<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-pm-truss-we-are-not-the-only-ones-facing-difficulties-it-is-a-global-problem-20220929/“>UK PM Truss: We are not the only ones facing difficulties, it is a global problem</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/pboc-reportedly-called-major-state-owned-banks-to-stock-up-for-yuan-intervention-20220929/“>PBOC reportedly called major state-owned banks to stock up for yuan intervention</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-kazaks-a-weak-euro-does-not-help-with-inflation-20220929/“>ECB’s Kazaks: A weak euro does not help with inflation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-rehn-significant-rate-hikes-are-needed-in-the-coming-meetings-20220929/“>ECB’s Rehn: Significant rate hikes are needed in the coming meetings</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-rehn-small-rate-hikes-arent-enough-in-the-current-situation-20220929/“>ECB’s Rehn: Small rate hikes aren’t enough in the current situation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/ecbs-mller-too-early-to-say-how-much-to-hike-in-october-20220929/“>ECB’s Müller: Too early to say how much to hike in October</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-simkus-my-choice-would-be-to-hike-by-75-bps-20220929/“>ECB’s Simkus: My choice would be (to hike by) 75 bps</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-de-cos-qt-could-potentially-cause-market-turmoil-in-certain-segments-20220929/“>ECB’s de Cos: QT could potentially cause market turmoil in certain segments</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/saxony-september-cpi-92-vs-73-yy-prior-20220929/“>Saxony September CPI +9.2% vs +7.3% y/y prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/bavaria-september-cpi-108-vs-84-yy-prior-20220929/“>Bavaria September CPI +10.8% vs +8.4% y/y prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/spain-september-preliminary-cpi-90-vs-101-yy-expected-20220929/“>Spain September preliminary CPI +9.0% vs +10.1% y/y expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-considers-power-cuts-for-parts-of-the-country-on-a-rotating-basis-report-20220929/“>France considers power cuts for parts of the country on a rotating basis – report</a></li></ul><p>Markets:</p><ul><li>USD leads, CAD lags on the day</li><li>European equities lower; S&P 500 futures down 0.7%</li><li>US 10-year yields up 12 bps to 3.825%</li><li>Gold down 0.6% to $1,650.23</li><li>WTI crude up 0.3% to $82.38</li><li>Bitcoin down 0.5% to $19,467</li></ul><p style=““ class=“text-align-justify“>After broad relief was seen in markets yesterday, we are seeing a return to old habits as bonds are selling off a fair bit while the dollar is running higher and equities are pushing lower. UK prime minister, Liz Truss, came out to defend the government’s policy plans and batted away any suggestions of U-turn in fiscal action.</p><p style=““ class=“text-align-justify“>Despite some nervous ticks higher in bond yields, 30-year gilt yields are little changed around 3.93% on the day. However, there is a notable selloff in Treasuries across the curve with 2-year yields up 11 bps to 4.20% and 10-year yields up 12 bps to 3.82%.</p><p style=““ class=“text-align-justify“>That kept the pressure on equities with US futures pushing lower after a solid bounce yesterday. S&P 500 futures are down 0.7% while European indices are also pressured lower as German inflation looks set to come in above 10% in September.</p><p style=““ class=“text-align-justify“>The dollar remains in a decent spot, recovering losses from yesterday as GBP/USD was pushed lower by 1% to 1.0765 initially before paring that loss and keeping around 1.0840-70 levels for the time being.</p><p style=““ class=“text-align-justify“>USD/JPY continues to keep buoyant, just below 145.00 with buyers slowly taking aim at the figure level again despite intervention fears. Meanwhile, EUR/USD was initially dragged down to a low of 0.9635 before holding at its 100-hour moving average and rebounding now to near unchanged levels at 0.9730.</p><p style=““ class=“text-align-justify“>Commodity currencies continue to stay under pressure with USD/CAD up 0.4% to 1.3660, though off earlier highs of 1.3755. Then, AUD/USD is down 0.3% to 0.6500 but at least moving off its low earlier as well at 0.6435 as the dollar gives a little bit back.</p><p style=““ class=“text-align-justify“>A report on the PBOC potentially intervening is also something to take note of, taking away part of the dollar’s tailwind with month-end trading also in focus.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>Just a heads up on this after the government has decided not to go through with a gas levy in fears that it will fuel a further price increase. A source earlier said that lawmakers have agreed to a significant but „responsible“ spending in dealing with the matter.</p>

This article was written by Justin Low at forexlive.com.

<ul><li>Rate hikes by major central banks raises recession risks</li><li>A big step in October is appropriate</li><li>ECB should start discussing QT now</li></ul><p style=““ class=“text-align-justify“>There’s a mix of comments in there but nothing that we don’t already know as being part of the ECB’s position at the moment. Policymakers from the central bank are out in droves today but the overall communique is clear i.e. 50 bps rate hike is the minimum for October but there’s a likelihood of raising by 75 bps as well.</p>

This article was written by Justin Low at forexlive.com.

<p style=““ class=“text-align-justify“>I’m not seeing any notable headline driving the move as this looks like just another swing in volatility for the pound this week. There is some notable short-term resistance just above 1.0900 but I would continue to pin the current range for the pair between 1.0600 and 1.1000 in the bigger picture.</p><p style=““ class=“text-align-justify“>The dollar continues to hold steady elsewhere, though gains have been pared slightly and not helped by this report <a target=“_blank“ href=“https://www.forexlive.com/news/pboc-reportedly-called-major-state-owned-banks-to-stock-up-for-yuan-intervention-20220929/“ target=“_blank“>here</a> as well, so this is more of a flow move in the pound. Broader <a target=“_blank“ href=“https://www.forexlive.com/terms/m/market-sentiment/“ target=“_blank“ id=“9c47bdfe-3721-43f4-97e8-fc0b97df4c60_1″ class=“terms__main-term“>market sentiment</a> also continues to be on edge with S&P 500 futures down 0.7%, European indices down roughly 1%, and bond yields pushing higher today. 10-year gilt yields are up 16 bps to 4.16% while 10-year Treasury yields are up 13 bps to 3.84% currently.</p><p style=““ class=“text-align-justify“>As for the pound, we heard from UK PM Truss that she’s not backing down from her recent policy initiatives and that is a clear signal for a couple of things.</p><p style=““ class=“text-align-justify“>If the gilt market continues to come under further pressure, it would require more effort by the BOE to try and restrain the market and provide more bailouts. In essence, it has to step in with some form of yield curve control.</p><p style=““ class=“text-align-justify“>That just points to further decimation for the pound on the balance of things and rightfully, it should require the government to be more fiscally responsible and embrace austerity. Otherwise, the contradicting policies between the government and central bank will just make for a disastrous recipe in terms of financial stability and confidence in the UK economy.</p>

This article was written by Justin Low at forexlive.com.