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Daily Pivots: (S1) 1.3265; (P) 1.3291; (R1) 1.3344; More....

USD/CAD is losing some downside momentum as seen in 4 hour MACD. But intraday bias stays on the downside for now. Strong support could be seen from 1.3207 cluster support (61.8% retracement of 1.2726 to 1.3976 at 1.3204) to bring rebound. Break of 1.3494 support turned resistance will turn bias back to the upside. However, sustained break of 1.3204/7 will carry larger bearish implication and target 1.2952 support next.

In the bigger picture, as long as 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) holds, larger up trend from 1.2005 (2021 low) is still expected to resume through 1.3976 high at a later stage. . However, firm break of 1.3222/3 will indicate that the trend might have reversed. Deeper fall would be seen to next cluster support at 1.2726 (61.8% retracement at 1.2758).

Daily Pivots: (S1) 0.6669; (P) 0.6696; (R1) 0.6729; More...

Intraday bias in AUD/USD remains on the upside as rise from 0.6169 is in progress. Next target is 161.8% projection of 0.6169 to 0.6521 from 0.6271 at 0.6841. On the downside, below 0.6662 minor support will turn intraday bias neutral and bring consolidations, before staging another rally.

In the bigger picture, the break of 0.6680 support turned resistance confirms medium term bottoming at 0.6169. It's too early to call for trend reversal. But even as a corrective move, rise from 0.6169 should target 38.2% retracement of 0.8006 to 0.6169 at 0.6871. Sustained trading above 55 week EMA (now at 0.6934) will raise the chance of the start of a bullish up trend. This week now remain the favored case as long as 0.6521 resistance turned support holds.

Daily Pivots: (S1) 138.89; (P) 139.84; (R1) 140.88; More...

Intraday bias in USD/JPY stays neutral for consolidation above 138.45 temporary low. Upside of recovery should be limited below 145.54 support turned resistance and bring another fall. Break of 138.45 will resume the decline from 151.93, as a correction to the larger up trend, towards 133.07 fibonacci level.

In the bigger picture, a medium term top should be formed at 151.93. Fall from there is correcting larger up trend from 102.58. It's too early to call for bearish trend reversal. But even as a corrective move, such decline should target 38.2% retracement of 102.58 to 151.93 at 133.07, or further to 55 week EMA (now at 130.58).

Daily Pivots: (S1) 0.9395; (P) 0.9442; (R1) 0.9479; More...

USD/CHF is losing some downside momentum as seen in 4 hour MACD. But intraday bias stays on the downside for 0.9369 support, and then 0.9287 fibonacci level. On the upside, break of 0.9488 minor resistance will turn intraday bias neutral first and bring consolidation, before staging another decline.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 might be a medium term down trend itself. Break of 61.8% retracement of 0.8756 to 1.0146 at 0.9287 will pave the way to 0.8756. In any case, risk will stay on the downside as long as 55 day EMA (now at 0.9821) holds.

Daily Pivots: (S1) 1.0278; (P) 1.0319; (R1) 1.0366; More...

EUR/USD is losing upside momentum as seen in 4 hour MACD, but intraday bias stays on the upside. Current rise should target 1.0609 fibonacci level next. On the downside, below 1.0270 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, a medium term bottom was in place at 0.9534, on bullish convergence condition in daily MACD. Even as a corrective rise, rally from 0.9534 should target 38.2% retracement of 1.2348 (2021 high) to 0.9534 at 1.0609. Sustained trading above 55 week EMA (now at 1.0566) will raise the chance of trend reversal and target 61.8% retracement at 1.1273. This will now remain the favored case as long as 1.0092 resistance turned support holds.

In October, UK payrolled employees rose 0.2% mom or 74k. Comparing with October 2021, payrolled employees rose 2.7% yoy or 772k. Median monthly pay rose 6.0% yoy. Claimant counts rose 3.3k, versus expectation of -12.6k.

In the three months to September, comparing to the previous three month period, unemployment was down -0.2% to 3.6%. Employment rate was unchanged at 75.5%. Economic inactivity rate rose 0.2% to 21.6%. Average earnings excluding bonus rose 5.7% yoy. Average earnings including bonus rose 6.0% yoy.

Full release here.

Market movers today

The G20 leaders' summit is kicking off in Bali and markets will be attuned to any geopolitical headlines.

In the euro area, German ZEW expectations for November are on the agenda and it will be interesting to see whether the October uptick extends for another month amid easing energy crisis fears. ECB's Panetta and De Guindos will also be on the wires.

In Sweden we expect October headline CPIF to print -0.1% m/m/9.3% y/y and core CPIF excl. energy to print +0.4% m/m/7.4% y/y. That means headline would be lower than Riksbank's forecast and core would be spot on.

In Denmark, preliminary growth figures for Q3 22 are due with the publication of the GDP indicator.

The 60 second overview

There is positive sentiment in the Asian equity markets this morning as tensions between China and US are showing signs of easing. Furthermore, the easing of Covid restrictions in China as well as support for the Chinese property sector combined with the Chinese central bank providing plenty of liquidity is also supporting the positive sentiment.

Comments from Fed's Brainard supported the Federals Reserve's narrative that it will soon be appropriate to slow down rate hikes. However, the comments had a fairly limited impact on the markets.

This morning Japanese GDP data for Q3 unexpectedly shrank as GDP fell 1.2% (q/q annualised) relative to an expected growth of 1.2%. This was driven by lower consumer spending and on the back of a surge in Covid during Q3.

Equities: Equity performance reversed on Monday with cyclicals and yield sensitive sectors, especially real estate, underperforming. Sector performance fairly bunched though, with few market movers during the session. S&P -0.9%, Nasdaq -1.1% and Russell-1.1%. Futures are slightly higher this morning.

FI: There was a modest steepening of the European government bond yield curves from the short end with a modest decline in bond yields. US Treasury yields rose, but this was mainly a "lagged" effect as the US market was closed on Friday, when global yields rose.

FX: Yesterday saw some reversion of last week's moves, with stronger USD and weaker Scandies. JPY was the biggest loser within G10, despite lower oil price. Within CEE, both PLN and HUF gave up all gains from last week, whereas CZK traded steady.

Credit: Amidst continued heavy primary market activity, sentiment remained strong in credit markets, with iTraxx Xover tightening 5bp and Main 1.5bp.

Nordic macro

In Sweden we expect October headline CPIF to print -0.1% m/m / 9.3% y/y and core CPIF excl. Energy to print +0.4% m/m / 7.4% y/y. That means headline would be lower than Riksbank's forecast and core would be spot on. Headline is being pulled down by plunging electricity prices, but energy as a whole is balanced by sharply higher fuel prices. Among core inflation components, recreation, food and clothing contribute the most. CPI, which includes the effect of higher mortgage costs, is hit by about 10% m/m higher mortgage cost as Riksbank 100bp September hike adds another 0.3 percentage points to CPI inflation.

Despite inflation realising roughly in line with the Riksbank's forecast from September, we still expect them to hike the policy rate more than their current path suggests at next week's meeting, where we see +75bp compared to the Riksbank forecast just below 50bp. This as international central banks have been more aggressive than the Riksbank projected in September.

Yesterday, we published a new forecast for Danish inflation in 2022 and 2023. We have revised up the forecast on the back of higher electricity prices. Hence, headline inflation is expected to be 7.9% for 2022 and 4.9% for 2023. Our old forecast was 7.5% and 3.4%. See more in Denmark. High inflation for longer, 14 November.

Equities saw some profit taking in last week’s post-US inflation rally, as some Federal Reserve (Fed) officials put ‘the church in the middle of the village’ as would say Swiss, reminding investors that the 7.7% inflation is still high and that the Fed would continue fighting to bring it lower.

The S&P500 couldn’t extend gains above the 4000 mark and gave back 0.89% yesterday, while Nasdaq slid about 1%. The US 2-year yield consolidated at about 4.40%, and the US dollar index slightly recovered, yet is now about 7% lower than the peak reached by end of September.

The latest depreciation in the US dollar has been good for the mood, but it may not last, as despite the decline in US CPI last week, the latest data released at the start of this week showed that after several months of sharp drops, inflation expectations in the US jumped last month for both 1 and 3-year horizons.
And another thing about inflation is

We have been cheering the news that China will be relaxing the Covid zero measures, and boost their property market. Both are great news for the world economy, and both are bad news for global inflation. Rising Chinese demand next year, will put a renewed positive pressure on energy and commodity prices. Therefore, Chinese recovery, if materializes, will be the next battle in the global inflation war.

Crude oil down

Interestingly, crude oil didn’t react strongly to the Chinese Covid easing news. The barrel of American crude dived 4% on Monday, on the news that OPEC cut its oil demand outlook and warned of uncertainties around global growth.

The latest data suggested that the Chinese industrial growth expanded below forecasts in October, as retail sales unexpectedly declined.

Back to oil, the barrel of American crude is back below its 50-DMA, and below the bottom of September – November rising triangle. Support will likely come in play into the $80/82 range.

No tears in Biden-Xi meeting

Yesterday’s meeting between Joe Biden and Xi Jinping hasn’t ended up in tears yesterday, and that, per se, is excellent news for everyone.

Both leaders criticized Russia for loose nuclear talk, which certainly helped melting the ice between the two nations. Joe Biden said a new cold war isn’t necessary. Xi said the world is big enough for everyone to prosper. Xi still warned the US that it doesn’t want to see its nose in its Taiwan matters.

But overall, the 3-hour discussion happened as if Joe Biden hadn’t forbidden the US chipmakers to sell their stuff to China to keep China in retreat for technological advance.

As a result, US-listed Chinese stocks extended gains. Nasdaq’s Golden Dragon China index advanced 0.47% yesterday, but we are far from the days when investors rushed in to take a piece of the Chinese dream… very far.

Daily Pivots: (S1) 1.1703; (P) 1.1766; (R1) 1.1821; More...

Intraday bias in GBP/USD is turned neutral first with a temporary top in place at 1.1853. Some consolidations would be seen first, but downside of retreat should be contained above 1.1332 support to bring another rise. On the upside, firm break of 61.8% projection of 1.0351 to 1.1494 from 1.1145 at 1.1851 will pave the way to 100% projection at 1.2288.

In the bigger picture, current development suggests that rise from 1.0351 is a medium term bottom. Rise from there is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1145 support holds. Sustained break of 38.2% retracement of 1.4248 to 1.0351 at 1.1840 will pave the way to 61.8% retracement at 1.2759 and possibly above.

Overall, the forex markets are bounded in tight range as consolidative trading continues. There is no clear sign of a sustainable rebound in Dollar, and thus, the most is more likely down than up. Yen is clearly soft but selling hasn't really take off yet. Commodity currencies are currently having a slight upper hand against Europeans, but nobody is overwhelming nobody yet.

Technically, Gold's rally continues today but upside momentum is diminishing as seen in 4 hour MACD. While further rise is likely, upside could be limited by 38.2% retracement of 2070.06 to 1614.60 at 1788.58, at least on first attempt. Break of 1747.09 minor support turn this bias to the downside for 4 hours 55 EMA (now at 1716.38). If happens, that might be accompanied by corresponding recovery in Dollar.

In Asia, Nikkei rose 0.10%. Hong Kong HSI is up 3.36%. China Shanghai SSE is up 1.49%. Singapore Strait Times is up 0.63%. Japan 10-year JGB yield is up 0.0029 at 0.245. Overnight, DOW dropped -0.63%. S&P 500 dropped -0.89%. NASDAQ dropped -1.12%. 10-year yield rose 0.052 to 3.865.

Fed Brainard: Appropriate soon to move to a slower pace

Fed Vice Chair Lael Brainard said yesterday, "I think it will probably be appropriate soon to move to a slower pace of increases, but I think what's really important to emphasize is... we have additional work to do."

"It's really going to be an exercise on watching the data carefully and trying to assess how much restraint there is and how much additional restraint is going to be necessary, and sustained for how long, and those are the kinds of judgments that lie ahead for us," she said.

"It makes sense to move to a more deliberate and a more data dependent pace as we continue to make sure that there's restraint that will bring inflation down over time," she said.

"As we go forward...risks are going to be two sided if we get into more restrictive or further into restrictive territory," she said, "so we'll be balancing those considerations."

SNB Jordan: High probability for another rate hike in Dec

SNB Chairman Thomas Jordan said yesterday, "it cannot be excluded that the SNB will raise interest rates in December," given that interest rates are still low.

"There is a high probability that the SNB will have to tighten its monetary policy further," he said. "The next meeting will be in December and there is a high probability that it will be necessary to tighten monetary policy again to make sure that inflation can be fought sufficiently."

RBA minutes: Not ruling out returning to larger hikes

Minutes of RBA's November 1 meeting revealed that board members consider both a 25 bps or a 50bps rate hike. There were "arguments in favour of both courses of action", but the case for 25bps was stronger.

"Acknowledging the uncertainty, members did not rule out returning to larger increases if the situation warranted," the minutes noted. "Conversely, the Board is prepared to keep rates unchanged for a period while it assesses the state of the economy and the inflation outlook. Interest rates are not on a pre-set path."

At the meeting, RBA raised the cash rate target by 25bps to 2.85%.

Japan GDP contracted -0.3% qoq in Q3

Japan GDP contracted -0.3% qoq in Q3, much worse than expectation of 0.3% qoq. In annualized term, GDP contracted -1.2%, versus expectation of 1.1%. GDP deflator dropped -0.5% yoy, versus expectation of -0.2% yoy.

During the quarter, imports rose strongly by 5.2% yoy on higher energy costs and weak Yen exchange rate. Exports grew only 1.9% qoq and led to a decline in net exports, which dragged GDP down. Domestically, private consumption grew 0.3% qoq only.

"Increased imports due to the easing of supply constraints and a temporary increase in payments for external services contributed to the negative growth," Chief Cabinet Secretary Hirokazu Matsuno said.

"The environment surrounding households and businesses is becoming more difficult, with declining real household incomes and rising corporate costs," Matsuno added.

China retail sales contracted -0.5% yoy in Oct

China industrial production rose 5.0% yoy in October, below expectation of 5.2% yoy. Retail sales dropped -0.5% yoy, much worse than expectation of 1.0% yoy. That's also the first decline since May. Fixed asset investment rose 5.8% ytd yoy, below expectation of 5.9%.

"We will focus on expanding effective demand, deepening structural reform on the supply side, continuing to stabilise employment and prices, stabilizing expectations, stimulating market vitality more, consolidating the economic recovery to a sound basis, and try to achieve better development results," the NBS said in a statement.

Looking ahead

UK job data will be focus in European session. Germany ZEW economic sentiment is another. Eurozone will also release GDP revision and trade balance. Later in the day, Canada will release manufacturing sales and wholesale sales. US will release PPI and Empire State manufacturing index.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.1703; (P) 1.1766; (R1) 1.1821; More...

Intraday bias in GBP/USD is turned neutral first with a temporary top in place at 1.1853. Some consolidations would be seen first, but downside of retreat should be contained above 1.1332 support to bring another rise. On the upside, firm break of 61.8% projection of 1.0351 to 1.1494 from 1.1145 at 1.1851 will pave the way to 100% projection at 1.2288.

In the bigger picture, current development suggests that rise from 1.0351 is a medium term bottom. Rise from there is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1145 support holds. Sustained break of 38.2% retracement of 1.4248 to 1.0351 at 1.1840 will pave the way to 61.8% retracement at 1.2759 and possibly above.

Economic Indicators Update