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Market movers today

• Today's main event will be the FOMC meeting, where we expect the Fed to announce a tapering of their QE asset purchases. We expect tapering to start immediately in November with a pace of USD 15bn per month, and with risks tilted towards a faster pace. Note that due to European markets switching to wintertime, we get the Fed announcement at 19:00 CET and the press conference at 19:30 CET. See more in our Fed Research Preview: Tapering yes, but how fast?
• National Bank of Poland will also announce their monetary policy decision today. We expect a 50bp in line with consensus but risks are tilted towards a larger hike.
• We also get the US ISM non-manufacturing index this afternoon following the ISM manufacturing release on Monday, which was weaker than expected.

The 60 second overview

FOMC: The key event this week kicks off tonight with the FOMC meeting. Markets generally enter the meeting from the point of view of being 'upbeat'. At least, US and European equities are close to or above all-time highs and equity volatility (VIX) is quite low. In FX, there seem to have been a small tilt towards dollar strength recently, though. The event itself appear to have been well communicated and it is a consensus event that tapering will be announced. Focus, thus, will turn to how fast Fed expect to hit zero purchases and any potential guidance on rates.

RBA meeting causes repricing of global rates: Rates markets recorded a strong relief rally yesterday led by the short end and the belly of the curve. The RBA's meeting overnight led to a strong repricing from the morning in what can best be characterised as a reversal of the previous days strong market reaction leading up to and after the ECB meeting. 1y1y €STR dropped 11bp on the day while 5y Germany was 7bp lower on the day. After a couple of sessions with severe pressure on the Italian bonds, the performance from Monday afternoon extended into yesterday with 10y BTPs-Bund spread tightening 8bp to around 123bp level. However, today's FOMC meeting, tomorrow's BoE and Friday's US labour market report will be very important for the lasting effect of this move. We expect the volatile market conditions are going to stay with us for a while.

Equities: Equities were moderately higher on Tuesday, which was enough to tick in on new all-time highs. The inflation trade reversed somewhat with growth and quality among the outperformers, such as tech and health care. Dow and S&P 500 closed up 0.4%, Nasdaq 0.3% and Russell 2000 0.2% after the small cap rally on Monday. US futures point lower though, in line with Asian markets down -0.5%-1% this morning.

FI: Rates markets recorded a strong relief rally yesterday led by the short end and the belly of the curve.

FX: The reaction in EUR/USD to tonight's FOMC meeting may be volatile but spot is likely headed lower. A dovish BoE may send EUR/GBP higher. EUR/NOK back in the mid 9.80s.

Credit: Though CDS indices performed well yesterday the story was quite different for cash bonds. iTraxx Xover and Main both tightened 2.4bp and 0.4bp, respectively. IG bonds widened 1bp while HY widened 4bp.

Daily Pivots: (S1) 154.58; (P) 155.23; (R1) 155.80; More...

No change in GBP/JPY's outlook as correction from 158.19 is still extending. Deeper fall could be seen but downside should be contained above 153.66 support to bring rebound. On the upside, above 158.19 will resume larger up trend from 123.94. Next target will be 61.8% projection of 136.96 to 156.05 from 148.93 at 160.72.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). The stay above 55 week EMA affirms medium term bullishness. Current rise should now target 61.8% retracement 195.86 (2015 high) to 122.75 at 167.93 next. In any case, outlook will remain bullish as long as 148.93 structural support hold, even in case of deep pull back.

Daily Pivots: (S1) 131.49; (P) 131.94; (R1) 132.40; More....

Intraday bias in EUR/JPY remains neutral as corrective pattern from 133.44 is still extending. Deeper fall could be seen but downside should be contained above 130.45 resistance turned support to bring rebound. On the upside, above 133.44 will target 134.11 high first. Firm break there will resume larger up trend from 114.42. Next target is 61.8% projection of 121.63 to 134.11 from 127.91 at 135.62.

In the bigger picture, rise from 114.42 (2020 low) is still in progress and the strong support support from 55 week EMA affirms medium term bullishness. Further rise would be seen to retest 137.49 (2018 high). Decisive break there will resume the whole long term rise from 109.03 (2016 low). Next target will be 100% projection of 109.03 to 137.49 from 114.42 at 142.88. This will now remain the favored case as long as 127.91 support holds.

Daily Pivots: (S1) 0.8491; (P) 0.8503; (R1) 0.8516; More...

Intraday bias in EUR/GBP remains mildly on the upside as rebound from 0.8401 short term bottom is in progress. Sustained trading above 55 day EMA (now at 0.8508) will bring further rise to retest 0.8656 resistance. On the downside, break of 0.8401 will resume larger down trend from 0.9499 to 0.8276 key long term support next.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8656 resistance holds, towards long term support at 0.8276. However, firm break of 0.8656 resistance would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Daily Pivots: (S1) 1.5456; (P) 1.5530; (R1) 1.5661; More...

Intraday bias in EUR/AUD is mildly on the upside at this point. Rebound from 1.5354 would target 55 day EMA (now at 1.5795). On the downside, break of 1.5354 will resume the fall from 1.6434 to retest 1.5250 low. Sustained break there will resume larger down trend from 1.9799.

In the bigger picture, the down trend from 1.9799 (2020 high) is in progress. Firm break of 1.5250 low will confirm resumption nand target 61.8% retracement of 1.1602 (2012 low) to 1.9799 at 1.4733. Sustained break there could bring more downside acceleration to 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623. In any case, break of 1.6434 resistance is needed to signal medium term bottoming, or outlook will stay bearish.

Daily Pivots: (S1) 1.0557; (P) 1.0581; (R1) 1.0614; More....

No change in EUR/CHF's outlook. Further fall is expected in EUR/CHF with 1.0678 support turned resistance intact. Current down trend from 1.1149 should target 100% projection of 1.1149 to 1.0694 from 1.0936 at 1.0481. On the upside, however, break of 1.0678 will indicate short term bottoming and bring stronger rebound.

In the bigger picture, current downside momentum argues that fall from 1.1149 is probably resuming the downside from 1.2004 (2018 high). Next focus is 1.0505 (2020 low). Decisive break there will confirm this bearish case and target 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223 next. Strong support from 1.0505 will bring rebound first. But outlook will stay bearish as long as 1.0936 resistance holds.

Daily Pivots: (S1) 1.1565; (P) 1.1589; (R1) 1.1603; More...

Intraday bias in EUR/USD stays neutral for the moment. Further decline is expected as long as 1.1691 resistance holds. On the downside, break of 1.1523 will resume the fall from 1.2265, and that from 1.2348 too, for long term fibonacci level at 1.1289 next. However, firm break of 1.1691 will indicate short term bottoming and turn bias back to the upside for stronger rebound, towards 1.1908 resistance.

In the bigger picture, price actions from 1.2348 should at least be a correction to rise from 1.0635 (2020 low). As long as 1.1908 resistance holds, deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289. Nevertheless break of 1.1908 resistance will revive medium term bullishness and turn focus back to 1.2348 high.

Daily Pivots: (S1) 1.3589; (P) 1.3631; (R1) 1.3657; More...

Intraday bias in GBP/USD is mildly on the downside at this point. Rebound from 1.3410 has possibly completed at 1.3833 already. Deeper fall would be seen to retest 1.340 low. On the upside, though, break of 1.3708 minor resistance will turn bias back to the upside for 1.3833 resistance again.

In the bigger picture, the structure of the fall from 1.4248 suggests that it's a correction to the up trend from 1.1409 (2020 low) only. While deeper fall cannot be ruled out yet, downside should be contained by 38.2% retracement of 1.1409 to 1.4248 at 1.3164, at least on first attempt, to bring rebound. On the upside, firm break of 1.4376 key resistance (2018 high) will add to the case of long term bullish reversal. However, sustained trading below 1.3164 will revive some medium term bearishness and target 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9106; (P) 0.9128; (R1) 0.9168; More....

No change in USD/CHF's outlook. As long as 0.9174 resistance holds, fall from 0.9367 is still in progress for 0.9017 support first and then 0.8925. On the upside, however, break of 0.9174 resistance will indicate short term bottoming and turn bias back to the upside for stronger rebound instead.

In the bigger picture, the corrective structure of the rebound from 0.8925 argues that fall from 0.9471 is not complete yet. It could either be the second leg of pattern from 0.8756 (2021 low), or resuming larger down trend from 1.0237 (2018 high). We'd pay attention to the downside momentum and assess the odds later. But for now, medium term outlook will be neutral at best as long as 0.9471 resistance holds.

Daily Pivots: (S1) 113.56; (P) 113.85; (R1) 114.24; More...

Intraday bias in USD/JPY remains neutral and outlook is unchanged, as consolidation from 114.69 is still extending. On the upside, firm break of 114.69 will resume the larger up trend to 100% projection of 102.58 to 111.65 from 109.11 at 118.18 next. Break of 113.24 will bring deeper pull back, but downside should be contained above 112.07 resistance turned support to bring rebound.

In the bigger picture, corrective decline from 118.65 (2016 high) should have completed at 101.18 already. Rise from the 102.58 is seen as the third leg of the up trend from 101.18. Next target is 114.54 resistance and then 118.65 high. This will now be the preferred case as long as 109.11 support hold, even in case of deep pull back.