• France September flash services PMI 43.9 vs 46.0 expected
• Germany September flash manufacturing PMI 39.8 vs 39.5 expected
• Eurozone September flash services PMI 48.4 vs 47.7 expected
• UK September flash services PMI 47.2 vs 49.2 expected
• Euro area PMI takeaways
• BOJ governor Ueda: Will not hesitate to take additional easing measures if necessary
• BOJ’s Ueda: Sustainability of wage hikes the most important thing for inflation outlook
• BOJ’s Ueda: Could consider easy policy exit when achievement of 2% inflation is in sight
• The bond market continues to hog the spotlight
• UK August retail sales +0.4% vs +0.5% m/m expected
• UK September CBI trends total orders -18 vs -18 expected
• Spain Q2 final GDP +0.5% vs +0.4% q/q prelim

Markets:

• NZD leads, JPY lags on the day
• European equities lower; S&P 500 futures up 0.2%
• US 10-year yield flat at 4.482%
• Gold up 0.3% to $1,925.47
• WTI crude up 1.0% to $90.57
• Bitcoin up 0.2% to $26,651

It was a relatively lively session as the euro and pound came under the microscope amid the latest PMI data for September.

The French reading disappointed while the German reading reaffirmed a contraction in Europe’s largest economy during the quarter, though the latter was better than expected on the month. That saw a bit of a fall and rise in the euro, with EUR/USD moving down from 1.0665 to 1.0615 before holding around 1.0640-50 currently.

The pound found little comfort from the poor PMI readings, with the BOE already having seen the numbers before choosing to pause yesterday. GBP/USD was already slightly softer on the day before extending a drop from 1.2260 to 1.2235 before keeping around 1.2250 levels now.

The dollar continues to keep in a solid spot, sitting more mixed on the day as it is only lower against the commodity currenies.

The yen was also a feature as BOJ governor Ueda ran back on his remarks on a „quiet exit“ from two weekends ago, and that is seeing further pressure on the currency today. USD/JPY is up 0.5% to 148.25 as higher yields continue to keep the pressure on the yen as well.

In the bond market, the selling is hitting a bit of a pause after the poor PMI data today but nothing too significant. 10-year yields in the US dropped off to around 4.46% but are now back up to 4.48% and that continues to keep equities on edge. European stocks are lower today after the heavy selling in Wall Street yesterday but US futures are at least a little higher but still have to navigate through the US session later.

There will be US PMI also to watch out for and any surprises there could keep things rather interesting towards the end of the week. In that lieu, a downside miss will be of more impact than any upside beat I would say.

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

The snapshot today is that the dollar is down against the commodity currencies but higher against the European currencies and the Japanese yen. The poor PMI data in Europe and UK are proving to be the bane for the euro and pound respectively, while the BOJ failing to walk the talk is weighing on the yen.

In a case of bad news is good news, the continued weakness in the euro area and UK economies are putting a stop to the bond selling and US futures are able to trade more sideways on the session – holding slight gains. That being said, Wall Street tends to have a mind of its own and higher yields in the bigger picture are still a cause for concern for stocks.

EUR/USD is one to keep an eye out for ahead of the weekend, with the pair testing key support at 1.0635 currently:

Meanwhile, USD/JPY is up 0.5% to 148.25 while GBP/USD is down 0.3% to 1.2250 levels at the moment.

The commodity currencies are the ones leading the way today with USD/CAD down 0.2% to 1.3450, helped out by higher oil prices with WTI crude returning above $90. And AUD/USD is also up 0.4% to 0.6440 in what has been a rather back and forth week for the pair – up just a measly 13 pips on the week at its current level.

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

US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations, so the market’s pricing remained roughly the same.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also
  yesterday with the strong beat in Jobless Claims.
• The market doesn’t expect the Fed to hike again at
  the moment.

Japan:

• The BoJ kept everything unchanged as expected.
• The Japanese CPI today showed that inflationary
  pressures remain high with the core-core reading hovering at the cycle highs.
• The Unemployment Rate surprisingly increased recently,
  although it remains near cycle lows.
• The Japanese Manufacturing PMI fell further into contraction but
  the Services PMI remains in expansion.
• BoJ governor Ueda repeated that they will not
  hesitate to take additional easing measures if needed and clarified that the
  recent comment on “quiet exit” from monetary easing was misinterpreted.
• The recent Japanese wage data showed a slowing in wage growth,
  and this is something the BoJ focuses on particularly.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that USDJPY remains in an uptrend, but the bullish momentum is clearly waning.
The red 21 moving average
continues to act as dynamic support and the fundamentals keep supporting more
upside for the pair, but it looks like one ugly economic release for the US
could make the pair fall hard to the 145.00 level. For now, the 150.00 level
remains the target for the buyers.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
massive divergence with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we only got pullbacks, but the price action has been
forming what looks like a rising wedge, which
is a reversal pattern. So, this will be something to watch out for.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price action is very messy and it’s hard to find clear levels to lean on.
Nonetheless, we have two key levels to watch now. A break above the recent high
at 148.47 should see more buyers coming into the market and keep the uptrend
going, while a break below the low at 147.32 should confirm the break of the
rising wedge and lead the pair to the 145.00 support.

Upcoming Events

Today we only have the
Flash PMIs for the US before we head into the weekend. Strong data is likely to
keep the pair supported but weak readings might cause a selloff.

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

• Prior -15

The order books measure is as per estimates, seen falling once again. But adding to the woes of UK manufacturers is that output is seen falling again with the reading at -10 in the three months to September, though slightly improved from the -19 reading in the three months to August (still far below the average of +3). Tough times for the UK economy.

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

US:

• The Fed left interest rates unchanged as
  expected.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US CPI came
  in line with expectations, so the market’s pricing remained roughly the same.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also
  yesterday with the strong beat in Jobless Claims.
• The market doesn’t expect the Fed to hike again at
  the moment.

New Zealand:

• The RBNZ kept its official cash rate unchanged at the
  last meeting while stating that it will remain at the restrictive level for the
  foreseeable future to ensure that inflation comes down back to target.
• The recent New Zealand inflation and employment data surprised to the upside but
  the PMIs continue to slide further into contraction.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely.
• The recent New Zealand Retail Sales beat expectations although the data
  remains deeply negative.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that NZDUSD has
finally pulled back all the way up to the 0.5987 resistance where it
sold off from following the more hawkish than expected FOMC dot plot. The price
action remains choppy, but the sellers should start coming back into the market
with strength unless the price breaks above the resistance invalidating the
bearish setup.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
strong selloff from the resistance. The price is currently pulling back. Things
are messy at the moment as there’s no clear divergence between central banks as
they are all moving to the sidelines and watching the tightening to day
filtering through the economies.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor resistance at the previous swing high with the 50% Fibonacci
retracement level for confluence. This
is where the sellers should step in with a defined risk above the level and
target another selloff into the 0.5860 support. More conservative sellers might
want to wait for the price to break below the counter-trendline to
pile in and extend the fall into the support.

Upcoming Events

Today the biggest event
will be the Flash PMIs for the US.

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