• Prior 5.25%
• Bank rate vote vs 3-6 expected
• Statement details to follow..

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

Headlines:

• Is the bond market rout finally over?
• Dollar stays pinned down after yesterday’s retreat
• Equities perk up in European morning trade
• BOJ’s main message is to maintain easy policy, even if their actions contradict – report
• ECB’s Knot: Policy rates now are at a good ‚cruising altitude‘
• Eurozone October final manufacturing PMI 43.1 vs 43.0 prelim
• Germany October unemployment change 30k vs 15k expected
• Switzerland October CPI +1.7% vs +1.7% y/y expected
• US October Challenger layoffs 36.84k vs 47.46k prior

Markets:

• NZD leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.6%
• US 10-year yields down 2.9 bps to 4.705%
• Gold up 0.3% to $1,987.87
• WTI crude up 1.4% to $81.56
• Bitcoin flat at $35,431

The reversal rally in bonds yesterday was the main story and the reverberations continue to be felt today, with yields also looking rather sluggish in European trading.

10-year Treasury yields are down at the lows near the 4.70% now and that is dragging the dollar down with it as risk trades continue to soar. The squeeze continues and will likely stay the course until we get to the US jobs report tomorrow.

Equities were cautiously optimistic early on before eventually running with a full on rally, as European indices are now clocking in 1.5% to 1.9% gains across the board. S&P 500 futures were up only 0.2% in the handover from Asia, but are now seen up 0.6% or 26 points on the day.

EUR/USD moved up from 1.0590 to 1.0630 levels while AUD/USD is largely holding gains at around 0.6430-40 levels on the day, up by 0.6%. The dollar is the laggard with USD/JPY trailing by 0.4% to 150.30 levels although not much changed from the end of Tokyo trading.

It’s all about the question if this is the top in yields and if so, that could as well signal a top in the dollar rally over the last few months.

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

• Prior 47.46k

US-based employers announced 36,836 job cuts last month, a roughly 9% increase compared to the same period last year. That continues the trend of rising job cuts relative to the corresponding month a year ago and can be seen as a sign of softening in labour market conditions overall.

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

After a surprise pause in September here, the BOE has gotten away with making their job a little easier in communicating today’s policy decision. The thinking previously was to get one more rate hike in as they could still get away with it. But now that ship has sailed and we’re left staring at another decision where the central bank is to keep its bank rate unchanged at 5.25%.

And with price pressures trending lower as a whole, that is working to their favour in having announced a pause in September. As such, there is no need to change the status quo for now.

There shouldn’t be any surprises as the BOE is likely to reaffirm that rate hikes are doing their job and will take some time to see the full effect. Meanwhile, inflation developments are progressing positively but the road ahead is still a long one. For now, the pressure on the economy is not one that is crushing just yet and so there is no need to poke the bear on that front.

Given an easier walkthrough for the BOE this time around, the pound reaction should be rather muted; all else being equal.

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

Yesterday, the Fed left interest rates unchanged as
expected with basically no change to the policy statement. Fed Chair Powell
repeated once again that they are “proceeding carefully” as the full effects of
the policy tightening have yet to be felt.

There were some expectations for him to hint or
signal something for the December meeting given that the September Dot Plot
showed another rate hike by the end of the year, but Powell instead
said that they “have not made any decisions on future meetings” sparking a
rally in the Dow Jones.

On the data front, yesterday the US Job Openings beat
expectations, but the ISM Manufacturing PMI missed
by a big margin. The market might be taking this as good news for a relief
rally in the short term, but the bulls may want to be careful going forward.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
bounced around a previous swing level and it’s now approaching key resistance levels.
In fact, we can see that the price is near the 61.8% Fibonacci retracement level
and the red 21 moving average.

This is where we can expect the sellers to step in
and further increase the bearish bets if the price reaches the trendline. The
buyers, on the other hand, will want to see the price breaking above the
trendline to invalidate the bearish trend and start eyeing the all-time high.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD right
around the key swing level. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, since the price broke
above the minor trendline, the reversal got confirmed and the buyers piled in
more aggressively to extend the rally into new highs.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
trend on this timeframe is clearly bullish with the price printing higher highs
and higher lows and the moving averages being crossed to the upside. We can
expect this trend to continue as long as the price stays above the trendline and
the red 21 moving average. If the price falls below the trendline, the sellers
should step in and position for a drop into new lows as that could be the
signal that the short term correction has ended.

Upcoming Events

Today, we have only the US Jobless Claims data,
which will be important for the market given the recent weakness in Continuing
Claims. Tomorrow, we conclude the week with the US NFP report and the ISM
Services PMI.

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