• China’s Politburo reaffirms will lower RRR and implement forceful interest rate cuts
• Aussie bounces back today on upbeat China sentiment
• Is this the real turning point for Chinese equities?
• SNB cuts key policy rate by 25 bps to 1.00% from 1.25% previously
• SNB chairman Jordan: Swiss franc rise a major factor of inflation decline
• ECB October policy decision reportedly to be „wide open“
• Germany October GfK consumer sentiment -21.2 vs -22.5 expected
• Germany’s leading economic institutes sees GDP contracting again this year

Markets:

• AUD leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.8%
• US 10-year yields down 0.9 bps to 3.771%
• Gold up 0.8% to $2,678.03
• WTI crude down 2.8% to $67.77
• Bitcoin up 1.3% to $64,330

China continues to hog the spotlight so far this week. The Politburo came out today to amplify their commitment towards all of the measures taken up this week and that spurred a surging rally in Chinese assets. The Shanghai Composite closed above the 3,000 mark for the first time since June, closing up by 3.6%. Meanwhile, the CSI 300 index ended up by 4.2% and is holding over 10% gains already this week.

That helped to push the likes of the aussie higher, with a more positive risk mood also flowing through broader markets.

AUD/USD moved up from 0.6840 to 0.6880 levels now, up 0.9% on the day. And as the session progressed, a softer dollar is also starting to permeate across other major currencies.

EUR/USD was weighed down by a report that the ECB is considering October to be a live meeting, with the pair falling to 1.1127 before trading back up by 0.2% now to 1.1155. GBP/USD held steadfast and is up 0.4% to 1.3380. USD/JPY tested the 145.00 mark in early Asia trading but is now dragged down by 0.4% to 144.23 on the day.

There was also the SNB policy decision and the Swiss central bank decided to cut its policy rate by 25 bps. It was a coin flip in terms of market pricing and the decision helped to cement slight gains in the franc, with traders still looking for roughly two more 25 bps rate cuts by the SNB by June next year. In that sense, the pricing outlook hasn’t changed that much.

Still, both USD/CHF and EUR/CHF fell with the latter down 0.2% to 0.9455 currently as the SNB getting outdone by the ECB even on their decision day.

In the equities space, it’s a more straightforward one as investors are buoyed by the vote of confidence in Chinese markets.

S&P 500 futures raced higher to be up 0.8% now while European indices are all holding over 1% gains on the day.

In the commodities space, gold is continuing to scale higher and is trading to fresh record highs now near $2,680. The train marches on there.

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

The gains picked up during the handover from Asia to Europe, following comments from China’s Politburo here. That amplified Beijing’s commitment from all of the measures announced this week and also drove Chinese equities to surging gains on the day. S&P 500 futures were already up 0.3% at the time but extended that to 0.8% and have been consolidating a fair bit since.

Tech shares are staying buoyed overall with Nasdaq futures marked up by 1.4%. Adam highlighted Nvidia as being a standout here yesterday.

But so far, the main takeaway since last week is that investors are feeling confident about a soft landing in most major economies. And put together with a vote of confidence/faith in China this week, it is making for a more positive mood towards the end of September.

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

The US Dollar came under
renewed pressure recently following the surprisingly weak US
consumer confidence report on Tuesday. The labour market data in the report
softened a lot and it generally leads the unemployment rate.

The market responded by
raising the probabilities for the Fed to cut by 50 bps in November to roughly
60%. The question now is whether this is just about the low hiring rate or
something worse. We will have to wait for the NFP report next Friday.

The focus is now on the
economic data. If we start to see an improvement, then Treasury yields will likely
rise and drive USDCHF higher. Conversely, if the data weakens significantly,
the market will start to worry about a recession and take USDCHF lower.

For the CHF, the SNB
today cut rates by 25 bps bringing the policy rate to 1.00%. The central
bank mentioned that it’s prepared to intervene in currency markets as necessary
and the new inflation forecasts were revised significantly lower signalling
more rate cuts to follow.

That was not enough for the
market to lead to a weaker CHF as the currency is now positive on the day.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF remains stuck in the range between the 0.8555 resistance
and the 0.8400 support. The market participants will likely keep on playing the
range by buying at support and selling at resistance until we get a breakout.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action. There’s not much to add here as
we will need to wait for a major catalyst or a breakout to see a more sustained
trend.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the pair bounced strongly from the lows yesterday. If the price breaks
below the most recent higher low at 0.8465, we might see the bearish momentum
increasing as the sellers will look for a drop back into the support. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the US PCE report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

On the daily chart, we can
see that the Russell 2000 got rejected from the cycle highs and pulled back.
The buyers will want to see the price breaking higher to increase the bullish
bets into a new all-time high, while the sellers will likely step back in
around the highs if the price gets there.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a downward trendline
defining the current pullback. The sellers will likely keep on leaning on it to
position for new lows, while the buyers will look for a break higher to pile in
for a rally into a new cycle high.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action. There’s not much else we can add here
as the sellers will likely lean on the trendline, while the buyers will look
for break higher. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the US PCE report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

They are sticking with the view that the ECB will begin delivering back-to-back rate cuts, but starting from December. A further weakening in the economic outlook is the main cause for the shift in their call, after having previously forecasting the ECB to deliver on 25 bps rate cuts every quarter until a terminal rate of 2.00% to 2.50% around the end of next year.

„We are moving to a faster normalization call, with the ECB to reach the same terminal rate of 2.00 to 2.50% six months earlier in mid-2025. We expect this more rapid easing cycle to be achieved with back-to-back 25 bp cuts from December, but we do not rule out a 50bp cut in December.“

But given the latest report that surfaced just a little over an hour ago here, they might just have to consider revising their call again.

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