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Daily Pivots: (S1) 1.5468; (P) 1.5524; (R1) 1.5558; More...

EUR/AUD's fall is still in progress and intraday bias remains on the downside. Current decline from 1.6434 is in progress for 161.8% projection of 1.6434 to 1.5907 from 1.6232 at 1.5379 next. Break there will target 1.5250 low. On the upside, above 1.5716 minor resistance will turn intraday bias neutral and bring consolidations. But near term outlook will remain bearish as long as 1.5907 support turned resistance holds.

In the bigger picture, rise from 1.5250 medium term bottom is seen as a correction to the down trend from 1.9799 (2020 high) only. With 38.2% retracement of 1.9799 to 1.5250 at 1.6988 intact, such down trend is expected to resume at a later stage. Firm break of 1.5250 will target 61.8% retracement of 1.1602 (2012 low) to 1.9799 at 1.4733. In any case, sustained break of 1.6988 fibonacci level is needed to indicate long term reversal.

Daily Pivots: (S1) 1.0686; (P) 1.0726; (R1) 1.0746; More....

EUR/CHF's rebound lost momentum after hitting 1.0764 and intraday bias is turned neutral again. On the downside, break of 1.0678 will resume larger fall from 1.1149, towards 61.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0655. On the upside, above 1.0764 will resume the rebound to 55 day EMA (now at 1.0787) and possibly above.

In the bigger picture, the rejection by 55 week EMA maintains medium term bearishness. Fall from 1.1149 (2021 high) is currently seen as the second leg of the patter from 1.0505 (2020 low) first. Hence, in case of deeper fall, we'd look for strong support from 1.0505 to bring rebound. However, sustained break of 1.0505 will resume the long term down trend from 1.2004 (2018 high). Also, medium term outlook will now be neutral at best as long as 1.0936 resistance holds.

Daily Pivots: (S1) 1.1626; (P) 1.1642; (R1) 1.1668; More...

Further rise is still expected in EUR/USD with 1.1571 minor support intact. Sustained break of 55 day EMA (now at 1.1707) will be a sign that larger correction from 1.2348 has completed. Stronger rally would be seen to 1.1908 resistance for confirmation. On the downside, though, break of 1.1571 minor support will turn bias back to the downside for 1.1523 support instead.

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.

The US Dollar declined by 56 pips or 0.45% against the Canadian Dollar on Wednesday. The currency pair was pressured lower by the 50– hour simple moving average during yesterday's trading session.

Everything being equal, the USD/CAD exchange rate could continue to trend lower during the following trading session. The potential target for sellers will be near the 1.2240 level.

However, the currency exchange rate might rebound from the current price level at 1.2300 within this session.

During the first half of Wednesday's trading session, the British Pound declined by 107 pips or 0.67% against the Japanese Yen. However, the currency pair regained the lost points at the end of the day.

All things being equal, the exchange rate could continue to trend higher during the following trading session. The possible target for GBP/JPY pair will be near the 159.00 level.

Though, the resistance level at 158.18 could provide resistance for the currency exchange rate within this session.

The Australian Dollar surged by 50 pips or 0.67% against the US Dollar on Wednesday. The currency pair breached the upper line of an ascending channel pattern during the Asian session on Thursday.

By and large, the exchange rate could continue to trend bullish during the following trading session. The potential target for the AUD/USD pair would be near the 0.7612 level.

However, the currency exchange rate might make a brief pullback towards the 50– hour simple moving average at 0.7488 within this session.

Daily Pivots: (S1) 1.3766; (P) 1.3800; (R1) 1.3859; More...

Intraday bias in GBP/USD remains neutral for consolidation below 1.3833 temporary top. Further rise is expected as long as 1.3646 support holds. Above 1.3833 will resume the rebound from 1.3410 to 1.3912 key structural resistance. Firm break there will indicate that the correction from 1.4248 is complete with three waves down to 1.3410. Further rally would then be seen to retest 1.4248 high. However, break of 1.3646 will turn bias to the downside for retesting 1.3410 low.

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.

The Eurozone single currency declined by 58 pips or 0.43% against the Japanese Yen. The decline was stopped by the 50– hour simple moving average during Wednesday's trading session.

As for the near future, the exchange rate is likely to continue to trade in an ascending channel pattern. The potential target for the EUR/JPY pair will be near the 134.07 level.

However, given that the currency exchange rate is currently trading near the lower line of the channel pattern, a breakout could occur within this session.

Daily Pivots: (S1) 0.9167; (P) 0.9209; (R1) 0.9232; More....

Intraday bias in USD/CHF remains neutral at this point. With 0.9272 resistance intact, further decline is in favor. Considering bearish divergence condition in daily MACD, firm break of 0.9162 support will argue that whole rise from 0.8925 has completed and target this support. On the upside, break of 0.9272 minor resistance will turn bias back to the upside for retesting 0.9367 instead.

In the bigger picture, the corrective structure of the rebound from 0.8925 argues that fall from 0.9471 is not completed 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 of assess the odds later. But for now, medium term outlook will be neutral at best as long as 0.9471 resistance holds.

Market movers today

• Today, we keep an eye on euro area consumer confidence data for any signs that rising energy prices are denting consumers' willingness to spend in Q4.
• The Central Bank of Turkey will announce their rate decision at 13:00 CET. We expect a 100bp rate cut to 17.0% in line with market consensus. Turkish lira has fallen to record lows after President Erdogan's move last week to fire three top central bank officials who have been opposing rate cuts in the context of rising inflation.
• In the US, we pay attention to weekly jobless claims, Philly Fed manufacturing index and existing home sales for any signs that the economy could be losing steam.
• SCB unemployment data will be released from Sweden but we think it should be ignored due to serious distortions. Data from PES are of better quality.

The 60 second overview

Evergrande: The deal for Evergrande to sell a 51% stake of its property management unit to Hopson collapsed overnight, and trading in Evergrande's shares resumed after a 17-day halt with a double-digit decline. Broader Chinese equity markets were mixed. The proposed USD 2.6bn deal would have brought some short-term relief to Evergrande ahead of the end of the grace period for several missed coupon payments. While Evergrande could officially default as soon as next Saturday, we think that Beijing is soon likely to take more concrete action to support the broader credit markets, and as such we might be near peak stress for now, read our take in Strategy - China closer to 'peak stress', 15 October.

ECB: In a surprise move German Bundesbank President Jens Weidmann resigned his post after 10 years at the helm of the German central bank. Citing personal reasons, Weidmann will leave office by the end of this year, but in his parting letter to employees he also stressed that ECB should not neglect rising inflation concerns and warned about threats to central bank independence from too close ties to fiscal policies or markets. Investors will now start speculating about Weidmann's successor, who is to be appointed by the German government. As possible candidates current ECB board member Isabel Schnabel, Bundesbank Vice-President Claudia Buch or Finance Ministry Chief Economist Jakob von Weiszäcker have been mentioned, all of which would likely stand for more moderate monetary policy views than Weidmann's hawkish line.

Fedspeak: Cleveland Fed's Mester (non-voter) stuck with the dovish narrative yesterday, expecting inflationary pressures to moderate towards next year. Quarles (voter) also saw rate hikes as premature, given that demand growth is declining and supply challenges are likely to eventually prove transitory. Despite 5y5y inflation expectations remaining elevated near 2.6%, growth prospects moderating and market continuing to price in the first Fed hike by September next year, risk sentiment has remained positive with equities and reflation-sensitive currencies continuing to perform relatively well. Read more about our rates view in Yield Outlook: Central banks becoming increasingly hawkish, 20 October.

Equities: Wednesday saw relatively minor moves, but enough to take S&P500 just shy of a fresh all-time high. Defensives generally outperformed cyclicals, with real estate and utilities among the best performing sectors. S&P500 0.4%, Dow 0.4%, Nasdaq -0.1% and Russell 2000 0.6%. Implied volatility has drifted lower continuously this week, with VIX now at year-lows. Asian markets have dipped into negative this morning though. Similarly, US futures point to an opening in red.

FI: There was a modest relief in the European bond markets as bond yields declined and the market began pricing out the early ECB hike as reflected in the decline of the 1y1y Eonia forward rate. The curves steepened modestly from the front end as the 2Y German yield fell 3bp while 10Y fell 2bp- the US yield was range bound trading around the 1.65%-level.

FX: Reflation-sensitive currencies continue to perform. In the Scandies this is most prominent with EUR/NOK having broken below the 9.70-threshold late in the US session yesterday. EUR/SEK remains close to the 10.00-threshold while EUR/USD hovers around close to 1.1640. EUR/GBP has hit new post COVID-19 lows.

Credit: CDS indices tightened further yesterday, with iTraxx Xover and Main closing 1bp and 0.2bp tighter, respectively. HY bonds widened 2.5bp and IG was unchanged.