• Inflation has come down a lot, should continue
• Economy has been resilient
• But business contacts say a slowdown is coming
• Not going to see a recession, inflation will go to 2%
• Don’t think there will be rate cuts before middle of next year
• Economy still has a lot of momentum
• Inflation will ebb slowly; Fed will need to be cautious, patient and resolute

As always is the case, you don’t really have to talk about the R-word unless there is a risk of it materialising. So, that sort of speaks for itself. But among all the major economies, it does seem like the Fed is best prepared to weather a slowdown at the moment.

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

Headlines:

• It’s all about the known unknowns right now
• USD/JPY nervy as traders test waters at 150.00
• Gold runs up towards next technical hurdle as geopolitical tensions persist
• Israel says that at any time Hezbollah shoots, they will fire back
• UK September retail sales -0.9% vs -0.2% m/m expected
• BOJ’s Ueda: Japan economy is recovering moderately
• BOJ to hold first long-term monetary policy review workshop on 4 December
• BOE’s Bailey says expects a ‚marked fall‘ in inflation next month

Markets:

• CAD leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields down 5.5 bps to 4.932%
• Gold up 0.5% to $1,982.84
• WTI crude up 1.5% to $89.71
• Bitcoin up 4.4% to $30,001

Traders are feeling sidelined for the moment awaiting further key developments in all areas, before really firming up any convictions. The bond selling hasn’t yet resulted in 5% yields in 10-year Treasuries, with flows also balanced out somewhat by uncertainty and rising tensions in the Middle East.

Stocks are pinned down for now but US futures are pointing to modest losses, although European indices are hammered down towards the end of the week.

In FX, it’s all about watching for USD/JPY at the 150.00 mark. The pair briefly clipped the figure level according to some quotes and that triggered a drop to around 149.60-70 before keeping just under 150.00 again now.

The pound also fell for a moment after a weak UK retail sales data, with GBP/USD slipping to 1.2095 before holding flattish around 1.2135 currently.

The loonie is the one leading gains on the day, helped out by higher oil prices with commodities still impacted by the Israel-Hamas conflict and worries surrounding the region.

WTI crude is up 1.5% to $89.71 while gold is also underpinned and testing the June and July highs at $1,983-87 on the day.

We’re approaching the weekend and that could explain the more cautious approach for now, after having seen a similar take last Friday already.

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

The good news on the economy continues to be
trumped by further tightening in financial conditions due to rising Treasury
yields, and the tensions in the Middle East increasing. In fact, on a
forward-looking basis, these events are likely to weigh on the economy further
down the road, which is not a good thing for the market. Yesterday, the US Jobless Claims beat
expectations once again but the Continuing Claims missed for a second time in a
row, which might be signalling that laid off people are finding it harder to
find another job fast.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite broke down and it’s now at a key support around
the 13174 level. This is where we can expect the buyers to step in with a
defined risk below the level to position for a rally into the top trendline around
the 13700 level. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 12274 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a
minor trendline adding an extra layer of confluence to the
13174 support level. This is likely to be a “break it or make it” moment for
the Nasdaq Composite as a break to the downside would open the door for much
lower prices.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that if we
were to get a bounce here, the sellers are likely to lean on the previous support now turned
resistance around the 13340 level where we can also
find the 50% Fibonacci
retracement level and the red 21 moving average. The
buyers will want to see the price breaking above that resistance zone as well
to invalidate the bearish setup and target the highs with more conviction.

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