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Daily Pivots: (S1) 0.6231; (P) 0.6289; (R1) 0.6329; More...

Intraday bias in AUD/USD stays on the downside at this point as down trend is in progress. Next target is 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155. On the upside, above 0.6362 minor resistance will turn intraday bias neutral and bring consolidations. But outlook will remain bearish as long as 0.6539 resistance holds.

In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.6680 support turned resistance holds. Next target is 0.5506 low. Medium term momentum will now be closely monitored to gauge the chance of break of 0.5506.

Daily Pivots: (S1) 145.56; (P) 145.73; (R1) 146.03; More...

USD/JPY's break of 145.89 confirms up trend resumption. Intraday bias is back on the upside for 147.68 long term resistance. On the downside, break of 145.41 minor support will turn intraday bias neutral and bring consolidations again. But overall, outlook will remain bullish as long as 140.33 support holds, even in case of deep pullback.

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). Further rise should be seen to 147.68 (1998 high). For now, break of 130.38 support is needed to be the first indication of medium term topping. Otherwise, outlook will stay bullish even in case of deep pull back.

Daily Pivots: (S1) 0.9916; (P) 0.9969; (R1) 1.0021; More...

Intraday bias in USD/CHF remains neutral first. While deeper retreat cannot be ruled out, break of 0.9779 support is needed to indicate short term topping. Otherwise, outlook will stay cautiously bullish in case of retreat. On the upside, above 1.0019 will target 1.0063 high first. Decisive break there will resume larger up trend.

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.

Daily Pivots: (S1) 0.9660; (P) 0.9718; (R1) 0.9762; More...

Despite some loss of downside momentum, intraday bias in EUR/USD stays mildly on the downside for retesting 0.9534 low. Firm break there will resume larger down trend for 100% projection of 1.0368 to 0.9534 from 0.9998 at 0.9163. For now, risk will stay on the downside as long as 0.9998 resistance holds, in case of recovery.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, break of 0.9998 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish even with strong rebound.

Daily Pivots: (S1) 1.0889; (P) 1.1035; (R1) 1.1116; More...

GBP/USD's fall from 1.1494 resumed after brief recovery. Intraday bias is back on the downside for retesting 1.0351 low. On the upside, above 1.1178 minor resistance will turn intraday bias neutral again. But near term risk will stay on the downside as long as 1.1494 resistance holds, in case of recovery.

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.

Dollar is trying to extend recent rally again but buying is mostly seen against Yen and Sterling. The Yen finally broke out and fell to new 24-year low against the greenback, and it's on track to take on the level seen back in 1998. Sterling, on the other hand, is pressured after BoE ruled out extending the emergency intervention in bond markets beyond this weekend. Selloff in the Pound is giving some support to Euro and Swiss Franc. Aussie is also weak with risk-off sentiment in Asia.

Technically, EUR/GBP's break of 0.8848 minor resistance is a sign that Sterling bears are back in control, and further rise could be seen back to retest 0.9267 high. At the same time, GBP/USD is also resuming its fall towards 1.0351 low. Break of 1.0811 minor support tin GBP/CHF will also align the outlook. That is, rebound from 1.0183 has completed at 1.1283, and retest of 1.0183 low could be seen next.

In Asia, at the time of writing, Nikkei is down -0.14%. Hong Kong HSI is down -1.86%. China Shanghai SSE is down -1.10%. Singapore Strait Times is down -0.67%. Japan 10-year JGB yield is up 0.0010 at 0.256. Overnight, DOW rose 0.12%. S&P 500 dropped -0.65%. NASDAQ dropped -1.10%. 10-year yield rose 0.051 to 3.939.

USD/JPY breaks to new 24-yr high as Japan just closely watching

USD/JPY finally breaks through 145.89 resistance to resume up trend to new 24-year high. It's on track towards 1998 high at 147.68. But there is not clear sign of imminent intervention by Japan yet.

Finance Minister Shunichi Suzuki just repeated that what was important was the speed of forex moves. Japan will closely watch forex moves with a sense of urgency.

Chief Cabinet Secretary Matsuno Hirokazu said echoed that the government is "closely watching FX moves with a high sense of urgency" and will " take appropriate steps on excess FX  moves".

The message has been consistent that Japan is mindful of fast, one-sided depreciation of yen, rather than the actual rate.

ECB Villeroy: Interest rate should be at neutral by year end

ECB Governing Council member Francois Villeroy de Galhau said it's still too early to decide whether the central bank should hike by 50bps or 75bps at October 27 meeting. But he noted interest rate should be at neutral level, or "a bit less than 2%" by year end.

Then, ECB could start shrinking its balance sheet. "It would not be consistent to keep a very large balance sheet for too long in order to compress the term premium, whilst at the same time contemplating tightening policy rates above neutral," he added.

"The reimbursement of TLTROs comes first, and we should avoid any unintended incentives to delay repayments by banks," he said. "Here we could start earlier than 2024, maintaining partial reinvestments but at a gradually reduced pace."

RBA Ellis: Neutral is not a destination we necessarily reach

RBA Assistant Governor Luci Ellis said in a speech that "don't think of this as a mechanistic approach of 'we have to get back to neutral', or above neutral" interest rate.

"The neutral rate is an important guide rail for thinking about the effect policy might be having. It is not necessarily a prescription for what policy should do," he said.

"'Neutral', then, is not a destination we necessarily reach, but more a pole-star to guide us. And even then, its location is sufficiently uncertain that we are perhaps better served by paying more attention to the ground as it shifts beneath our feet than to that faraway pole-star," he added.

Looking ahead

UK GDP, production and goods trade balance will be released in European session, with Eurozone industrial production too. Later in the day, US will publish PPI, but main focus will be on tomorrow's CPI report.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.0889; (P) 1.1035; (R1) 1.1116; More...

GBP/USD's fall from 1.1494 resumed after brief recovery. Intraday bias is back on the downside for retesting 1.0351 low. On the upside, above 1.1178 minor resistance will turn intraday bias neutral again. But near term risk will stay on the downside as long as 1.1494 resistance holds, in case of recovery.

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.

Economic Indicators Update

Key Highlights

• Crude oil price started a fresh increase above the $85.50 and $88.00 resistance levels.
• A major bullish trend line is forming with support near $88.40 on the 4-hours chart.
• Gold price failed to clear the $1,730 resistance and trimmed gains.
• EUR/USD and GBP/USD seem to be consolidating losses.

Crude Oil Price Technical Analysis

Crude oil price started a fresh increase from the $76.80 zone against the US Dollar. The price gained pace for a move above the $80.00 resistance level.

Looking at the 4-hours chart of XTI/USD, there was a break above the $85.00 resistance zone. The price even settled above the $86.50 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

There was a clear move above the $88.00 and $90.00 levels. It traded as high as $93.70 and recently there was a minor downside correction.

The price dipped below the $90.00 level. There was a move below the 23.6% Fib retracement level of the upward move from the $76.77 swing low to $93.70 high. However, there are many supports on downside, starting with $88.40 and a connecting bullish trend line.

The next major support is near $85.00 zone. It is near the 50% Fib retracement level of the upward move from the $76.77 swing low to $93.70 high.

Any more losses might call for a test of the $82.50 zone. On the upside, the price might face sellers near the $91.50 zone. The next major resistance is near $93.80, above which the price could accelerate higher towards the $95.00 zone.

Looking at gold price, there was a fresh bearish wave after the price failed to clear the $1,730 resistance. It is now consolidating near the $1,675 zone.

Economic Releases to Watch Today

• UK Industrial Production for August 2022 (MoM) - Forecast -0.2%, versus -0.3% previous.
• UK Manufacturing Production for August 2022 (MoM) - Forecast 0%, versus +0.1% previous.
• US Producer Price Index for Sep 2022 (MoM) – Forecast 0.2%%, versus -0.1% previous.
• US Producer Price Index for Sep 2022 (YoY) – Forecast +8.4%, versus +8.7% previous.

USD/JPY finally breaks through 145.89 resistance to resume up trend to new 24-year high. It's on track towards 1998 high at 147.68. But there is not clear sign of imminent intervention by Japan yet.

Finance Minister Shunichi Suzuki just repeated that what was important was the speed of forex moves. Japan will closely watch forex moves with a sense of urgency.

Chief Cabinet Secretary Matsuno Hirokazu said echoed that the government is "closely watching FX moves with a high sense of urgency" and will " take appropriate steps on excess FX moves".

The message has been consistent that Japan is mindful of fast, one-sided depreciation of yen, rather than the actual rate.

RBA Assistant Governor Luci Ellis said in a speech that "don't think of this as a mechanistic approach of 'we have to get back to neutral', or above neutral" interest rate.

"The neutral rate is an important guide rail for thinking about the effect policy might be having. It is not necessarily a prescription for what policy should do," he said.

"'Neutral', then, is not a destination we necessarily reach, but more a pole-star to guide us. And even then, its location is sufficiently uncertain that we are perhaps better served by paying more attention to the ground as it shifts beneath our feet than to that faraway pole-star," he added.

Full speech here.

ECB Governing Council member Francois Villeroy de Galhau said it's still too early to decide whether the central bank should hike by 50bps or 75bps at October 27 meeting. But he noted interest rate should be at neutral level, or "a bit less than 2%" by year end.

Then, ECB could start shrinking its balance sheet. "It would not be consistent to keep a very large balance sheet for too long in order to compress the term premium, whilst at the same time contemplating tightening policy rates above neutral," he added.

"The reimbursement of TLTROs comes first, and we should avoid any unintended incentives to delay repayments by banks," he said. "Here we could start earlier than 2024, maintaining partial reinvestments but at a gradually reduced pace."