• Prior +6.1%
• CPI +% vs +0.3% m/m expected
• Prior +0.3%
• HICP +% vs +4.5% y/y expected
• Prior +6.4%
• HICP +% vs +0.3% m/m expected
• Prior +0.4%

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

• Dollar holds tentatively lower so far on the day
• The bond market continues to hold all the cards
• Saxony September CPI +5.4% vs +6.8% y/y prior
• Bavaria September CPI +4.1% vs +5.9% y/y prior
• Spain September preliminary CPI +3.5% vs +3.5% y/y expected
• Economic institutes forecast 0.6% GDP contraction for Germany this year
• China to introduce tax exemptions and cuts for affordable housing

Markets:

• AUD leads, USD lags on the day
• European equities mixed; S&P 500 futures down 0.1%
• US 10-year yields up 3.7 bps to 4.647%
• Gold flat at $1,875.15
• WTI crude down 0.4% to $93.28
• Bitcoin up 0.8% to $26,446

The two main outperformers this week are the laggards today, that being the dollar and oil.

The latter raced higher in Asia trading to $95 but is marked down by 0.4% now to $93.27 while the greenback is down across the board as it gives back some of the gains this week.

EUR/USD tested waters below 1.0500 for the first time since January before bouncing up to 1.0540 levels while USD/JPY is still caught out by intervention fears, down 0.2% to 149.30 currently.

All of this comes despite higher Treasury yields on the day, with 10-year yields in the US touching above 4.64%. And that is still keeping equities rather nervous, with some selling pressure in Europe which was met by dip buyers – who seem to be keeping things interesting ahead of month-end and quarter-end.

In terms of data, we got Spanish and German inflation numbers. The former continues to reaffirm stickier price pressures while the latter is showing a decent drop, which fits expectations. That being said, the monthly readings are still rising and alongside higher oil prices, that just means the ECB cannot quite breathe easy just yet.

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

It looks like the more hawkish than expected FOMC Dot Plot last
week was kind of a wakeup call for the market as it’s been selling off with
almost no pullback ever since. The resilience in the economy is keeping the Fed
on the hawkish camp as it wants to see more weakness in the data, especially on
the labour market front. We’ve seen a huge rally since the lows back in October
2022 as the market continued to see a soft landing but even Fed Chair Powell said
that it’s not his base case, although they are aiming for it. With so many
bearish drivers that accumulated throughout the first half of 2023, the market
might be at risk of a major fall now.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 continued to fall after breaking below the key support around
the 1820 level. The target for the sellers is now the support around the 1720
level where we will likely find strong buyers stepping in with a defined risk
below the support to position for a rally back into the 1820 resistance.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that if we were to
see a pullback, the best place for the sellers from a risk management
perspective will be the trendline where
there’s also the confluence with the
Fibonacci retracement levels.
The buyers, on the other hand, will want to see the price breaking above the
trendline to position for a rally back into the 2020 resistance.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
have a divergence with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a pullback into the minor trendline and
the 38.2% Fibonacci retracement level where the sellers are likely to pile in
for another selloff into the 1720 support. The buyers, on the other hand, are
likely to pile in on a breakout and position for a rally into the major
trendline.

Upcoming
Events

Today the main event will be the US Jobless Claims
report. At this point, looks like there’s not much difference if it’s strong or
weak data as the former would keep the Fed hawkish and even raise the risk of
higher rates, while the latter might point to a recession. Nonetheless, the
last time the market rallied on weak data as it decreased the risk of further
tightening and brought down Treasury yields. Tomorrow, we will see the latest
US PCE data which is unlikely to change much in terms of market pricing unless
we see some big surprises.

This article was written by FL Contributors at www.forexlive.com.

Equities had that familiar sinking feeling just about an hour ago but have found some relief right after this post here. It’s still a heavy-looking week all things considered and I wouldn’t count out another wave of selling later in US trading, especially if bonds also hit the skids. But at least for now, there is a bit of a breather as dip buyers step in with S&P 500 futures rallying back to be up 0.2%.

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

Taxes will be exempt for urban land used for the construction of affordable housing projects and stamp duty will also be waived for management firms and buyers of said projects, all starting from 1 October. Adding to that, there will be a reduced deed tax of 1% to be levied on the purchase of affordable housing by home buyers.

All of this is to further bolster support for the real estate sector but again, I reckon Beijing needs to do so much more.

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