US

• The Fed left interest rates unchanged as expected at the last meeting.
• The macroeconomic projections were revised higher,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts projected in 2024.
• Fed Chair Powell reaffirmed their data dependency but added that
  they will proceed carefully.
• The recent US CPI beat expectations on the headline
  figures, but the core measures came in line with forecasts and the market’s
  pricing barely changed.
• The labour market remains pretty resilient as seen once again last
  week with the beat inJobless Claims, although continuing claims missed for a second
  time in a row.
• The US Retail Sales last week beat expectations by a big
  margin with positive revisions to the prior figures, suggesting the consumers’
  spending is still solid.
• The US PMIs this week showed that the economy now
  looks more balanced and resilient.
• Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing
  the job for the Fed and therefore they are expected to keep rates steady in
  November as well.
• The market doesn’t expect the Fed to hike anymore.

UK

• The BoE kept interest rates unchanged at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it kept a door open for
  further tightening if inflationary pressures were to be more persistent.
• The latest employment report showed a slowdown in wage growth
  and some job losses in September which could point to a softening labour
  market.
• The UK CPI last week slightly beat expectations but given
  the softening in the labour market it’s unlikely to change the BoE’s stance.
• The UK PMIs this week showed further contraction in the
  services sector.
• The market doesn’t expect the BoE to
  hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the GBPUSD pair
probed above the key trendline but got
rejected as the UK PMIs disappointed and the US ones surprised. The US Dollar
remains in the driver’s seat as the US economy is outperforming its peers and
the negative risk sentiment is leading to safe haven flows. The target for the
sellers is the 1.1840 level and we should see the bearish momentum picking up
as soon as the price breaks the recent lows.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see the selloff from
the key trendline with the sellers increasing the bearish bets on the break of
the support zone
around the 1.2220 level and then on the break of the counter-trendline. The
buyers don’t have much to lean onto at the moment, but we might find them
around the recent lows as they try to position for a rally back to the 1.23
handle. The sellers remain in control though and we should see them piling in
at every rally.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the sellers have a good resistance zone around
the 1.21 handle where we can find the confluence with
the trendline, the Fibonacci
retracement levels and the red 21 moving average. If
the price breaks above the trendline, the buyers should pile in to extend the
rally into the 1.2180 level where the sellers will step in again.

Upcoming Events

Todaywe will see the latest US Jobless Claims data
with the market likely focusing on the Continuing Claims figures as they’ve
missed expectations two times in a row already and might be a signal that the
labour market is weakening. Tomorrow, we will get the US PCE report which is
unlikely to change anything for the Fed at this point in time.

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

There will no be no changes to key interest rates today and no tweaks to other policy instruments as well. So, that leaves very little for the ECB to work with and not much for markets to really scrutinise overall. It’s going to be all about the language and how the ECB wants to communicate their future steps, although whether or not traders believe that is another thing.

The base case is that the central bank is going to maintain most of the language from September, acknowledging more positive inflation developments. That should outline their cause for pause before emphasising that at this point, sticking with higher rates for longer is the more impactful decision in the fight against inflation.

I reckon Lagarde might also point to some risks amid the geopolitical tensions in the Middle East but she should fall short of saying that such a development would be enough to warrant further rate hikes amid more persistent inflation. The magic words will be „it is still too early to tell“.

Besides that, I don’t see much else that the ECB can work with at this point. There might be a word or two about potentially discussing unwinding PEPP reinvestments earlier but I would expect policymakers to keep kicking that can down the road. As such, it might not feature too prominently in the statement or in Lagarde’s comments later on.

The ECB has sold a pause and they now have to go with that, at least for the time being. I would expect that even with worsening economic conditions, Lagarde will still tout that they have room to work with should they need to hike in December. But not any time sooner and so, there should not be any fireworks today.

So, where does this leave the euro?

At the balance, the single currency should not be too much impacted as we already know what to expect from the ECB. And their recent communication has also emphasised what they will try to sell again from today’s meeting. In the case of EUR/USD, the stronger dollar now will be the more crucial factor driving price action alongside bond yields and broader market sentiment.

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

• Prior -14

That’s a poor reading for the monthly retail sales balance as UK retailers suffer the joint-worst October on record, according to CBI. Retailers are seen cutting orders to suppliers and are expected to do so again in November and that does not bode well heading into the winter months. High interest rates and cost-of-living concerns are definitely the problem right now.

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

This week started like the last one with a broader
rally in the markets as the risk sentiment got supported by another lack of a
ground operation in Gaza over the weekend and the positive news about a couple
of hostages being released. Yesterday, on the other hand, we got the complete
reverse with the Dow Jones opening lower and selling off for no apparent reason
except a reaction to some key resistance levels. The selloff accelerated in the
evening as the Israeli PM Netanyahu said
that they were preparing for a ground invasion. Will we see another selloff
into the weekend?

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that after a brief
bounce at the start of the week, the Dow Jones yesterday began to fall again.
The sellers are eyeing the 32597 level at the moment as the risk sentiment remains
negative. That’s where we can expect the buyers to step in with a defined risk
below the level to position for a rally back into the trendline around
the 34000 level.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that there’s not
much to glean from this timeframe. The buyers might want to step in already at
the equal lows but in the current context, there’s a high chance that the Dow
Jones continues to fall into the weekend.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price yesterday rejected the resistance around
the 33265 level where we had the confluence with
the trendline and the 38.2% Fibonacci
retracement level. The buyers will want to see the
price breaking above the trendline to gain more confidence and pile in to
target a rally into the 34000 resistance.

Upcoming Events

Today, we will see the US Jobless Claims data with
the market likely focusing on the Continuing Claims figures as they’ve been
recently showing some softness. The market may not like bad data given the
fragile risk sentiment. Tomorrow, we will get the US PCE report, which is not
expected to change anything for the Fed at this point in time.

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

It’s still a hard one to read as to whether or not the 90-pip drop in USD/JPY earlier had to do with Tokyo intervention. The size and speed of the fall is suggestive but then why all of a sudden at 150.70 and not at a level just above 150.00 again like before? There are certainly some question marks about that. But since then, the pair has stabilised somewhat although traders are weary about pushing it too far above the figure level now:

There is the possibility that the drop was also triggered by the algos, with there being a note by BofA touting the possibility of the BOJ raising its 10-year JGB yield ceiling to 1.50% next week. That comes amid the rising pressure in bond yields globally. But in any case, the fact that USD/JPY is able to work its way back up above 150.00 is convincing enough to say that the drop isn’t one that matters all too much from a technical perspective – at least for now.

That being said, the dollar has since cooled off and is now trading mostly little changed across the board as the earlier gains are now looking rather tentative in European morning trade.

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