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Daily Pivots: (S1) 1.1162; (P) 1.1249; (R1) 1.1327; More...

Intraday bias in GBP/USD stays neutral and outlook is unchanged. On the upside, break of 1.1494 will resume the rise from 1.0351 to 61.8% projection of 1.0351 to 1.1494 from 1.0922 at 1.1628. On the downside, below 1.0922 will turn bias back to the downside for 1.0351 low instead.

In the bigger picture, fall from 1.4248 (2018 high) is resuming long term down trend from 2.1161 (2007 high). Next target is 100% projection of 2.1161 to 1.3503 from 1.7190 at 0.9532. There is no scope of a medium term rebound as long as 1.1759 support turned resistance holds.

Daily Pivots: (S1) 0.9995; (P) 1.0032; (R1) 1.0069; More...

USD/CHF's break of 1.0072 resistance confirms up trend resumption. Intraday bias is back on the upside. Current up trend should target 1.0283 projection level. On the downside, below 0.9993 minor support will turn intraday bias neutral first. But near term outlook will stay bullish as long as 0.9799 support holds.

In the bigger picture, current development suggests that up trend from 0.8756 (2021 low) is still in progress. Sustained break of 1.0063 will target 100% projection of 0.9149 to 1.0063 from 0.9369 at 1.0283, and then 1.0342 (2016 high). For now, this will remain the favored case as long as 0.9369 support holds, even in case of deep pull back.

• USDJPY rising inside impulse wave (iii)
• Likely to test resistance level 152.50

USDJPY continues to rise inside the short-term impulse wave (iii), which belongs to the higher order impulse waves 3 and (5).

The pair earlier broke the resistance trendline of the daily up channel from March – which added to the bullish pressure on USDJPY.

Given the overriding daily uptrend, USDJPY can be expected to rise further toward the next resistance level 152.50 (target price for the completion of the active impulse wave (iii)).

• EURGBP reversed from support level 0.8600
• Likely to rise to resistance level 0.8800

EURGBP currency pair recently reversed up with the daily Long-legged Doji from the pivotal support level 0.8600 (which has been reversing the pair from the middle of July), which stopped the previous wave C.

The support level 0.8600 was further strengthened by the lower daily Bollinger Band.

Given the UK political uncertainty and the resultant sterling sales, EURGBP can be expected to rise further toward the next resistance level 0.8800.

• Natural gas falling inside impulse wave (c)
• Likely to fall to support level 5.365

Natural gas continues to fall inside the short-term impulse wave (c) which previously broke the support level 6.500 (which stopped wave (i) in September) and the 61.8% Fibonacci correction of the upward price move from January.

The active impulse wave (c) belongs to the ABC correction 2 from the middle of August.

Natural gas can be expected to fall further toward the next support level 5.365 (previous multi-month low from July and the target for the completion of the active impulse wave (c)).

Pound slides on Truss resignation fallout

The British pound is showing strong volatility in the wake of Prime Minister’s Truss resignation. Truss resigned on Thursday after just 44 days in office, and the pound jumped as much as 1% before paring most of the gains. The reality of the political maelstrom engulfing the UK has set in and GBP/USD has plunged 1.1% today. The currency has touched a low of 1.1100, its lowest level since October 13th.

The deep political crisis in the UK has seen two prime ministers resign in just two months and leaves the Conservatives in turmoil. The Conservatives will elect a new leader next week and fortunately for them, they do not need to call an election for two more years. Still, Truss’s brief period as prime minister has caused political and financial chaos, and the new leader will have their work cut out to establish some semblance of normality for the country after the circus over the past few weeks.

The Bank of England meets on November 3^rd and with inflation climbing back into double digits, the Bank has little choice but to continue delivering oversize rates. Policy makers will likely be deliberating between a 0.75% and a full-point hike, which could give the beleaguered pound a much-needed boost.

The Federal Reserve has signalled that it plans to remain aggressive, as priority number one remains the fight against soaring inflation. This hawkish position was outlined by Philadelphia Federal Reserve President Patrick Harker on Thursday. Harker was blunt, saying that the Fed’s rate hikes had failed to curb inflation and that rates would continue to rise “for a while”. He added that rates would be “well above” 4% by the end of the year. Currently, the benchmark is at 3.25%, with the Fed holding its next meeting on November 2nd. The markets have received the message loud and clear, pricing in two more 0.75% increases in November and December.

GBP/USD Technical

• GBP/USD is testing resistance at 1.1254. Above, there is resistance at 1.1399
• There is support at 1.1162 and 1.1085

Daily Pivots: (S1) 149.71; (P) 150.00; (R1) 150.44; More...

USD/JPY's rally accelerates to as high as 151.93 so far. Intraday bias remains on the upside. Next target for the up trend is 100% projection of 130.38 to 140.33 from 145.89 at 155.84 next. On the downside, below 150.07 minor support will turn intraday bias neutral first. But near term outlook will remain bullish as long as 145.89 resistance turned support holds.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). 147.68 (1998 high) was already met and there is no clearly sign of topping yet. In any case, break of 140.33 support is needed to be the first sign of medium term topping. Otherwise, further rise is in favor to next target at 160.16 (1990 high).

Dollar surges broadly today as risk sentiment turns sour again while treasury yields continue to march higher. Yen is apparently weak, with Japan absent from intervention despite the steep decline. But Sterling and Swiss Franc are worse, Commodity currencies are also turning south, with Kiwi on the weaker side. Stronger than expected retail sales data from the UK and Canada are providing no support to the CAD.

Technically, USD/CHF's strong rally today confirms up trend resumption. The question is when EUR/USD and GBP/USD would follow. Break of 0.9630 minor support in EUR/USD and 1.0922 minor support in GBP/USD will argue that both are ready for at least a retest on recent lows at 0.9534 and 1.0351.

In Europe, at the time of writing, FTSE is down -1.02%. DAX is down -1.51%. CAC is down -1.97%. Germany 10-year yield is up 0.0905 at 2.493. Earlier in Asia, Nikkei dropped -0.43%. Hong Kong HSI dropped -0.42%. China Shanghai SSE rose 0.13%. Singapore Strait Times rose 0.18%. Japan 10-year JGB yield rose 0.0024 to 0.256.

Canada retail sales rose 0.7% mom in Aug, well above expectations

Canada retail sales rose 0.7% mom to CAD 61.8B in August, much better than expectation of 0.2% mom rise. Sales increased in 6 of 11 subsectors, representing 65% of retail trade. Excluding gasoline stations and motor vehicle and parts, sales also rose 0.9% mom, large increase since march.

In volume terms retail sales were up 1.1% mom.

Based on advance estimate, dales decreased -0.5% mom in September.

UK retail sales volume down -1.4% mom in Sep, value down -0.5% mom

UK retail sales volume dropped -1.4% mom in September, much worse than expectation of -0.5% mom. Sales values dropped -1.4% mom too. On a year earlier, sales volumes dropped -6.9% yoy while sales value rose 3.8% yoy.

Excluding fuel, sales volumes dropped -1.5% mom while sales values dropped -0.4% mom. On a year earlier, sales volume was down -6.2% yoy while sales value was up 3.3% yoy.

Comparing with pre-coronavirus level in February 2020, total retail sales were 12.0% higher in value terms but volumes were -1.3% lower.

Japan Suzuki: We are confronting speculators strictly

Japan stepped up verbal intervention as USD/JPY breaks above 150 level. Finance Minister Shunichi Suzuki warned today, "we are confronting speculators strictly."

Yet, when asked if Yen was under attack by speculators, Suzuki said, "it's inappropriate for me to comment on such a question under the current circumstances."

Regarding BoJ policy, he said, "I'm not in a position to comment anything concrete. We'll strive to maintain fiscal discipline with a major target of achieving primary budget surplus in fiscal 2025."

Japan CPI core rose to 3% yoy in Sep

Japan headline CPI was unchanged at 3.0% yoy in September, below expectation of 3.1% yoy. CPI core (all items ex-fresh food) accelerated from 2.8% yoy to 3.0% yoy, matched expectations. CPI core-core (all items ex-fresh food and energy) accelerated from 1.6% to 1.8% yoy, below expectation of 2.0% yoy.

CPI core has now exceeded BoJ's target for the 6th straight months, and hit the highest level since 1991 (excluding the effect of the 2014 sales tax hike). CPI core-core was also at the highest level since 2015. Yet, BoJ is seeing inflation as mostly driven by imports rather than domestic price pressures. This could be reflected in the 5.6% yoy rise in goods prices, and the sluggish 0.2% yoy rise in services prices.

NZ exports rose 37.% yoy in Sep, imports rose 16% yoy

New Zealand good exports rose 37% yoy or NZD 1.6B to NZD 6B in September. Goods imports rose 16% yoy or NZD 1.1B to NZD 7.6B. Monthly trade balance reported a deficit of NZD -1.6B.

Exports to all major trading partners were up, including China (+31% yoy), Australia (+33% yoy), USA (+13% yoy), EU (+21% yoy), and Japan (+42% yoy).

Imports from all major trading partners rose, except EU, including China (+20% yoy), EU (-5.3% yoy), Australia (+11% yoy), USA (+26% yoy), and Japan (+14% yoy).

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 149.71; (P) 150.00; (R1) 150.44; More...

USD/JPY's rally accelerates to as high as 151.93 so far. Intraday bias remains on the upside. Next target for the up trend is 100% projection of 130.38 to 140.33 from 145.89 at 155.84 next. On the downside, below 150.07 minor support will turn intraday bias neutral first. But near term outlook will remain bullish as long as 145.89 resistance turned support holds.

In the bigger picture, up trend from 101.18 is still in progress, as part of the whole up trend from 75.56 (2011 low). 147.68 (1998 high) was already met and there is no clearly sign of topping yet. In any case, break of 140.33 support is needed to be the first sign of medium term topping. Otherwise, further rise is in favor to next target at 160.16 (1990 high).

Economic Indicators Update

Canada retail sales rose 0.7% mom to CAD 61.8B in August, much better than expectation of 0.2% mom rise. Sales increased in 6 of 11 subsectors, representing 65% of retail trade. Excluding gasoline stations and motor vehicle and parts, sales also rose 0.9% mom, large increase since march.

In volume terms retail sales were up 1.1% mom.

Based on advance estimate, dales decreased -0.5% mom in September.

Full release here.

ETHUSD has been trending downwards since mid-August when the price failed to surpass the 2,030 mark. Even though Ethereum experienced an acceleration of its decline following the successful completion of the Merge in mid-September, it has been trading within a tight range during the past month.

The momentum indicators currently suggest that near-term risks remain tilted to the downside. Specifically, the RSI is declining beneath its 50-neutral mark, while the stochastic oscillator is descending after posting a bearish cross.

Should selling pressures intensify, the price could initially test the recent support of 1,200. Sliding beneath that floor, the spotlight may turn to the crucial 1,000 psychological mark. A decline below the latter might trigger a retreat towards the 2022 low of 880.

On the flipside, bullish actions could meet immediate resistance at 1,410, which is the upper boundary of the recent sideways pattern and overlaps with the 50-day simple moving average (SMA). Piercing this threshold, the price could ascend towards the recent peak of 1,800 before the spotlight turns to the trend reversal point of 2,030.

In brief, ETHUSD appears to be in a consolidation mode, waiting for developments that could provide fresh directional impetus. A break above or below its tight range is likely to be followed by a significant move in the same direction.