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Daily Pivots: (S1) 130.76; (P) 131.18; (R1) 131.62; More....

Intraday bias in EUR/JPY remains neutral with focus on 130.86 resistance turned support. On the upside, break of 133.12 will resume the rise from 124.89 and target 137.49 high. However, firm break of 130.86 will argue that whole rise from 124.89 has completed. Deeper fall should then be seen back towards 127.85 support.

In the bigger picture, current development suggests that EUR/JPY has defended key support level of 124.08 key resistance turned support. And, the larger up trend from 109.03 (2016 low) is still in progress. Firm break of 137.49 will target 141.04/149.76 resistance zone next. This will now be the preferred case as long as 127.85 near term support holds.

Market movers today

The US jobs report for September is today's highlight. We estimate non-farm payrolls rose 190,000 in line with the recent trend, which may be sufficient to lower the unemployment rate to 3.8% from 3.9%. Most focus will be on average hourly earnings, where the monthly growth rates have been on the high side for a few months now, indicating that wage growth has begun to move higher due to the tight labour market. We estimate average hourly earnings rose +0.25% m/m, which would lead to a decline in the annual growth rate to 2.7% (close call between 2.7% and 2.8%) from 2.9%. The Fed is likely to continue hiking at a gradual pace.

Otherwise, focus in the markets remains on politics, not least the EU-Italy budget clash and the Brexit negotiations, which are about to restart now the Conservative Party Conference is over.

In Scandinavia, we are due to get production data for August in Denmark and Sweden (see next page).

Selected market news

Asian equity markets followed US ones lower, after US-China tension flared up again following remarks from US Vice-President Mike Pence accusing China of trying to sway the outcome of the mid-term elections through propaganda and influence operations. US Treasuries held steady, while Brent oil fell back below USD85/bl.

ECB sources yesterday suggested that a flexible application of the capital key for the QE reinvestments from next year was being discussed on a technical level. Further, more flexibility on the maturity of the reinvestments was discussed. This is a highly technical and political discussion about the detailed implantation of the ECB's purchases per country. We expect ECB to come up with new guidance on the reinvestment at the December meeting, which includes a flexible implementation around the capital key. The ECB's Draghi has continually said that the capital key is the 'guiding principle'.

A week after the initial deficit target was released, the Italian government finally also unveiled some of the underlying assumptions (see here). GDP growth is expected at 1.5% in 2019, 1.6% in 2020 and 1.4% in 2021. This is slightly higher than the previous government's forecast and significantly more optimistic than current consensus forecasts. The government believes that the expansionary fiscal measures will stimulate growth, but in light of signs of an economic slowdown, this view is not shared by investors and the European Commission, which will be especially concerned by the envisioned weakening in the 2019 structural balance.

Daily Pivots: (S1) 0.8828; (P) 0.8852; (R1) 0.8870; More...

EUR/GBP's strong break of 0.8847 support invalidated our view. Fall from 0.9097 has resumed and intraday bias is back on the downside for 61.8% retracement of 0.8620 to 0.9097 at 0.8802 first. Sustained break there will target 0.8620 support and possibly below. On the upside, break of 0.8917 resistance is needed to indicate short term bottoming. Otherwise, near term outlook will now remain cautiously bearish.

In the bigger picture, EUR/GBP is staying in long term range pattern from 0.9304 (2016 high). At this point, there is no clear sign of range break out yet. And more corrective trading would continue. On the upside, in case of another rise, we'd stay cautious on strong resistance from 0.9304/5 to limit upside in case of further rally. Meanwhile, if there is another medium term decline, strong support will likely be seen from 0.8303 to contain downside.

Daily Pivots: (S1) 1.6173; (P) 1.6227; (R1) 1.6320; More....

EUR/AUD rises to as high as 1.6306 so far today. The break of 1.6252 resistance confirmed that pull back from 1.6353 has completed with three waves down to 1.5984. And, larger up trend is ready to resume. Intraday bias is back on the upside for 1.6353 resistance first. Break will confirm this bullish case and target 1.6587 key resistance next. On the downside, below 1.6220 minor support will turn intraday bias neutral and bring retreat. But downside should be contained well above 1.5984 support to bring another rally.

In the bigger picture, up trend from 1.3624 (2017 low) is still in progress. Further rise should be seen to retest 1.6587 (2015 high). Decisive break there will resume the long term rally and target 1.7488 fibonacci level. On the downside, break of 1.5886 resistance turned support is need to be the first sign of medium term reversal. Otherwise, outlook will remain bullish in case of deep pull back.

Daily Pivots: (S1) 1.1377; (P) 1.1407; (R1) 1.1449; More...

Intraday bias in EUR/CHF remains neutral or the moment. On the upside, decisive break of 1.1452 resistance should confirm bullish reversal, after drawing strong support from 1.1154/98 zone. In that case, outlook will be turned bullish for 1.1713 resistance next. However, break of 1.1280 will argue that choppy recovery from 1.1178 has completed and bring retest of 1.1154/98 support zone again.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. This cluster level is in proximity to long term channel support (now at 1.1234) too. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

For the 24 hours to 23:00 GMT, the EUR rose 0.29% against the USD and closed at 1.1517.

In the macro news, Germany''s Markit construction PMI eased to a level of 50.2 in September, compared to a reading of 51.5 in the previous month.

In the US, data showed that the US factory orders advanced to a 11-month high level of 2.3% on a monthly basis in August, after registering a drop of 0.5% in the preceding month. Market participants had envisaged factory orders to climb by 2.1%. Moreover, the nation''s final durable goods orders rebounded 4.4% on a monthly basis in August, compared to a fall of 1.2% in the prior month. The preliminary figures had recorded a gain of 4.5%, while market participants had expected for a rise of 4.5%. Additionally, the number of Americans filing for fresh unemployment benefits unexpectedly slid to a level of 207.0K in the week ended 29 September 2018, compared to a revised level of 215.00K in the prior week.

In the Asian session, at GMT0300, the pair is trading at 1.1507, with the EUR trading 0.09% lower against the USD from yesterday''s close.

The pair is expected to find support at 1.1466, and a fall through could take it to the next support level of 1.1426. The pair is expected to find its first resistance at 1.1545, and a rise through could take it to the next resistance level of 1.1584.

Going forward, investors would closely monitor Germany''s factory orders and producer price index, both for August, set to release in a while. Later in the day, the US trade balance data for August followed by the US non-farm payrolls, unemployment rate and average hourly earnings, all for September, will keep trades on their toes.

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 0.59% against the USD and closed at 1.3023.

In the Asian session, at GMT0300, the pair is trading at 1.3018, with the GBP trading slightly lower against the USD 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 1.2877. The pair is expected to find its first resistance at 1.3065, and a rise through could take it to the next resistance level of 1.3111.

Trading trend in the Sterling today is expected to be determined by UK’s Halifax house price index for September, slated to release in a few hours

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 0.52% against the JPY and closed at 113.88.

In the Asian session, at GMT0300, the pair is trading at 113.91, with the USD trading a tad higher against the JPY from yesterday’s close.

Overnight data indicated that, in Japan, household spending rose 2.8% on an annual basis in August, higher than market expectations for a rise of 0.1%. Household spending had registered a rise of 0.1% in the previous month.

The pair is expected to find support at 113.54, and a fall through could take it to the next support level of 113.17. The pair is expected to find its first resistance at 114.37, and a rise through could take it to the next resistance level of 114.83.

Going ahead, traders would closely monitor Japan’s leading index and coincident index, both for August, scheduled to release in a while.

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

For the 24 hours to 23:00 GMT, the USD marginally rose against the CHF and closed at 0.9915.

In the Asian session, at GMT0300, the pair is trading at 0.9926, with the USD trading 0.11% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9901, and a fall through could take it to the next support level of 0.9875. The pair is expected to find its first resistance at 0.9943, and a rise through could take it to the next resistance level of 0.9959.

Looking ahead, investors would await Switzerland’s consumer price index for September, due to be released in a while.

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

For the 24 hours to 23:00 GMT, the USD rose 0.38% against the CAD and closed at 1.2922.

On the data front, Canada's seasonally adjusted Ivey Purchasing Managers Index (PMI) dropped to a two-year low level of 50.4 in September, compared to a reading of 61.9 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.2927, with the USD trading slightly higher against the CAD from yesterday's close.

The pair is expected to find support at 1.2877, and a fall through could take it to the next support level of 1.2826. The pair is expected to find its first resistance at 1.2958, and a rise through could take it to the next resistance level of 1.2988.

Looking ahead, traders would await Canada's unemployment rate for September and international merchandise trade balance data for August, set to release later in the day.

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