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The price of Bitcoin jumped in the Asian session to a high of $6565. The gain was attributed mostly to technical traders rather than fundamental traders as there was no major Bitcoin news overnight.

On Tuesday, The Wall Street Journal (WSJ) revealed that Bitcoin manipulation was carried out by bots in a damaging report for the sector. This would not have been a shock to many crypto enthusiasts but coupled with the fact that large exchanges manipulate crypto prices; the digital assets industry appears to be becoming increasingly fragile.

Yesterday, WSJ released a documentary about cryptocurrencies in which staff created a new coin known as WSJCoin. The aim was to show people how easy it was to create such currencies.

Meanwhile, crypto investor, Michael Novogratz, lowered his estimates for the price of Bitcoin for the second time. Previously, he had predicted that the price will top $10,000 before the end of the year. Yesterday, he said that the price will likely not pass $9000. If he is right, it means that Bitcoin could gain by more than 40%.

The BTC/USD pair is currently trading at 6522, which is slightly lower than the intraday high of 6565. This jump means that there is a likelihood that the price will continue the upward trend. If it does, the pair will likely find resistance at the 6600 level.

The US dollar strengthened after strong economic numbers released yesterday. ADP’s non-farm employment data showed that the economy added 230K jobs in September. This was the highest number in seven months and more than the 187K jobs that traders were expecting.

Such data sent US treasury yields soaring due to inflation fears from investors. Employment numbers were followed by PMI numbers that beat analysts’ estimates. The data from ISM showed that the PMI of the services sector rose to 53.9, which was higher than the 52.9 that traders were expecting. The non-manufacturing PMI rose to 61.6 which was higher than the expected 58.1. It was at the highest level since 1998.

The sterling declined sharply against the US dollar. This decline was due to the strong dollar, mixed economic data and Theresa May’s speech at the Tory party conference. Her speech was reviewed by pundits as being sincere and better than her performance in 2017. She talked about the future of UK businesses after leaving the European Union and called for members to support her plan. With no major economic data expected today, traders will focus on tomorrow’s jobs numbers from the US.

The Australian dollar declined to the lowest level since 2016 against the USD. This decline was because of the strong greenback. Earlier today, Australia released trade data. The trade balance rose to A$1,604B, which was better than the expected $1430B.

EUR/USD

The EUR/USD pair fell to an intraday low of 1.1470. This was the lowest level since August. The four-hour chart shown below shows that the pair has lost more than half of the previous gains. This price is between the 23.6% and 38.2% Fibonacci Retracement levels. The MACD and the double EMA is showing signs that the downward trend will continue. If it does, the pair will test the 1.1400 support level.

GBP/USD

The GBP/USD pair declined sharply to an intraday low of 1.2921. This price is close to the 38.2% Fibonacci Retracement level as shown in the four-hour chart below. The pair’s price is along the lower Bollinger Band, a sign that it is a strong downward trend. The RSI is currently at 29, which is a sign that the downward trend is strong too. Therefore, the pair will likely continue moving lower to the 1.2900 level.

AUD/USD

The AUD/USD pair declined to 0.7086, which is the lowest level since March 2016. At this level, the pair found some resistance as shown on the four-hour chart below. The Bears Power indicator shows that bears are still in control. This is evidenced by double moving EMA and the Money Flow Index indicators shown below. Therefore, the pair will likely remain at these low levels. If it crosses past the 0.7085, it will likely continue to move lower.

USDJPY short-term Elliott wave view suggests that the pair is nesting higher as impulse structure. Looking for an extension higher towards 118.24-120.30 100%-123.6% Fibonacci extension area from 3/23/2018 low. And until that area is reached dips are expected to remain supported in 3, 7 or 11 swings looking for upside extension. Currently, Minor wave 3 remain in progress as impulse structure, in which the lesser degree cycles showing the sub-division of 5 wave structure in each leg higher thus favored it to be an impulse structure.

The rally to 113.12 high ended lesser degree Minutte wave (iii). A pullback to 112.55 low ended Minutte wave (iv). Then a move to 114.05 high ended 5 waves rally in Minutte wave (v) & also completed Minute wave ((iii)). Down from there a pullback to 113.49 low ended Minute wave ((iv)). Near-term Minute wave ((v)) of 3 remain in progress looking to extend higher 1 more push towards 115.01-116.24 area higher. Afterwards, the pair is expected to do a Minor wave 4 pullback in 3, 7 or 11 swings before further upside towards 118.24-120.30 area is seen. The right side tag is up therefore selling is not recommended. And expect buyers to appear in 3, 7 or 11 swings.

USDJPY 1 Hour Elliott Wave Chart

The EURGBP currency pair has dropped from the PP point, and we can see a consolidation around the S1 support. A retracement to the POC zone will probably decide the next move. Any rejection from the 0.8925-8940 region should target 0.8860. A break below 0.8860 might retest 0.8800 the S2 support. However a 4h candle close above 0.8970 might target 0.9037 and 0.9085. Both EUR and GBP have light news today, so normal volatility should be expected, except if unexpected news concerning Brexit hits the wire. Don't forget to follow our Forex calendar for all regular updates on the news, economic announcements, forecasts and much more.

Technically, the EUR/GBP currency pair formed a zig zag pattern that is bearish in its shape, so we might say that a general trend is still bearish. For news traders, bear in mind that the light GBP news - Housing Equity Withdrawal that is scheduled for early Thursday trading might not move the market that much, as its impact is negligible. Always pay attention to price action before you start making new entries. Consolidation usually precedes breakouts.

Pivot Lines - Weekly Support and Resistance

POC - POC - Point Of Confluence (The zone where we expect the price to react - aka the entry zone)

The EURUSD currency pair made a bearish break below the major support trend line (dotted green) and the round level of 1.15. The bearish breakout and candlestick patterns could indicate a change of trend and make a bearish continuation more likely. This makes it likely that a potential wave B (purple) has been completed, and that the price is starting a bearish wave C (purple).

The EUR/USD currency pair broke below the support trend lines (dotted) after completing an ABC (orange) correction. The price is now falling towards the Fibonacci targets of wave 5 vs 1+3.

The EUR/USD currency pair bearish breakout is decreasing the chances of a potential larger WXY correction (pink) within wave B (purple), and making it more likely that the wave B (purple) has already been completed.

The USD/JPY made a bullish bounce after a retracement within the uptrend channel. The bullish continuation within the uptrend channel is now challenging the resistance trend line again.

The USD/JPY is now at a key bounce or break spot which is resistance line (orange) of the channel. A bullish continuation could see be aiming for the Fibonacci target whereas a retracement could see price return to the support trend line (green).

The USD/JPY seems to be building a 5 wave (orange) pattern after breaking above the resistance trend lines (dotted red) and could now be bouncing at the Fibonacci levels of wave 4 (orange).

General Trend:

• Higher yields support bank shares in Australia and Japan
• Bank of Queensland (BOQ.AU] rises over 3%, FY profits beat ests
• US Treasury yields help push JGB yields higher
• US yields weigh on the commodity and Asian currencies
• Australia monthly retail sales due for release on Friday
• Samsung Electronics expected to report prelim Q3 earnings on Friday

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.3%
• (AU) AUSTRALIA AUG TRADE BALANCE (A$) 1.60B V 1.45BE
• (AU) Australia Sept CBA Services PMI: 52.2 v 51.8 prior
• (AU) Australia sells A$500M v A$500M indicated in Dec 7 2018 notes, avg yield 1.862%, bid to cover: 5.72x
• (NZ) New Zealand sells NZ$100M in 2.5% Sept 2040 inflation-indexed bonds: avg yield 1.8114%, bid to cover 3.65x
• (NZ) Moody's: Stable outlook for New Zealand banking system

China/Hong Kong

• Shanghai Composite closed, Hang Seng opened -0.2%
• ZTE [763.HK]: Confirms US Court extended the term for the court-appointed monitor to March 22, 2022
• (CN) World Bank maintains China 2018 GDP growth forecast at 6.5%
• (CN) US Navy said to propose 'major' show of force to warn China – CNN
• (CN) US Scretary of State Pompeo to visit China on Oct 8th
• (HK) Hong Kong Sept PMI: 47.9 v 48.5 prior
• (HK) Certain banks in Hong Kong said to increase mortgage rebates amid recent rise in interest rates - HK Press
• (HK) Certain Hong Kong property developers said to use incentives to increase sales - HK Press

Japan

• Nikkei 225 opened +0.5%
• Nintendo: Said to plan to release new version of 'Switch' in H2 2019 - US financial press
• Toyota: Confirms plans to start the 'Monet Technologies Corporation' jv with Softbank by April 2019
• (JP) Japan said to consider a reduced sales tax for convenience store food - Japanese Press
• (JP) Prime Min Abe cabinet approval rating at 50% (post reshuffle) - Nikkei
• (JP) Japan Finance Ministry (MOF) to sell ¥700B in 30-yr JGBs on Thursday Oct 11th

South Korea

• Kospi opened +0.1%
• Hynix: To raise investment in new South Korea chip plant to KRW20T ($17.7B)
• (KR) Bank of Korea Gov Lee: Financial imbalances accumulating in South Korea with rising household debt
• (KR) South Korea Sept Foreign Reserves: $403B v $401.1B prior (Record high)

Other

• (TH) Thailand Central Bank said to place curbs on mortgage lending - Local Press
• (TW) Taiwan Central Bank Gov Yang: No need to raise key rate for now; Global trade risks may affect financial markets; US dollar (USD) accounts for more than 70% of Taiwan's FX reserves
• (TW) Taiwan Sept exports may rise more than 2% y/y (vs. 1.9% prior) - Local Press

North America

• US equity markets ended higher: Dow +0.2%, S&P500 +0.1%, Nasdaq +0.3%, Russell 2000 +0.9%
• Alphabet [GOOGL]: US Justice Dept (DoJ) may investigate the company for anti-competitive behavior in connection with the Android operating system - NY Post
• Cummins [CMI]: Isuzu confirms to explore the establishment of a partnership with Cummins
• (US) DOE CRUDE: +8.0M V +1.5ME
• (US) Fed Chair Powell: Need to keep moving rates gradually toward normal; policy is still accommodative; rates may go past 'neutral'
• (US) Fed's Barkin (Voter, Leaning Hawk): Policy rate is still below neutral; supports gradual path so long as data fits
• (US) Fed's Evans (non-voter, dove): Policy to turn mildly restrictive in 2019
• (US) Fed’s Mester (hawk, FOMC voter): US divergence from other economies could feed back through USD and other markets and would have to be factored in policy; A one-day move in US bonds is not concerning.

Europe

• (IT) Italy PM Conte: Italy's debt/GDP Target is below 130% in 2019, and down to 126.5% in 2021
• (IT) Italy govt reportedly agrees to deficit/GDP target of 2.4% in 2019, 2.1% in 2020, and 1.8% in 2021 - Italian press
• RU) Russia Energy Min Novak: there's always the risk of oil prices going too high; oil prices are probably a bit too high already

Levels as of 01:30ET

•  Nikkei 225, -0.3%, ASX 200 +0.5%, Hang Seng -2%; Shanghai Composite closed; Kospi -1.6%
• Equity Futures: S&P500 -0.4%; Nasdaq100 -0.5%, Dax +0.1%; FTSE100 -0.1%
• EUR 1.1495-1.1463 ; JPY 114.56-114.21; AUD 0.7114-0.7078 ;NZD 0.6521-0.6488
• Dec Gold -0.2% at $1,200/oz; Oct Crude Oil -0.3% at $76.24/brl; Dec Copper +0.3% at $2.833/lb

Market movers today

Today, the most important release is the Swedish housing price data from Maklarstatistik. We think the release is likely to show a decline in housing prices

Otherwise, markets will focus on the ongoing Italian budget negotiations with the final 2019 DEF document still to be released and what happens with the Brexit negotiations now the Conservative Party Conference is over.

Selected market news

10Y US Treasury yields soared to the highest level since 2011, breaching 3.19% on the back of growing US economic optimism and upbeat comments from Fed Chairman Powell. US stock futures still point to a lower opening today, while USD/JPY rose to its highest level in more than a year. Japanese 10Y yields surged past 0.145%, a level that previously triggered inventions from the Bank of Japan. Brent oil remained above USD86/bl, despite the biggest US crude stock build in more than 18 months.

Italian government bonds and stocks rallied for the first time in five days following reports that the Italian government will scale down its 2020-21 deficit targets. PM Conte said the government will set the budget deficits at 2.4%, 2.1% and 1.8% for 2019, 2020 and 2021 respectively, lowering the targets partially on the back of pressure from the EU side. Markets still await the publication of the Financial and Economic Document (DEF), outlining the details of the governments new budget plan.

Turkish inflation surged to 24.5% in September, the highest level since 2003, indicating that the weaker Turkish lira continues to put upside pressure on producer and consumer prices. USD/TRY moved back above the 6.00 level on the news. Further inflation rises in the coming months will put pressure on the Turkish central bank to hike, but our base case remains that the benchmark rate will stay unchanged until end-2018. Meanwhile, the Brazilian real strengthened on the back of polls showing growing support for right wing candidate Bolsonaro ahead of Sunday's election. For more details on the outlook for Emerging Markets, see our new Emerging Markets Briefer - Switching slowly from red light to yellow, 4 October.

Theresa May's speech at the Conservative Party Conference brought little surprises and tried to paint a positive vision for the UK after leaving the EU. May again stressed that Britain is not afraid of leaving without a deal. Overall, the congress still left the impression of a divided conservative party over the Brexit issue and Theresa May is likely to continue to struggle to find support for her Brexit plan. That said, we maintain our view that May's room for manoeuvre is bigger now the conference is over. The UK and the EU are expected to restart negotiations as soon as this Friday and EU leaders will discuss Brexit over dinner on the eve of the EU summit on 18 October

For the 24 hours to 23:00 GMT, the EUR declined 0.58% against the USD and closed at 1.1484.

Macroeconomic news indicated that Euro-zone's seasonally adjusted retail sales unexpectedly eased 0.2% on a monthly basis in August, declining for the second consecutive month and defying market consensus for a rise of 0.2%. In the prior month, retail sales had recorded a revised drop of 0.6%. On the other hand, the region's final Markit services PMI advanced to a level of 54.7 in September, at par with market expectations and confirming the preliminary figures. In the previous month, the PMI had registered a reading of 54.4.

Additionally, in Germany, the final services PMI rose to an 8-month high level of 55.9 in September, falling short of market expectations for a rise to a level of 56.5. In the prior month, the PMI had recorded a reading of 55.0, while preliminary figures had indicated a rise to 56.5.

The greenback gained ground against its major peers, following upbeat private sector employment data.

In the US, data showed that the US ADP private sector employment climbed to a 7-month high level of 230.0K in September, compared to a revised advance of 168.0K in the preceding month. Market participants had anticipated the private sector employment to rise to a level of 184.0K. Additionally, the ISM services PMI unexpectedly climbed to a level of 61.6 in September, compared to a reading of 58.5 in the prior month. However, the nation's final Markit services PMI fell to a level of 53.5 in September, following a reading of 54.8 in the previous month. The preliminary figures had indicated a fall to 52.9. Market participants had envisaged the PMI to drop to a level of 53.0. Meanwhile, the US mortgage applications remained flat on a weekly basis in the week ended 28 September 2018, after a rise of 2.9% in the prior week.

In the Asian session, at GMT0300, the pair is trading at 1.1469, with the EUR trading 0.13% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1425, and a fall through could take it to the next support level of 1.1380. The pair is expected to find its first resistance at 1.1554, and a rise through could take it to the next resistance level of 1.1638.

Looking forward, investors would await Germany's Markit construction PMI for September, slated to release in a while. Later in the day, the US factory orders and durable goods orders, both for August, followed by initial jobless claims, will garner significant amount of investor's attention.

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

For the 24 hours to 23:00 GMT, the GBP declined 0.27% against the USD and closed at 1.2947.

On the data front, UK's services PMI dropped to a level of 53.9 in September, compared to a level of 54.3 in the prior month. Market participants had envisaged the PMI to decline to a level of 54.0.

In the Asian session, at GMT0300, the pair is trading at 1.2932, with the GBP trading 0.12% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2895, and a fall through could take it to the next support level of 1.2858. The pair is expected to find its first resistance at 1.2996, and a rise through could take it to the next resistance level of 1.3060.

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