• Flailing German economy fails to breath confidence in the euro
• France October flash services PMI 46.1 vs 44.6 expected
• Germany October flash manufacturing PMI 40.7 vs 40.0 expected
• Eurozone October flash services PMI 47.8 vs 48.7 expected
• Germany November GfK consumer sentiment -28.1 vs -26.6 expected
• UK October flash services PMI 49.2 vs 49.3 expected
• UK August ILO unemployment rate 4.2% vs 4.3% expected
• ECB’s Lagarde to EU officials: Inflation fight is going well
• ECB’s Makhlouf: Far too early to tell consequences of Middle East situation
• RBA’s Bullock: Australian dollar relatively stable, not a concern for policy
• We are going to see higher interest rates for longer – Larry Fink
• Loan demand by firms and households continue to decline sharply – ECB survey

Markets:

• AUD leads, EUR lags on the day
• European equities higher; S&P 500 futures up 0.5%
• US 10-year yields up 2.3 bps to 4.861%
• Gold down 0.6% to $1,961.07
• WTI crude up 0.3% to $84.75
• Bitcoin up 4.1% to $34,458

Falling yields were the highlight yesterday and it threatened to be that way early on today as well. 10-year Treasury yields dipped to a low of 4.80% before recovering to around 4.86% currently and that took the dollar along with it for the ride.

Instead, the euro was the highlight as it slumped during the session after a weak set of PMI readings from France and Germany in particular. EUR/USD held around 1.0690 early in the session before reversing to hit a low of 1.0623 and is holding just above that on the day.

The single currency remains the weakest performer while risk trades are keeping the turnaround from yesterday and pushing higher today. S&P 500 futures are up 0.5% while European indices are holding modest gains so far on the day.

That is helping to keep the aussie underpinned, with AUD/USD up 0.5% to 0.6365. Besides that, other major currencies remain more muted although we did see GBP/USD fall off as well from a high of 1.2280 to 1.2210 on the session after is own PMI data and dollar recovery.

In other markets, gold is seen tracking lower and looks poised for back-to-back daily losses for the first time in three weeks. Perhaps there is some further unwinding of safety flows at play there. Meanwhile, Bitcoin continues to surge with over 4% gains now to $34,458 after briefly clipping the $35,000 mark earlier in the day.

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

• Eurozone economy to stagnate in the next few quarters
• Risks to inflation have become more balanced
• Fiscal impasse is starting to turn into a headache

The fear for the euro area now is that as the economy skirts around the risk of a recession, a second-round effect of inflation pressures would basically put them in a rather dire spot. Stagflation, anyone? Lagarde is trying to sound optimistic but surely she can’t say with unequivocal certainty that the ECB has done enough.

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

The near-term chart shows the change in prospects for gold as price now falls below the 100-hour moving average (red line). That indicates that the near-term bias is now more neutral as sellers wrestle back some control:

The fall comes after gold tested the highs from June and July around the region of $1,983-87 on the daily chart. And with a lack of significant escalation in the Israel-Hamas conflict since the weekend, we are perhaps starting to see safety bets come off the boil even more this week.

If gold keeps with losses today, it will be the first back-to-back daily decline for the precious metal since the start of October.

That could be a turning point for sellers to try and gather more momentum for a downside push in the sessions ahead. The next key test will be the 200-hour moving average (blue line) first around $1,935.24 currently before moving on to the 100 and 200-day moving averages around $1,922-31 next.

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

• 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 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 remains 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.

New Zealand:

• The RBNZ kept its official cash rate
  unchanged while
  stating that demand growth continues to ease and it’s expected to decline
  further with monetary conditions remaining restrictive.
• The New Zealand inflation data last week missed expectations
  supporting the RBNZ’s stance.
• The latest employment data surprised to the upside.
• The Manufacturing PMI continues to slide further into
  contraction, but the Services PMI jumped back into expansion.
• 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 the NZDUSD pair
is massively diverging with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got a pullback into the broken support turned resistance which
might end up being a classic “break and retest” pattern. If the price continues
higher and breaks above the resistance though, we will get a confirmation of a
reversal and the NZDUSD pair might rally all the way back to the trendline.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the recent
break above the minor trendline and the moving averages
crossover switched the bias more to the upside. This might be just a complex
correction though and the sellers are likely to step in at the resistance with a
defined risk above the level to position for a drop into new lows. The buyers,
on the other hand, will want to see the price breaking higher to pile in and
start targeting the major trendline around the 0.5980 level.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we’ve
been diverging with the MACD for quite some time. The first target of the
divergence, in case the price breaks above the resistance, is the swing high
around the 0.5925 level. A lot will depend on how the price reacts to the key
resistance. A break below the recent higher low around the 0.5838 level should
change the market structure on this timeframe back to bearish and likely
increase the downside momentum leading to a drop to new lows.

Upcoming Events

Today we will get the latest US PMIs where strong
figures should support the greenback, while weak readings are a bit more
complicated as the USD might weaken due to falling Treasury yields but also
strengthen due to recessionary fears. On Thursday, we will see the US Jobless
Claims figures, while on Friday we get the US PCE report which is not expected
to change anything for the Fed at this time.

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

The pair is now down to 1.0634 on the day, lower by 0.3% as it owes more to a slump in the euro with the dollar keeping relatively steadier on the session. The greenback was slightly softer earlier on but 10-year Treasury yields are now up 2.1 bps to 4.858% and that is helping the dollar to find a bit of a footing. As for the euro, the poor PMI readings from France and Germany has been a real drag for the single currency.

With the drop today, EUR/USD is threatening to undo yesterday’s technical breakthrough above the 23.6 Fib retracement level at 1.0643. That will give sellers back some semblance of control, as they are also putting up a defense with price action having fallen off after hitting a high of 1.0693 earlier – which tested the 100-week moving average of 1.0685.

That tells us that any upside break is not secured just yet and will rely a lot on the daily close today to some degree.

If buyers can’t hang on and keep price above 1.0643, it’s tough to argue for a strong push higher in EUR/USD unless Treasury yields threaten to retrace much more than it already has yesterday.

In turn, that perhaps is a sigh of relief for dollar bulls as well considering that EUR/USD was the only pair that really threatened something at the start of the day here.

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