Sample Category Title

Daily Pivots: (S1) 113.05; (P) 113.43; (R1) 113.62; More...

Intraday bias turned neutral as USD/JPY lost momentum again. Some consolidations could be seen but downside of retreat should be contained above 112.07 resistance turned support to bring rise resumption. On the upside, break of 113.79 will extend the larger up trend from 102.58, and target 61.8% projection of 102.58 to 111.65 from 109.11 at 114.71. Firm break there will target 100% projection at 118.18 next.

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 108.71 support hold, even in case of pull back.

General trend

• Nikkei has extended rise; Fast Retailing gains ahead of earnings report.
• S&P ASX 200 has also continued to rise during the session [Resources index rises]; Rio Tinto is due to issue Q3 production update on Fri (Oct 15th).
• Shanghai ended morning trading slightly higher.
• USD index trades flat after prior drop.
• TRY declines on Turkish Central Bank news.
• Companies due to report during the NY morning include Bank of America, Citi, Commercial Metals, Dominos Pizza, Morgan Stanley, Progressive Corp, UnitedHealth, US Bancorp, Walgreens, Wells Fargo.
• China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs.
• China PBOC generally conducts MLF operations around the 15th of the month (Fri).

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened +0.7%.
• (AU) AUSTRALIA SEPT EMPLOYMENT CHANGE: -138.0K V -110.0KE; UNEMPLOYMENT RATE: 4.6% V 4.8%E.
• WHC.AU Reports Q1 Managed ROM Coal production 5.2Kt v 4.5K y/y.
• (AU) Reserve Bank of Australia (RBA) Deputy Gov Debelle: Not any obvious change to investor appetite for Australia bonds or equities, but there is significant climate driven divestment risks - "Climate Risks and the Australian Financial System".
• S32.AU To acquire 45% interest in Sierra Gorda Copper, the upfront cash consideration is $1.55B; additionally agreed to provide a contingent price-linked consideration of up to $500M to Sumitomo.
• (AU) AUSTRALIA OCT CONSUMER INFLATION EXPECTATION: 3.6% V 4.4% PRIOR.
• (NZ) Reserve Bank of New Zealand (RBNZ) Bascand: Robust balance sheets yield a faster more robust recovery than expected.

Japan

• Nikkei 225 opened +0.4%.
• (JP) Japan LDP Lawmaker Yamamoto [played key role in crafting Abenomics]: Govt must compile stimulus package of at least ¥32-33T ($282-290B); BOJ should aggressively buy JGBS to help fund fiscal spending.
• (JP) Japan said to give ¥3.8B to 3 companies (FujiFilm, Shionogi and Astrazeneca) to develop coronavirus treatments, funds mainly to be used to cover clinical trial costs - Japan press.
• (JP) Bank of Japan (BOJ) Official Noguchi: Expects clearer economic recovery starting from end of 2021, see no change in underlying price trend.
• (JP) Japan confirms has dissolved Parliament in preparation for Oct 31st election.
• Japan MoF sells ¥2.5T v ¥2.5T indicated in 0.005% 5-year JGBs; Avg Yield: -0.790% v -0.1030% prior, bid-to-cover 3.86x v 4.42x prior.

Korea

• Kospi opened +0.8%.
• (KR) South Korea Fin Min: Recent FX declines in KRW were fast, Finance Ministry is closely monitoring movements.
• (KR) South Korea Sept Import Price Index M/M: 2.4% v 1.3% prior; Y/Y: 26.8% v 22.4% prior; Export Price Index M/M: 1.0% v 1.3% prior; Y/Y: 20.2% v 18.9% prior (exports rise for the 10th consecutive month).

China/Hong Kong

• Hang Seng closed for holiday; Shanghai Composite opened -0.2%.
• (CN) CHINA SEPT CPI M/M: 1.2% V 0.3%E; Y/Y: 0.7% V 0.8%E; PPI Y/Y: 10.7% v 10.5%e (highest since 1995).
• (CN) China PBOC Gov Yi Gang: Inflation is moderate overall, reiterates prudent monetary policy will be flexible, targeted, reasonable and appropriate.
• (CN) China PBOC sets Yuan reference rate: 6.4414 v 6.4612 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B prior; Net drain CNY90B v Net drain CNY90B prior.
• (CN) China President Xi calls on officials to address aging population and step up fiscal support – Xinhua.
• (CN) China Daily: Tire makers in China said to be increasing prices due to increased costs and power cuts, some cos. may increase prices by up to 5%.

Other

• (SG) SINGAPORE MONETARY AUTHORITY (MAS) BI-ANNUAL MONETARY POLICY STATEMENT: WILL RAISE SLIGHTLY THE SLOPE OF THE S$NEER CURRENCY BAND (Not Expected).
• (SG) SINGAPORE Q3 ADVANCE GDP Q/Q: 0.8% V 1.1%E; Y/Y: 6.5% V 6.6%E.
• (TW) Taiwan Central Bank Deputy Gov Chen Nan-kuang: Central bank should not easily describe current price rising as transitory while the pandemic is causing global structural changes.
• (TW) Taiwan Defense Min: Taiwan has many foreign military exchanges; Will not strike first to cause war.

North America

• (US) Fed's Bowman (voter): Comfortable with starting bond tapering this year, preferably in Nov.
• (US) Weekly API Crude Oil Inventories: +5.2M v +1.0M prior.
• (G7) Finance Leaders make statement on Central Bank Digital Currency (CBDC) and digital payments: Innovation in digital money and payments can bring significant benefits but raises regulatory issues.
• (US) US Officials said to be hopeful on reaching agreement with EU Regarding steel tariffs by end of Oct.

Europe

• (EU) EU Commission presents counter-proposal on Northern Ireland Protocol; EU proposes to cut Northern Ireland customs checks and paperwork; Will not renegotiate EU court oversight.
• (EU) European Union proposes tax breaks for member states help protect their most vulnerable companies and citizens from the unprecedented surge in energy prices – press.

Levels as of 01:15ET

• Hang Seng closed for holiday; Shanghai Composite +0.0%; Kospi +1.1%; Nikkei225 +1.3%; ASX 200 +0.8%.
• Equity Futures: S&P500 +0.3%; Nasdaq100 +0.4%, Dax +0.2%; FTSE100 +0.4%.
• EUR 1.1601-1.1589; JPY 113.58-113.21; AUD 0.7394-0.7372; NZD 0.6983-0.6956.
• Commodity Futures: Gold -0.2% at $1,791/oz; Crude Oil +0.7% at $81.00/brl; Copper +1.7% at $4.57/lb.

Daily Pivots: (S1) 0.7342; (P) 0.7362; (R1) 0.7400; More...

AUD/USD's rise resumed after brief retreat and intraday bias is back on the upside. Current rally from 0.7169 should target 0.7477 resistance first. Sustained break there will argue that larger decline from 0.8006 has completed and turn near term outlook bullish. On the downside, below 0.7302 minor support will turn bias back to the downside for 0.7169 instead.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action from 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

Daily Pivots: (S1) 1.2424; (P) 1.2451; (R1) 1.2472; More...

Intraday bias in USD/CAD remains neutral with focus on 1.2421 key structural support. Larger rise from 1.2005 should still be intact as long as 1.2421 holds. On the upside, break of 1.2592 support resistance will turn bias back to the upside for 1.2773 resistance first. On the downside, however, sustained break of 1.2421 will argue that whole choppy rise from 1.2005 has completed. Deeper fall could then be seen back to retest 1.2005 low.

In the bigger picture, the failure to sustain above 55 week EMA (now at 1.2684) revives some medium term bearishness in USD/CAD. Still as long as 1.2005 support holds, we'd expect another rise ahead, to 38.2% retracement of 1.4667 to 1.2005 at 1.3022. Sustained break there will indicate larger bullish reversal. However, firm break of 1.2005 will resume the down trend from 1.4667 (2020 high).

Daily Pivots: (S1) 0.8475; (P) 0.8487; (R1) 0.8500; More...

Intraday bias in EUR/GBP remains neutral for consolidation above 0.8471 temporary low. Further decline is expected as long as 55 day EMA (now at 0.8543) holds. On the downside, below 0.8471 will resume the fall from 0.8656 to retest 0.8448 low. Firm break there resume larger down trend from 0.9499, towards 0.8276 key support.

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 0.8668 resistance holds, towards long term support at 0.8276. However, firm break of 0.8668 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) 1.5678; (P) 1.5717; (R1) 1.5751; More...

EUR/AUD is staying in consolidation from 1.5643 temporary low and intraday bias remains neutral. Upside of recovery should be limited below 1.5907 support turned resistance to bring another decline. On the downside, break of 1.5643 will resume the fall from 1.6434 to 161.8% projection of 1.6434 to 1.5907 from 1.6232 at 1.5379 next.

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) 1.0703; (P) 1.0721; (R1) 1.0734; More....

Further decline in EUR/CHF is expected with 1.0750 minor resistance intact. Decisive break of 1.0694 support will resume whole decline from 1.1149. Next target is 61.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0655. On the upside, though, break of 1.0750 minor resistance will turn bias back to the upside for rebound towards 1.0811 support turned resistance first.

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) 130.98; (P) 131.23; (R1) 131.56; More....

EUR/JPY rises further to as high as 131.67 so far today and intraday bias remains on the upside. As noted before, corrective pattern from 134.11 could have already completed at 127.91. Further rally should be seen to retest 134.11 high. On the downside, below 130.73 minor support will turn intraday bias neutral and bring consolidation first, before staging another rally.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, deeper fall would be seen to 61.8% retracement of 114.42 to 134.11 at 121.94.

Daily Pivots: (S1) 154.23; (P) 154.60; (R1) 155.07; More...

GBP/JPY's rally continues today and reaches as high as 155.25 so far. Intraday bias stays on the upside for retesting 156.05 high. Decisive break of 156.05/59 key resistance will carry larger bullish implications. Next target would be 61.8% projection of 136.96 to 156.05 from 148.93 at 160.72. On the downside, below 153.66 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low), which is still in progress. Sustained break of 156.59 (2018 high) would affirm the case of long term bullish reversal, and pave the way to 61.8% retracement 195.86 (2015 high) to 122.75 at 167.93 next. For now, this will be the favored case as long as 148.93 structural support holds.

Yen's decline resumes in Asian session today, with selling focusing against commodity currencies. Aussie shrugs off slightly weaker than expected job data, and strengthen together with Kiwi and Loonie. On the other hand, Dollar turns slightly softer even though FOMC minutes affirmed tapering to start in November. Euro is not far away too while Sterling is a bit sluggish. As for the week, Aussie is currently the strongest one so far, followed by Kiwi. Yen remains the worst, followed by Dollar and Euro.

Technically, USD/CAD is now pressing a key structural support level at 1.2421. Sustained break there would argue that whole rebound from 1.2005 has completed at 1.2947. That would set the stage for retesting 1.2005 low. That, if happens, might be a prelude for more downside in Dollar in general, except versus Yen. In particular, AUD/USD could follow and rise through 0.7477 resistance to affirm the case that larger correction form 0.8006 has completed.

In Asia, at the time of writing, Nikkei is up 1.44%. China Shanghai SSE is up 0.15%. Singapore Strait Times is up 0.22%. Japan 10-year JGB yield is down -0.0044 at 0.086. Overnight, DOW dropped -0.00%. S&P 500 rose 0.30%. NASDAQ rose 0.73%. 10-year yield dropped -0.031 to 1.549.

Fed Bowman: Asset purchases have essentially served their purpose

Fed Governor Michelle Bowman said in a speech yesterday that she's "mindful that the remaining benefits to the economy from our asset purchases are now likely outweighed by the potential costs."

"Provided the economy continues to improve as I expect, I am very comfortable at this point with a decision to start to taper our asset purchases before the end of the year and, preferably, as early as at our next meeting in November," she added.

Bowman also noted that the asset purchases have "essentially served their purpose." She's particularly concerned that "asset purchases could now be contributing to valuation pressures, especially in housing and equity markets." The loose monetary policy could now "pose risks to the stability of longer-term inflation expectations."

BoJ Noguchi: Economic recovery will become clearer at the end of year

BoJ board member Asahi Noguchi said the central bank should continue with the currency easing "patiently" because it takes a long time to achieve the 2% inflation target. But he's optimistic that economic recovery will become clearer at the end of the year and onwards, as vaccinations help to ease the pandemic impacts.

Separately, Governor Haruhiko Kuroda said in a G20 finance meeting that some emerging economies are still facing downward pressure form the pandemic. But the overall impact on the global economy will "gradually subside".

Australia employment dropped -138k in Sep, back below pre-pandemic levels

Australia employment dropped -138k in September, worse than expectation of -120k. Full-time jobs grew 26.7k while part-time jobs lost -164.7. Unemployment rate rose 0.1% to 4.6%, better than expectation of 4.8%. Participation rate dropped sharply by -0.7% to 64.5%.

Bjorn Jarvis, head of labour statistics at the ABS, said: "Extended lockdowns in New South Wales, Victoria and the Australian Capital Territory have seen employment and hours worked both drop back below their pre-pandemic levels.

"There were large falls in employment in Victoria (123,000 people) and New South Wales (25,000 people, following the 173,000 decline in August). This was partly offset by a 31,000 increase in Queensland, as conditions there recovered from the lockdown in early August."

"The low national unemployment rate continues to reflect reduced participation during the recent lockdowns, rather than strong labour market conditions."

Elsewhere

China CPI slowed from 0.8% yoy to 0.7% yoy in September, below expectation of 0.9% yoy. PPI rose from 9.5% yoy to 10.7% yoy, above expectation of 10.5% yoy.

Looking ahead, Swiss PPI will be the main feature in European session. Later in the day, Canada will release manufacturing sales. US will release PPI and jobless claims.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 154.23; (P) 154.60; (R1) 155.07; More...

GBP/JPY's rally continues today and reaches as high as 155.25 so far. Intraday bias stays on the upside for retesting 156.05 high. Decisive break of 156.05/59 key resistance will carry larger bullish implications. Next target would be 61.8% projection of 136.96 to 156.05 from 148.93 at 160.72. On the downside, below 153.66 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low), which is still in progress. Sustained break of 156.59 (2018 high) would affirm the case of long term bullish reversal, and pave the way to 61.8% retracement 195.86 (2015 high) to 122.75 at 167.93 next. For now, this will be the favored case as long as 148.93 structural support holds.

Economic Indicators Update