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Daily Pivots: (S1) 0.9328; (P) 0.9334; (R1) 0.9344; More...

Intraday bias in EUR/CHF stays neutral as range trading is still in progress above 0.9311. Risk is mildly on the downside as long as 0.9354 resistance holds. Break of 0.9311 will resume the fall from 0.9452 to 0.9265 support. Nevertheless, firm break of 0.9354 will turn bias back to the upside for 0.9452 resistance instead.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside potential should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Markets

Consensus-matching August PCE deflators (headline 0.3% M/M and 2.7% Y/Y from 2.6%, core 0.2% and 2.9%) halted a technical rebound both in US yields and of the dollar last Friday. Personal income (0.4% M/M) and spending (0.6%) remained solid. Even so, with markets looking forward to this week’s labour data, the PCE provided little reason to further price out Fed rate cuts this year and early next year. US yields changed one bp or less across the curve. US yields in the meantime have created some ‘breathing space’ vis-à-vis the technical levels that were tested around the time of the September 17 Fed meeting (2-y 3.64% vs 3.50% area, 10-y 4.15% vs 4% support area). German yields in technical trading slightly outperformed with yields easing up to 2.7 bps at the belly of the curve. Risk sentiment remained constructive, with little overall impact from the new sector tariffs the US announced on Thursday. The S&P 50 gained 0.59%. The Eurostoxx 50 even added 1%. The (yield-driven) USD rebound on Wednesday and Thursday ran into resistance. DXY failed to test 98.83 resistance and even made a small step back to close the week in the established ST trading range (close 98.15). USD/JPY approached the 150 barrier (close 149.49). EUR/USD finished the week near the 1.17 big figure (vs a week low of 1.1646 on Thursday).

Asian risk sentiment stays constructive this morning. Aside from key eco data, markets also keep a close eye at a meeting between president Trump and Congressional leaders as they seek to reach an agreement on a short-term spending bill (by October 01) to avoid a government shutdown. Regarding the data, first national EMU CPI data will be published today (Spain, Belgium) and tomorrow (France, Germany, Italy …) to be summarized into Wednesday’s EMU release (expected 0.1% M/M and 2.2% Y/Y for headline, 2.3% for core). The EMU data most likely won’t challenge a prolonged ECB status-quo. In the US, the focus evidently stays on labour market data (JOLTS , tomorrow), ADP on Wednesday, jobless claims on Thursday and the payrolls on Friday (if they are not delayed by a US government shutdown). The picture from the labour data will be complemented by the ISM’s (Wednesday manufacturing, Friday services) and by the conference board consumer confidence release. Data probably will have to be materially stronger than expected for markets to leave the idea of a follow-up Fed rate cut end next month. A halt in the US yields’ rebound and maybe some noise on a US government shutdown might also abort the most recent USD rebound. EUR/USD could return higher in the 1.1574/1.1919 range. In Japan, we keep an eye at the Tankan survey, as the BOJ MPC internally debates the timing of the next rate hike, potentially coming as soon as the October 30 meeting. The yen last week tested key support near USD/JPY 150, with EUR/JPY (currently 174.5) only a whisker away from the 175.43 2024 multi-year top. In the UK, the Labour Party Congress in Liverpool will highlight the difficult fiscal balancing act of Chancellor Reeves, with key EUR/GBP resistance at 0.8769 still within reach.

News & Views

People familiar with the plans said that OPEC+ is likely to raise oil output again in November. The oil cartel is considering adding the same amount as they plan to do in October, i.e. 137k barrels a day. It’s technically restoring a layer of previous output curbs (of 1.66 million b/d) that was originally planned to remain in place through the end of this year. It has prompted warnings of a supply glut from the oil industry. So far, though, oil prices withstood the extra supply relatively well with OPEC+ delegates saying that the actual restored output is less than the amounts announced due to production constraints in some countries. Brent this morning holds steady around a two-month high just shy of $70. OPEC+ meets this Sunday.

Moldova’s pro-European ruling Party of Action and Solidarity secured 50% of the votes in yesterday’s ballot, putting president Maia Sandu on track for a second term in office. With the projected 54 seats in the 101-seat parliament, PAS doesn’t rely on support from other parties to form a government. The pro-Russian Patriotic Electoral Bloc won a little over 24% of the votes. Moldova, squeezed between Romania and Ukraine, has a population of just 2.4 mln but with an outsized geopolitical importance. The former Soviet state was granted EU candidate status, along with Ukraine, four months after the Russian invasion in 2022. Its goal is to join the EU by the end of the decade.

Daily Pivots: (S1) 1.3918; (P) 1.3939; (R1) 1.3965; More...

Intraday bias in USD/CAD is turned neutral first with current retreat. Above 1.3957 will resume the corrective rebound from 1.3538. But upside should be limited by 1.4014 cluster resistance to bring reversal. Meanwhile, sustained trading below 55 4H EMA (now at 1.3862) will bring deeper fall back to 1.3725 support.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 cluster resistance (38.2% retracement of 1.4791 to 1.3538 at 1.4017) holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 (2025 high) at 1.3069. However, sustained break of 1.4014 will argue that fall from 1.4791 has completed, and bring stronger rally to 61.8% retracement at 1.4312.

Daily Pivots: (S1) 0.6528; (P) 0.6540; (R1) 0.6559; More...

Intraday bias in AUD/USD is turned neutral first with current recovery. Risk will stay on the downside as long as 0.6627 resistance holds. Below 0.6519 temporary low will resume the fall from 0.6706. Sustained trading below 55 D EMA (now at 0.6545) will confirm rejection by 0.6713 fibonacci resistance, and bring deeper fall to 0.6413 cluster support (38.2% retracement of 0.5913 to 0.6706 at 0.6403).

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. Outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and pave the way to 0.6941 structural resistance for confirmation.

Daily Pivots: (S1) 1.1670; (P) 1.1688; (R1) 1.1719; More...

Intraday bias in EUR/USD remains neutral and more consolidations could be seen above 1.1644. Further fall is expected as long as 1.1819 resistance holds. Considering bearish divergence condition in D MACD, sustained trading below 55 D EMA (now at 1.1670) will argue that 1.1917 was already a medium term top. Deeper fall should then be seen to 1.1390 support next.

In the bigger picture, rise from 1.0176 (2025 low) is seen as the third leg of the pattern from 0.9534 (2022 low). 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916 was already met. For now, further rally will remain in favor as long as 1.1390 support holds, and firm break of 1.2000 psychological level will carry larger bullish implications. However, firm break of 1.1390 will suggest that rise from 1.0176 has already completed and bring deeper fall to 55 W EMA (now at 1.1231).

Daily Pivots: (S1) 1.3347; (P) 1.3380; (R1) 1.3430; More...

Intraday bias in GBP/USD stays neutral and more consolidations could be seen above 1.3322. But further decline is expected as long as 1.3535 resistance holds. Break of 1.3322 will resume the fall from 1.3725, as the third leg of the corrective pattern from 1.3787, and target 1.3140 support.

In the bigger picture, rise from 1.0351 (2022 low) is still seen as a corrective move. Further rally could be seen to 61.8% projection of 1.0351 to 1.3433 (2024 high) from 1.2099 (2025 low) at 1.4004. But strong resistance could be seen from 1.4248 (2021 high) to limit upside. Sustained break of 55 W EMA (now at 1.3155) will argue that a medium term top has already formed and bring deeper fall back to 1.2099.

Daily Pivots: (S1) 0.7953; (P) 0.7984; (R1) 0.8026; More…

Intraday bias in USD/CHF stays neutral for the moment, and more consolidations could be seen first. On the upside, sustained trading above 55 D EMA (now at 0.8014) will suggest that rise from 0.7828 is already correcting whole fall from 0.9200. Further rise should the be seen to 0.8170 resistance and possibly above. However, break of 0.7908 will turn bias back to the downside for retesting 0.7828 low.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Last week ended on a positive note despite fresh tariff threats on pharma, trucks and kitchen cabinets. PCE data coming in line with expectations helped keep investor mood sweet after a week of hesitation. The S&P 500 rebounded after a three-day retreat, the Stoxx 600 held above its 50-DMA, and even the pharma-heavy SMI index bounced from August lows – confirming that trade news has become usual bad news. There’s no guarantee tariffs will stay, and no guarantee they won’t be doubled; they’ve simply become an increasingly meaningless negotiation tactic, just another bump in the road.

The bigger picture remains unchanged: tariff risks exist, they weigh on global growth prospects, they hurt global trade, they will lead to revised supply chains and a more divided world – but their direct market impact has weakened. US inflation and jobs matter more, because it’s up to the Federal Reserve (Fed) to keep the bullish trend in check. Rates are being cut, and if things got ugly, the Fed would be the one buying government bonds. On that front, news is encouraging. Last week’s impressive 3.8% US GDP growth sounded alarm bells and raised questions about the necessity of further Fed cuts. But Friday’s PCE data came in *right* on target. Personal income and spending rose more than expected, but the Fed’s preferred inflation gauge, the core PCE index, held steady at 2.9%. That’s significantly and persistently higher than the Fed’s 2% target. But the Fed will tolerate higher inflation as the combination of ample fiscal support and ballooning US debt points to structurally higher inflation (all that money has to go somewhere).

And speaking of jobs and debt – investor attention now shifts to US jobs data this week and a potential government shutdown on October 1. For jobs, the US economy is expected to have added around 50K jobs in September, with wages up 0.3% and unemployment steady at 4.3%. A weaker-than-expected print would keep alive expectations of two more Fed cuts this year, putting pressure on short-term yields and the dollar while supporting equities. Stronger-than-expected numbers, on the other hand, could reduce the odds of two more cuts, support the dollar and cap equity appetite near record highs.

But that data may not be published if a government shutdown materializes. Should Congress fail to strike a deal, we could see both stocks and the dollar under pressure, alongside renewed stress at the long end of the US yield curve. Still, a last-minute deal is more likely than not, and shutdown scares have usually ended up as non-events. Even in the rare cases they caused market disruption, the dips proved attractive to buy – after all, the US government can’t stay shut forever.

Meanwhile, uncertainty is helping gold to fresh records. The metal kicked off the week above $3,800 per ounce, while silver continues its exponential rise as investors shun the dollar and US debt. The precious metals rally is not just a short-term allocation story – trend-followers are in control, and the trend is strongly positive.

Despite that risk-off note, the week starts with a positive tone. European and US futures are in the green. In China, stocks are higher after industrial profits rose 20% year-on-year in August. The Hang Seng is better bid too, boosted by another 3% jump in Alibaba shares. The AI rally across Chinese stocks remains a major theme, with Alibaba carrying the mascot’s torch. A rally toward the 200 mark looks increasingly on the cards, with room to extend further.

In FX, the US dollar is downbeat on dovish Fed expectations ahead of jobs data and amid shutdown risks. The EURUSD held above its 50-DMA last week. Starting today, eurozone countries will release their September preliminary inflation prints. On Wednesday, the aggregate CPI is expected to tick up from 2% to 2.2%. That should cement the idea that the European Central Bank (ECB) is done cutting rates. But since that’s largely priced in, direction will come more from the dollar. A soft jobs print or a shutdown could fuel a retest above 1.18, while strong jobs data and no shutdown should maintain resistance at that level.

Elsewhere, the Reserve Bank of Australia (RBA) is expected to keep rates unchanged when it meets tomorrow, and US crude is trading above the key $65pb level, with rallies seen as selling opportunities amid news that OPEC will continue restoring supply in November.

In focus today

In the euro area, this week's focus is on the flash HICP inflation print for September, with data from Spain and Belgium due today. We expect euro area HICP inflation to rise to 2.3% y/y (prior: 2.0%) mainly due to energy price base effects, while core inflation is also expected to increase slightly to 2.4% y/y (prior: 2.3 %) on services-related base effects, particularly airfares. Core inflation momentum is likely to remain steady, making the rise in yearly rates largely base effect-driven, limiting hawkish signals. Hence, we could see a decline in interest rates despite the yearly growth rate of inflation increases, if the month-on-month developments are weaker than expected.

Overnight, the Reserve Bank of Australia (RBA) will have a monetary policy meeting. We expect no policy rate changes, in line with market pricing. Markets believe that the RBA will eventually deliver at least one more rate cut over the winter period.

The Riksbank will publish the minutes from last week's policy rate decision. While we already know that Anna Seim entered a reservation against the rate cut, it will be particularly interesting to understand her reasoning. For the other board members, we will focus on nuances in their statements to identify any potential candidates for a more hawkish stance going forward. Anna Breman's elaborations will hold less relevance for future decisions, as she will leave the Riksbank on 10 October and will not participate in further interest rate decisions. Until a replacement is appointed, the board will consist of four members, with Erik Thedéen holding the casting vote in the event of a tie.

Looking ahead, this week features a packed economic calendar, the US September jobs report, and Japan's LDP leadership elections. A potential US government shutdown remains a risk this week, with negotiations still ongoing. While such shutdowns typically have limited macroeconomic impact, they could result in significant disruptions, including furloughs for hundreds of thousands of public workers. Efforts are underway to pass a short-term funding bill to extend government operations until 21 November, requiring bipartisan support in the Senate.

Economic and market news

What happened over the weekend

In oil markets, Reuters exclusive reported that OPEC+ is expected to approve a 137,000 bpd output hike for November at its 5 October meeting, continuing the gradual reversal of prior cuts. Brent crude rose above USD70/bbl on Friday, supported by Ukrainian drone attacks on Russia's energy infrastructure. However, OPEC+ often falls short of targets, as many members are already at capacity, heightening market concerns over shrinking spare capacity.

What happened Friday

In the US, August PCE closely matched expectations for both prices and real consumption growth, as core PCE came in at 2.9% y/y. Real consumption was revised up by USD 180bn (+0.9%), driven by a positive revision to household incomes. Overall, consumption remains a clear growth driver in Q3.

Tariffs and the euro area, Trump announced 100% tariffs on pharmaceutical goods as well as additional tariffs on heavy trucks, cabinets, and upholstered furniture. Pharmaceutical producers with manufacturing facilities either in place or in construction in the US will be exempted from the tariffs. This alleviates the impact on the EU economy, as this includes majority of the largest EU producers. In addition, EU's heavy truck exports are just EUR 430m annually, and total furniture exports (including unaffected items) amount to EUR 5bn (0.03% of GDP). However, the announcement underscores ongoing tariff uncertainty, despite a trade agreement.

Equities: Equities ended mostly higher on Friday, snapping a three-session losing streak. Nevertheless, global equities finished the week lower despite stronger macro data, primarily from the US. Rising yields kept equities under pressure, though the selloff was far from a true "risk-off" move. Instead, the weakness was concentrated in defensives (staples, health care) and high-multiple sectors such as communication services and technology. By contrast, value cyclicals - including materials, energy, and banks - were particularly strong. As for health care, weakness came from new tariff threats on pharma, but the downward pressure dampened in the afternoon following White House confirming that EU will have a 15% tariff on pharma products, not 100%. Within equities, we continue to favour banks, materials, and health care, and therefore expect similar market dynamics in the weeks ahead.

FI and FX: EUR/USD rose in the latter part of Friday's session, breaking back above the 1.17 mark. US yields carried upward momentum through most of last week, partly driven by stronger-than-expected data, though Friday's moves were relatively muted with yields essentially unchanged across the curve. This week, we head into a pivotal week for markets and the Fed, with a heavy slate of US labour market data. In Europe, Friday was also a quiet session, with front-end yields unchanged, while the 10Y and 30Y Bund yields declined 2bp. The modest long end-led move resulted in a mild bull flattening of the German curve. The oil price rose above USD70/bbl on Friday for the first time in almost two months. The rebound could be due to geopolitical uncertainty and in particular potential for more sanctions on Russia taking the focus from the impact from rising OPEC+ production and the higher tariffs.

Daily Pivots: (S1) 149.28; (P) 149.62; (R1) 149.83; More...

Intraday bas in USD/JPY is turned neutral first as retreat from 149.95 deepens. Some consolidations would be seen first but further rally is expected as long as 147.45 support holds. Corrective pattern from 150.90 should have completed at 145.47. Above 149.95 will bring retest of 150.90 first. Firm break there will target 151.22 fibonacci level. However, sustained break of 147.45 will dampen this bullish view and bring deeper fall to 145.47 support instead.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.