Sample Category Title

Market movers today

IMF will publish new forecasts today and will almost certainly revise lower global growth. But it will be interesting to see by how much. Their call on inflation developments will also be in focus.

The US NFIB small business optimism index is also due out. The release has some interesting sub-indices on price plans and compensation plans that adds some information to the state of inflation and labour market pressures.

In the Nordics, the Danish Economic Council publishes its' fall report.

Developments in the Russia/Ukraine war will also be followed closely following the recent reescalation. Yesterday Putin held a meeting in the Security Council, which could result in new military actions.

Today brings a bunch of labour market data from the UK and we expect the unemployment rate to be unchanged at 3.6% at the same time as wages are expected to take another step up. We acknowledge the inflationary nature of the fiscal package and thus see a large upside risk to our current call on BoE but think market pricing is too aggressive (currently 370bp until June 2023). However, today's figures will probably not ease the pricing. More important data about the economy will be released tomorrow with both production data and August GDP, which will give more information about the Q3 development.

The 60 second overview

Yesterday, Bloomberg reported that German chancellor Scholz backed joint EU debt to address the energy crisis, if given in the form of loans and not grants. Similar structure was announced during the early Covid-response phase via the SURE programme. That said, Reuters later rejected such proposal. However, the proposal comes as the fiscal support from Euro area governments is intensifying. By 15 October all EU member states have to hand in the 2023 budgets to the EC, although the SGP is suspended for 2023, so markets may discipline the member states rather than the EC themselves.

Japan's PM Kishida said in an interview that companies that pass on higher prices should also give higher wages. And the government is preparing measures to support businesses in the process. Kishida fully backs the very loose monetary policy and yield target from the BoJ.

Equities: A new week for equities but challenges remain the same and so did the reaction in markets yesterday. Indices in Asia, Europe and US all lower and with bond yields setting the direction. The post BoE emergency intervention rally in equities are now gone and several indices testing new lows. VIX rose to north of 32 yesterday all sectors lower led by long duration cyclical sectors. In US Dow -0.3%, S&P 500 -0.8%, Nasdaq -1.0% and Russell 2000 -0.60%. Sell-off in Asia intensifies this morning with tech stocks under pressure leading to big losses in Taiwan and South Korea. Weakening Asia not so much related to higher yields but rather attributed to the US export control announcement that aims to further restrict China's access to US-made semiconductor technologies. European and US futures lower as well this morning.

FI: What on paper seemed to be an uneventful session with US out for Columbus Day turned out quite volatile. Initially rates were under pressure from the UK as BoE confirmed its intention to end its temporary bond buying on Friday, but also the long end supply from EU and Germany contributed to the rates higher move. In the afternoon, Bloomberg reported that Scholz backed joint EU debt to address the energy crisis in the form of loans and not grants, which sent German yields 10bp higher on the news, ending the day 15bp higher at 2.34%. At the same time, BTPs staged a massive rally, ending the day 22bp tighter vs. Bunds. Late yesterday, Reuters published a piece with sources rejecting Scholz' view. That said, markets remain sensitive to the significant fiscal stimuli that may be coming to the market. Curves bull steepened across the board.

FX: Broad USD continues to strengthen and are closing in on September highs. Big swings in Scandies, but whereas the SEK weakened further yesterday the NOK, alike oil currencies in general, performed well, further aided by the inflation beat at home. USD/JPY are once again trading close to levels which prompted BOJ to intervene in September. The Yuan slid as well, as investors fear that Beijing will continue to uphold their Zero-Covid policy.

Credit: Yesterday, the week started on a weak footing with iTraxx main widening by 3bp to 135bp. The Xover index widened 11bp to 637bp. The leg wider was driven by a cocktail of renewed Russian aggressions and fears of further Central bank hawkishness.

USD/JPY:

Looking at the H4 chart, the current overall bias for USDJPY is bullish . To add confluence to this bias, the price is currently above the Ichimoku cloud which indicates a bullish market. Overnight, the price has continued it’s bullish momentum upwards.. If the bullish momentum continues, expect price to possibly head towards the 1st resistance line at 145.900, where the 100% Fibonaaci line is located.

Areas of consideration:

• H4 time frame, 1st resistance at 145.900
• H4 time frame, 1st support at 144.952

DXY:

On the H4 chart, prices are moving in an ascending trend signalling slight bullish momentum. It is currently moving towards the first resistance at 114.719 where the previous swing high sits. If bullish momentum continues it will bring price to 115.717 where the 78.6% projection. Alternatively, prices could test the first support at 110.084 where the swing low sits. if it breaks this level, bearish momentum will bring price to second support at 107.669

Areas of consideration:

• H4 time frame, 1st resistance at 114.759
• H4 time frame, 1st support at 110.084

EUR/USD:

On the H4, price is moving within the descending trendline in a descending manner, with the price moving below ichimoku cloud,- we are bearish biased. Price is testing the first support at 0.9695 where the 61.8% retracement sits. If it breaks this level, bearish momentum will bring price to the second support at 0.9545 where the swing low and 161.8% extension sit. Alternatively, price may test the first resistance at 1.0047 where the 78.6% retracement sits. If price breaks this level, it may test the second resistance at 1.0194, where the previous swing high sits

Areas of consideration :

• H4 1st resistance at 1.0047
• H4 2nd resistance at 1.0194

GBP/USD:

On the H4, price has rejected the first resistance and is moving in a descending trend hence we are bearish bias- price might break the ichimoku to test the first support at 1.0915 where the 38.2% retracement sits. If it breaks this level, bearish momentum will bring price to the second support at 1.0355 where the previous swing low sits. Alternatively price can test the first resistance at 1.1437 where the 78.6% retracement and overlap resistance sit. Subsequently the second resistance at 1.1739

Areas of consideration:

• H4 1st support at 1.0915
• H4 1st resistance at 1.1437

USD/CHF:

USDCHF is in a strong bullish trend on the H4 chart. Price is trading above the Ichimoku cloud signalling a bullish trend. Price looks like it’s moving toward the first resistance 1.0046 where the previous swing high sits. Alternatively price can test the first support at 0.9972 where the 127.2% extension and swing high sits then the second support at 0.9868 where the overlap support and 23.6% retracement sits

Areas of consideration

• H4 1st support at 0.9972
• H4 1st resistance at 1.0046

XAU/USD (GOLD):

On the H4, price is dropping to test the 1st support at 1665.160, which is in line with the 61.8% fibonacci retracement and overlap support, as the price is above ichimoku cloud, we can expect the price bounce off from here and rise to the 1st resistance at 1689.308, which is in line with the overlap resistance. If the 1st resistance is broken, we can expect the price rise to the 2nd resistance at 1729.880, where the 61.8% fibonacci retracement and previous swing high is. Alternatively, the price may break the 1st support and drop to the 2nd support at 1615.670, where the swing low is.

Areas of consideration:

• H4 time frame, 1st support at 1665.160
• H4 time frame, 2nd resistance at 1729.880

AUD/USD:

On the H4, the price is moving within the descending channel and below ichimoku cloud, we have a bearish bias that the price may drop to the 1st support at 0.62085, which is in line with the 61.8% fibonacci projection. If the 1st support is broken, the 2nd support could be at 0.61072, where the 78.6% fibonacci projection is. Alternatively, the price may rise to the 1st resistance at 0.63876, which is in line with the 23.6% fibonacci retracement and 50% fibonacci retracement.

Areas of consideration

• H4, 1st support at 0.63509,
• H4, 2nd support at 0.61072

NZD/USD:

On the H4, the price is below ichimoku cloud and testing the 1st support at 0.55330, which is in line with the 127.2% fibonacci extension, if the price can break this level, we can expect the price drop to the 2nd support at 0.54578, which is in line with the 161.8% fibonacci extension and 61.8% fibonacci projection. ALternatively, the price may bounce off from the 1st support and rise to the 1st resistance at 0.57384, where the previous swing highs are.

Areas of consideration:

• H4 time frame, 1st support at 0.55330
• H4 time frame, 2nd support at 0.54578

USD/CAD:

On the H4, the price trades higher near the 1st resistance of 1.3832 which is the previous swing high level. With the price trading above the ichimoku cloud, we have a short term bullish bias. The price could break the first resistance to test the second resistance at 1.4033 where the 61.8% projection sits. Alternatively it could fall to the 1st support at 1.3495 which is in line with the 38.2% retracement level and the previous swing low subsequently the second support at 1.3184 where the overlap support sits

Areas of consideration:

• H4 time frame, 1st resistance at 1.3828
• H4 time frame, 1st support at 1.3495

OIL:

Looking at the H4 chart, the current overall bias for Oil is bullish . To add confluence to this bias, the price is currently above the Ichimoku cloud which indicates a bullish market. Overnight, price has retraced backdownards.. If the bullish momentum continues, expect price to possibly head towards the 1st resistance line at 99.263, where the 127.2% Fibonaaci extension line is located.

Areas of consideration:

• H4 time frame, 1st resistance at 99.263
• H4 time frame, 1st support at 96.538

Dow Jones Industrial Average:

Looking at the H4 chart, the current overall bias for Oil is bearish. To add confluence to this bias, the price is currently below the Ichimoku cloud which indicates a bearish market. Overnight, price has continued it’s bearish momentum downwards… If the bearish momentum continues, expect price to possibly head towards the 1st support line at 29653.29, where the 0% Fibonacci line and 127.2% Fibonacci extension line is located.

Areas of consideration:

• H4 time frame, 1st support at 28715.85
• H4 time frame, 1st resistance at 29653.29

DAX:

On the H4, with the price moving below ichimoku cloud and long term descending trendline, we have a bearish bias that the price may break the 1st support at 12170.28, which is in line with the 61.8% fibonacci retracement. If the 1st support is broken, the 2nd support could be at 11857.67, which is in line with the swing low. Alternatively, the price may rise to the 1st resistance at 12668.06, which is in line with the 50% fibonacci retracement and overlap resistance, if the 1st resistance is broken, the 2nd resistance could be at 13572.68, where the previous swing high is.

Areas of consideration:

• H4 time frame, 1st support at 12170.28
• H4 time frame, 2nd support at 11857.67

ETHUSD:

Looking at the H4 chart, the current overall bias for ETHUSD is bearish. To add confluence to this bias, the price is currently under the Ichimoku cloud which indicates a bearish market. Overnight, the price has continued it’s bearish momentum downwards.. If the bearish momentum continues, expect price to possibly head towards the 1st support line at 1220.00, where the 0% Fibonaaci line is located.

Areas of consideration:

• H4 time frame, 1st resistance of 1420.74
• H4 time frame, 1st support at 1220.00

BTCUSD:

On the H4, price is showing a descending trendline and below the ichimoku cloud, we can expect the price drop to test the 1st support at 18527.00, which is in line with the swing lows and 61.8% fibonacci projection. If the 1st support is broken, we can expect the price drop to the 2nd support at 17475.87, where the previous swing low is. Alternatively, the price may rise to the 1st resistance at 20427.23, where the overlap resistance and 50% fibonacci retracement are.

Areas of consideration:

• H4 time frame, 1st support at 18527.00
• H4 time frame, 2nd support at 17475.87

S&P 500:

Looking at the H4 chart, the current overall bias for S&P500 is bearish. To add confluence to this bias, the price is currently under the Ichimoku cloud which indicates a bearish market. Overnight, the price has closed under the 1st resistance line at 3636.87, where the 100% Fibonacci line and previous swing low is located. If the bearish momentum continues, expect price to possibly head towards the 1st support line at 3448.80, where the 127.2% Fibonaaci line is located.

Areas of consideration:

• H4 time frame, 1st support at 3448.80
• H4 time frame, 1st resistance at 3636.87

UK payrolled employment rose 69k in September, or 0.2% mom, to 29.7m. Total growth over the 12-month period was 714k. Median monthly pay rose 6.3% yoy to GBP 2131.

In the three-month period to August, unemployment rate dropped to 3.5%, down -0.3% from the previous three-month period. Employment rate also dropped -0.3% to 75.5%. Economic inactivity rate rose 0.6% to 21.7%. Totally weekly hours dropped -0.4% to 1046m.

Average earnings excluding bonus rose 5.4% 3moy in August, up from 5.2%. Average earnings including bonus rose 6.0% 3moy, up from 5.5% 3moy.

Full release here.

Daily Pivots: (S1) 1.3728; (P) 1.3756; (R1) 1.3808; More...

USD/CAD's rally resumed by breaking 1.3832 and intraday bias is back on the upside. Current up trend should target 161.8% projection of 1.2005 to 1.2947 from 1.2401 at 1.3925. Decisive break there will target 200% projection at 1.4285. On the downside,e below 1.3701 minor support will turn intraday bias neutral first. but outlook will stays bullish as long as 1.3501 support holds, in case of retreat.

In the bigger picture, up trend from 1.2005 (2021 low) is still in progress. Based on current impulsive momentum, it could be resuming long term up trend from 0.9056 (2007 low). Whether it is or it isn't, retest of 1.4689 (2016 high) should be seen next. This will now remain the favored case as long as 1.3222 resistance turned support holds.

Dollar extends its near term rally in Asian session, with support from risk-off sentiment, while US 10-year yield is flirting with 4% handle. Yen is also firm, and has the potential to overwhelm the greenback if Japan steps into the markets again. Commodity currencies are the weakest one so far, with Aussie being the worst. European majors are mixed for now.

Technically, Dollar's rally is making progress with break of 1.3832 resistance in USD/CAD and 0.9964 resistance in USD/CHF. NZD/USD has also resumed down trend by falling through 0.5563 support. Near term outlook will stay bearish in NZD/USD as long as 0.5812 support holds. Next target is pandemic low at 0.5467.

In Asia, at the time of writing, Nikkei is down 2.54%. Hong Kong HSI is down -1.56%. China Shanghai SSE is up 0.40%. Singapore Strait times is down -0.12%. Japan 10-year JGB yield is down -0.0011 at 0.253.

Fed Brainard: Monetary policy will be restrictive for some time

Fed Vice Chair Lael Brainard said in a speech, "monetary policy will be restrictive for some time to ensure that inflation moves back to target over time."

"It will take time for the cumulative effect of tighter monetary policy to work through the economy broadly and to bring inflation down."

"In light of elevated global economic and financial uncertainty, moving forward deliberately and in a data-dependent manner will enable us to learn how economic activity, employment, and inflation are adjusting to cumulative tightening in order to inform our assessments of the path of the policy rate." She said.

Japan Suzuki: Will take appropriate action on excessive Yen moves

Japanese Finance Minister Shunichi Suzuki reiterated today, "we will take appropriate action if there are any excessive moves" in Yen's exchange rate. The comment came as Yen threatens to decline further towards the lowest level since 1998 again.

Suzuki also said, Japan is closely watching current FX moves with a "strong sene of urgency". He planned to explain the stance on intervention at G20 meeting. He said that Japan have gained "certain understanding" from the US regarding intervention.

Australia Westpac consumer sentiment dropped to 83.7, RBA averted a much bigger fall

Australia Westpac Consumer Sentiment Index dropped -0.9% mom to 83.7 in October. Westpac said the index remains in "deeply pessimistic territory", at a level comparable to the lows "briefly reached during the pandemic", and during the Global Financial Crisis.

It added RBA's smaller than expected 25bps rate hike "averted a much bigger fall" in sentiment. Sentiment amongst those sampled before the RBA decision showed a "depressing" 77.4 index read. But the post RBA "relief rebound" is "unlikely to be repeated in future months".

Westpac expects four more consecutive 25bps rate hikes at RBA's November, December, February and March meetings.

Australia NAB business conditions rose to 25, confidence dropped to 5

Australia NAB Business Confidence dropped from 10 to 5 in September. Business Conditions rose from 22 to 25. Trading conditions rose from 29 to 38. Profitability conditions was unchanged at 19. Employment conditions dropped from 17 to 16.

"Conditions are now higher than their pre-COVID peak, which shows just how strong demand is at present," said NAB Chief Economist Alan Oster. "The current level of conditions are only exceeded by the post-lockdown surge in early 2021. Clearly, consumers are still finding a way to keep spending, with the very strong labour market, savings buffers and a broader post-pandemic recovery all playing a role."

"Confidence eased in the month but is still around the long-run average in the history of the survey," said Oster. "The confidence index has been volatile recently but is clearly a little lower than it was early in the year when the passing of the Omicron wave was providing a strong reason for optimism. Still, businesses are far from pessimistic."

Looking ahead

UK employment data is the main focus today. Italy will release industrial production.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3728; (P) 1.3756; (R1) 1.3808; More...

USD/CAD's rally resumed by breaking 1.3832 and intraday bias is back on the upside. Current up trend should target 161.8% projection of 1.2005 to 1.2947 from 1.2401 at 1.3925. Decisive break there will target 200% projection at 1.4285. On the downside,e below 1.3701 minor support will turn intraday bias neutral first. but outlook will stays bullish as long as 1.3501 support holds, in case of retreat.

In the bigger picture, up trend from 1.2005 (2021 low) is still in progress. Based on current impulsive momentum, it could be resuming long term up trend from 0.9056 (2007 low). Whether it is or it isn't, retest of 1.4689 (2016 high) should be seen next. This will now remain the favored case as long as 1.3222 resistance turned support holds.

Economic Indicators Update

GMT	Ccy	Events	Actual	Forecast	Previous	Revised
23:01	GBP	BRC Like-For-Like Retail Sales Y/Y Sep	1.80%		0.50%
23:30	AUD	Westpac Consumer Confidence Oct	-0.90%		3.90%
23:50	JPY	Current Account (JPY) Aug	-0.53T	-0.47T	-0.63T
00:30	AUD	NAB Business Confidence Sep	5		10
00:30	AUD	NAB Business Conditions Sep	25		20
06:00	GBP	Claimant Count Change Sep		4.2K	6.3K
06:00	GBP	ILO Unemployment Rate (3M) Aug		3.60%	3.60%
06:00	GBP	Average Earnings Excluding Bonus 3M/Y Aug		5.30%	5.20%
06:00	GBP	Average Earnings Including Bonus 3M/Y Aug		5.90%	5.50%
08:00	EUR	Italy Industrial Output M/M Aug		0.20%	0.40%

Australia NAB Business Confidence dropped from 10 to 5 in September. Business Conditions rose from 22 to 25. Trading conditions rose from 29 to 38. Profitability conditions was unchanged at 19. Employment conditions dropped from 17 to 16.

"Conditions are now higher than their pre-COVID peak, which shows just how strong demand is at present," said NAB Chief Economist Alan Oster. "The current level of conditions are only exceeded by the post-lockdown surge in early 2021. Clearly, consumers are still finding a way to keep spending, with the very strong labour market, savings buffers and a broader post-pandemic recovery all playing a role."

"Confidence eased in the month but is still around the long-run average in the history of the survey," said Oster. "The confidence index has been volatile recently but is clearly a little lower than it was early in the year when the passing of the Omicron wave was providing a strong reason for optimism. Still, businesses are far from pessimistic."

Full release here.

Australia Westpac Consumer Sentiment Index dropped -0.9% mom to 83.7 in October. Westpac said the index remains in "deeply pessimistic territory", at a level comparable to the lows "briefly reached during the pandemic", and during the Global Financial Crisis.

It added RBA's smaller than expected 25bps rate hike "averted a much bigger fall" in sentiment. Sentiment amongst those sampled before the RBA decision showed a "depressing" 77.4 index read. But the post RBA "relief rebound" is "unlikely to be repeated in future months".

Westpac expects four more consecutive 25bps rate hikes at RBA's November, December, February and March meetings.

Full release here.

Japanese Finance Minister Shunichi Suzuki reiterated today, "we will take appropriate action if there are any excessive moves" in Yen's exchange rate. The comment came as Yen threatens to decline further towards the lowest level since 1998 again.

Suzuki also said, Japan is closely watching current FX moves with a "strong sene of urgency". He planned to explain the stance on intervention at G20 meeting. He said that Japan have gained "certain understanding" from the US regarding intervention.

Fed Vice Chair Lael Brainard said in a speech, "monetary policy will be restrictive for some time to ensure that inflation moves back to target over time."

"It will take time for the cumulative effect of tighter monetary policy to work through the economy broadly and to bring inflation down."

"In light of elevated global economic and financial uncertainty, moving forward deliberately and in a data-dependent manner will enable us to learn how economic activity, employment, and inflation are adjusting to cumulative tightening in order to inform our assessments of the path of the policy rate." She said.

Full speech here.

Key Highlights

• GBP/USD started a fresh decline from the 1.1500 resistance zone.
• It traded below a key bullish trend line with support at 1.1175 on the 4-hours chart.
• EUR/USD, AUD/USD, and NZD/USD faced an increase in selling pressure.
• The UK Claimant count could change -11.4K in Sep 2022.

GBP/USD Technical Analysis

The British Pound struggled to clear the 1.1500 resistance zone against the US Dollar. GBP/USD formed a short-term top and started a fresh decline below the 1.1400 level.

Looking at the 4-hours chart, the pair declined below the 1.1350 and 1.1300 levels. There was a clear move below a key bullish trend line with support at 1.1175. The pair declined below the 23.6% Fib retracement level of the upward move from the 1.0335 swing low to 1.1495 high.

The pair settled below the 1.1200 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

On the downside, an initial support is near the 1.0950 level. The main support sits at the 1.0915 level. It is close to the 50% Fib retracement level of the upward move from the 1.0335 swing low to 1.1495 high.

A downside break below the 1.0915 zone might send the pair towards the 1.0800 level. If the pair stays above the 1.0915 support, it could start a fresh increase. An immediate resistance is near the 1.1175 level.

The next major resistance is near the 1.1250 level. A clear move above the 1.1250 level might send the pair towards the 1.1320 level. The next major hurdle could be near the 1.1500 level.

Looking at EUR/USD, the pair started a fresh decline after it failed to clear the 1.0000 level. If the bears remain in action, the pair might slide below 0.9650.

Economic Releases

• UK Claimant Count Change for Sep 2022 – Forecast -11.4K, versus 6.3K previous.
• UK ILO Unemployment Rate for August 2022 (3M) – Forecast 3.6%, versus 3.6% previous.