned bullish for 1.3225 resistance for confirmation. On the downside, below 1.2886 minor support will turn bias to the downside for 1.2781 first.

In the bigger picture, corrective rebound from 1.2061 could have completed at 1.3385 already. Deeper fall is mildly in favor to 61.8% retracement of 1.2061 to 1.3385 at 1.2567, which is close to 1.2526 support. For now, we're not seeing fall from 1.3385 as resuming larger down trend from 1.4689 (2015 high) yet. Thus, we'll look for bottoming signal again below 1.2567 . On the upside, though, break of 1.3081 resistance will argue that the pull back from 1.3385 is completed and rise from 1.2061 is resuming for another high above 1.3385.

Daily Pivots: (S1) 1.1483; (P) 1.1515; (R1) 1.1550; More.....

EUR/USD's break of 1.1549 minor resistance indicates short term bottoming at 1.1431. Intraday bias is back on the upside for further rebound, to 55 day EMA (now at 1.1617) and possibly above. But upside should be limited by 1.17799/1814 resistance zone to bring down trend resumption finally. On the downside, below 1.1431 will resume the fall from 1.1814 to retest 1.1300 low.

In the bigger picture, corrective pattern from 1.1300 could have completed at 1.1814 after hitting 38.2% retracement of 1.2555 to 1.1300 at 1.1779. Decisive break of 1.1300 will resume the down trend from 1.2555 to 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. On the upside, break of 1.1814 will delay the bearish case and extend the correction from 1.1300 with another rise before completion.

Daily Pivots: (S1) 1.3142; (P) 1.3180; (R1) 1.3228; More...

GBP/USD's rise from 1.2921 is still in progress. Intraday bias stays on the upside for 1.3297 resistance. At this point, we'd still expect upside to be limited by 1.3316 key fibonacci level to limit upside to bring down trend resumption eventually. On the downside, below 1.3031 minor support will turn bias back to the downside for 1.2921 first.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4062). The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Daily Pivots: (S1) 0.9886; (P) 0.9911; (R1) 0.9925; More...

USD/CHF drops to as low as 0.9855 so far as correction from 0.9954 extends. Deeper fall could still be seen. But downside should be contained by 38.2% retracement of 0.9541 to 0.9954 at 0.9796 to bring rise resumption. On the upside, break of 0.9954 will target 1.0067 resistance next.

In the bigger picture, the pullback from 1.0067 has completed at 0.9541 already. And rise from 0.9186 is likely resuming. Firm break of 1.0067 will pave the way to retest 1.0342 key resistance. We'd be cautious on strong resistance from there to limit upside to bring another medium term fall to extend long term range trading.

Market movers today

Focus today will be on the equity market rout starting yesterday and continuing overnight in Asia. Developments in Italian bond markets also continue to be an important market driver.

On the data front, it's time for key Swedish inflation figures, where we look for a print below both the Riksbank and consensus forecast, see page 2.

Accounts from the ECB meeting on 13 September are due. Since then, communication has become less dovish and we will look at the assessment of not least wage growth.

US CPI inflation is due, which is getting more focus due to the tight labour market and still strong growth. We expect core inflation to stay unchanged at 2.3% y/y. It is clearly above the Fed's target but note that this is based on the PCE inflation number, which is a bit lower than CPI at present. However, inflation pressure generally seems to be rising in the US, as there are bottlenecks in the labour market and companies report very strong demand growth. US initial jobless claims are also being released and are expected to continue to hover around record lows.

Selected market news

Equities sold off heavily in the US session as a combination of rising US Treasury yields and renewed trade war concerns unsettled stock markets. Fears over equity valuation have been lingering for a while and notably technology stocks were hard hit with Nasdaq down over 4%, but also Dow Jones and S&P500 down more than 3%. The sell-off continued in the Asian session with Nikkei lower by over 4% at the time of writing. The VIX vol index reached its highest levels since April, illustrating the significant souring of risk sentiment.

US Treasury markets gained with yields down across the curve and the 10Y point dropped more than 4bp to now stand at 3.15%. Crude oil prices dropped whereas with Brent now around USD81.50/bbl as Hurricane Michael made landfall in Florida. JPY and CHF generally strengthened, Scandi currencies came under pressure but the USD weakened on a broad note with not least EUR/USD gaining.

The equity rout made the US President sharpen his recent criticism of the Fed . Trump said that the sell-off in equities was not driven by rising trade tensions but rather by the Fed 'going loco' with respect to rate hikes and adding 'they're so tight. I think the Fed has gone crazy'. The fall in equity markets could put some pressure on the Fed, but the comments from Trump are probably in themselves working in the other direction. Indeed, as central bankers sometimes put it, 'we are like whipped cream - the more you beat us the harder we become'. Meanwhile, focus is turning increasingly to whether the US could declare China a currency manipulator in its semi-annual report next week. We think not. See Flash Comment - Will the US label China a currency manipulator? Not likely, for details.

General Trend:

• Equities open sharply lower tracking volatile day in the US markets, many hitting multi-year lows
• Declines in technology shares weigh on markets
• Taiwan’s Taiex has largest decline since early 2008 (-6%)
• Nasdaq Futures extend losses during Asian trading
• Softbank and Tencent each decline over 6%
• Ganfeng Lithium declines over 25% in first day of trading in HK
• BMW to become majority owner of Chinese auto jv
• Iron ore miner Fortescue rises after announcing buyback
• EUR/USD rises in Asian trading, Trump again criticized the Fed
• China said to receive over $10B in orders for planned USD bond issuance
• Upcoming Japanese earnings in focus include Fast Retailing, FamilyMart and Lawson
• Taiwan’s Largan also expected to report
• Singapore’s Central Bank is expected to release its policy statement and Q3 Advance GDP data on Friday
• Reserve Bank of Australia (RBA) Financial Stability Report due on Friday

Headlines/Economic Data

Japan

• Nikkei 225 opened -2.0%
• (JP) Japan Securities Clearing Corporation (JSCC): Emergency margin call triggered for Index Futures trading
• (JP) Japan said to consider a supplementary budget of at least ¥900B in FY18 - Japanese Press
• (JP) JAPAN SEPT PPI (CGPI) M/M: 0.3% V 0.2%E; Y/Y: 3.0% V 2.9%E
• 7532.JP Confirms to acquire 60% stake in UNY from Familymart; Family to acquire 20% stake in Don Quijote at ¥6,600/share or ¥212B (~9% premium to prior close) [+7%]
• (JP) Bank of Japan (BOJ) Sakurai: Reiterates need to continue with easing persistently, need to continue easing cautiously
• (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.90% 30-year JGBs, avg yield 0.8980% v 0.850% prior, bid to cover: 3.92x v 4.68x prior

Korea

• Kospi opened -2.4%
• (KR) US Envoy Biegun may meet with North Korea's Choe next week - Korean press
• (KR) South Korea Aug Current Account Balance: $8.4B v $8.8B prior; Goods Balance: $11.2B v $11.43B prior
• (KR) South Korea: Denies report President Moon is considering replacing Finance Min Kim
• (KR) North Korea, China and Russia all share view on need to corresponding steps and adjusting sanctions
• (KR) South Korea exports more than double in first 10-days of October - Korean press

China/Hong Kong

• Hang Seng opened -3.1%, Shanghai Composite -3.0%
• (CN) China Premier Li Keqiang: China will promote a higher level of opening up and will continue to be an ideal place for foreign investment (yesterday after the close)
• (CN) China PBoC Open Market Operation (OMO): Skips OMO v skipped prior: Net: CNY0B drain v CNY0B drain prior (5th consecutive skip)
• (CN) China PBoC set yuan reference rate: 6.9098 v 6.9072 prior
• (US) US Treasury Sec Mnuchin met with PBOC Gov Yi Gang and discussed important economic issues
• (CN) China PBoC Gov Yi Gang met with US Fed member Williams during this week’s IMF meetings: The two officials discussed recent economic and financial developments, along with monetary policy
• (CN) China state-backed Global Times reiterated China should prepare more powerful steps to support economy, depending on the economic situation
• (CN) China PBoC Backed Financial News: Lowering the reserve ratio requirement (RRR) is good, but it does not cure all illnesses
• (CN) China govt said to be planning a major expansion of its 'too big to fail' rules - financial press
• (CN) China said to suspend approvals for new applicants to the Qualified Domestic Limited Partnership (QDLP) scheme - financial press

Australia/New Zealand

• ASX 200 opened -0.6%
• (AU) RBA Assistant Gov Ellis: Monetary policy cannot increase economy's speed limit, productivity
• FMG.AU To buyback up to A$500M in stock, to commence after Oct 25th [+1.6%]
• TNG.AU Announces title agreement related to Mount Peake [+14%]

Other Asia

• (SG) Singapore Central Bank (MAS): Keeping a close watch on property market
• (TH) Bank of Thailand official: Economy is capable of absorbing rate hike as it would not have much impact on borrowing

North America

• (US) Pres Trump: I think the Fed has "gone crazy" and is too tight; the Fed is making a mistake
• (US) Fed's Bostic (dove, voter): US unemployment rate of 3.7% is "very very low"; on many measures the economy is operating as desired
• VOXX Reports Q2 -$0.85 v -$0.74 y/y, Rev $108.9M v $113.5M y/y [-10%]
• TSLA CEO Musk: Earlier report of James Murdoch being the lead candidate for Chairman position is not correct – Tweet [-2%]
• (US) Weekly API Oil Inventories: Crude: +9.8M v +0.9M prior

Europe

• (UK) UK and EU are said to have agreed in principle on an all-UK backstop plan - UK's Telegraph
• (UK) Sept RICS House Price Balance: -2% v 1%e
• (IT) ESM's Regling says no immediate danger of Italy losing market access nor being downgraded below Inv Grade
• Bayer [BAYN.DE]: Reportedly courts could award new trial in Roundup punitive damages case over glyphosate (Round up weed killer) - press

Levels as of 01:30ET

• Hang Seng -3.9%; Shanghai Composite -4.5%; Kospi -3.9%; Nikkei225 -4.3%; ASX 200 -2.7%
• Equity Futures: S&P500 -1%; Nasdaq100 -1.1%, Dax -0.8%; FTSE100 -0.3%
• EUR 1.1573-1.1519 ; JPY 112.33-111.96 ; AUD 0.7081-0.7045 ;NZD 0.6480-0.6444
• Dec Gold +0.3% at $1,196/oz; Sept Crude Oil -1.6%at $71.97/brl; Sept Copper -0.5% at $2.736/lb

For the 24 hours to 23:00 GMT, the EUR rose 0.34% against the USD and closed at 1.1535.

In the US, data showed that the US producer price index climbed 2.6% on a yearly basis in September, rising for the first time in three months and falling short of market expectations for an advance of 2.7%. The index had recorded a gain of 2.8% in the previous month. Moreover, the nation’s mortgage applications slid 1.7% on a weekly basis in the week ended 05 October 2018, after registering a flat reading in the prior week.

In the Asian session, at GMT0300, the pair is trading at 1.1561, with the EUR trading 0.23% higher against the USD from yesterday’s close.

The pair is expected to find support at 1.1504, and a fall through could take it to the next support level of 1.1446. The pair is expected to find its first resistance at 1.1595, and a rise through could take it to the next resistance level of 1.1628.

In absence of macroeconomic releases in the Euro-zone today, traders will focus on the US initial jobless claims as well as the consumer price index and average hourly earnings, both for September, set to release later in the day.

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

For the 24 hours to 23:00 GMT, the GBP rose 0.08% against the USD and closed at 1.3154, amid renewed hopes for a Brexit deal.

On the macro front, UK's gross domestic product (GDP) remained flat on a monthly basis in August, compared to a growth of 0.4% in the prior month. Market participants had envisaged the GDP to rise 0.1%. Britain's industrial production advanced 1.3% on a yearly basis in August, beating market expectations for a gain of 1.0%. In the preceding month, industrial production had recorded a revised rise of 1.0%. Additionally, manufacturing production rose 1.3% on a yearly basis in August, surpassing market forecast for a gain of 1.1%. In the prior month, manufacturing production had recorded a revised rise of 1.4%. Meanwhile, the nation's total trade deficit widened more than expected to £1.27 billion in August, compared to a revised deficit of £0.57 billion in the previous month. Markets had expected the nation to post a deficit of £1.20 billion.

In the Asian session, at GMT0300, the pair is trading at 1.3231, with the GBP trading 0.59% higher against the USD from yesterday's close.

The pair is expected to find support at 1.3164, and a fall through could take it to the next support level of 1.3097. The pair is expected to find its first resistance at 1.3271, and a rise through could take it to the next resistance level of 1.3311.

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

For the 24 hours to 23:00 GMT, the USD declined 0.67% against the JPY and closed at 112.26.

Data indicated that Japan's flash machine tool orders advanced 2.8% on an annual basis in September, following a rise of 5.1% in the preceding month.

In the Asian session, at GMT0300, the pair is trading at 112.10, with the USD trading 0.14% lower against the JPY from yesterday's close.

The pair is expected to find support at 111.62, and a fall through could take it to the next support level of 111.13. The pair is expected to find its first resistance at 112.94, and a rise through could take it to the next resistance level of 113.77.

Amid lack of key economic releases in Japan 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.