• BOJ governor Ueda: Japan economy is recovering moderately, although there is some weakness
• BOJ governor Ueda: Recent data confirms economy is moving in line with our outlook
• BOJ governor Ueda: Will carefully communicate thinking behind policy decision with markets
• BOJ governor Ueda: Easy monetary conditions are in place as real rates remain negative
• Gold tops $2,600 as the bulls seek out the next leg higher
• Fed fund futures suggest November is starting to resemble a coin flip again
• What are the main events for today?
• BOE’s Mann: Policy needs to stay restrictive to purge inflationary behaviours
• ECB’s de Guindos: We will have more information in December than in October
• UK August retail sales +1.0% vs +0.4% m/m expected
• Germany August PPI +0.2% vs 0.0% m/m expected
• France September business confidence 98 vs 97 prior

Markets:

• GBP leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields down 0.4 bps to 3.735%
• Gold up 1.0% to $2,614.02
• WTI crude down 0.3% to $71.72
• Bitcoin up 0.6% to $63,410

The BOJ rounded off the central bank bonanza on the week and that led to some volatile movement in the Japanese yen during the day. USD/JPY dipped to a low of 141.73 ahead of BOJ governor Ueda’s press conference but rallied afterwards from his remarks, climbing up by over 1% to 144.30 levels now.

Ueda more or less dodged any suggestions of an imminent rate hike in October and that is what is arguably weighing on the yen.

He also said that markets remained „unstable“, referring to previous remarks from his colleagues when they were asked about whether or not the conditions were right to hike rates again.

Besides the yen, other major currencies didn’t get up to much during the session. The dollar fell yesterday but is holding its ground today as equities get a bit of a check back following the rally in the day before.

GBP/USD did rise up to a high of 1.3340 after a more upbeat UK retail sales but is now trading back just under 1.3300, up just 0.1% on the day.

With equities being kept in check and bonds also not doing all too much, there’s not much to work with so far for the dollar.

In the commodities space though, gold bulls are making a play as they look to seal a firmer break above $2,600. The precious metal is trading to fresh record highs again, looking poised for the next leg higher. Rock on. 🤘🏼

I wish you all a pleasant weekend and will catch you guys again next week. Have a good one.

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

On Wednesday, the Fed
finally started its easing cycle and decided to do it with a 50 bps
cut. The market was already leaning towards a 50 bps move, so it wasn’t a
surprise.

The larger cut was framed
as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by
the end of the year and less than the market expected in 2025.

The US Dollar didn’t get a
boost despite the rise in Treasury yields. Now that the decision is behind us,
the focus will be on the economic data.

If we start to see an
improvement, then Treasury yields will likely continue to rise and lead to a
reprising in the dovish expectations supporting the greenback in the
short-term.

Conversely, if the data
weakens, the market will likely go ahead with expecting more 50 bps cuts by
year-end and weighing on the US Dollar.

On the CAD side, the latest
soft Canadian
CPI raised the probabilities for a 50 bps cut at the upcoming meeting as
BoC’s Macklem hinted to a possibility of delivering larger cuts in case growth
and inflation were to weaken more than expected.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD probed above the key resistance around the 1.36 handle but
eventually got smacked back down. The price action remains choppy as the market
now awaits more data to pick a direction. The buyers will want to see the price
breaking higher to start targeting the 1.38 handle, while the sellers will
likely keep on defending the resistance for now.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the pair is trading in a tight range between the 1.3550 support and
the 1.36 resistance. The buyers will want to see the price breaking out to the
upside to increase the bullish bets into new highs, while the sellers will look
for a break lower to pile in for a drop back into the 1.34 handle.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the choppy price action. There’s not much else to add here as
the market participants will wait for a breakout on either side. The red lines
define the average daily range for today.

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

The dollar fell in trading yesterday but there’s no extension to that so far today. Besides USD/JPY, other dollar pairs remain relatively muted after some light extension to the ranges earlier. Here’s a snapshot of things currently:

GBP/USD did nudge up to a high of 1.3340 after the upbeat UK retail sales data but has pared that advance back to 1.3285 currently.

Meanwhile, the other dollar pairs are keeping in narrower ranges and still lacking appetite overall. EUR/USD remains confined with large option expiries here also in play, at least for now.

USD/JPY is the main mover as it looks to clip the 144.00 level next. In the big picture though, the pair is still caught in a series of lower highs in recent times.

The move higher today comes as the BOJ kept monetary policy change unchanged. And Ueda also offered no real suggestions of tightening policy in October next. As things stand, he still claims that markets are „unstable“. And BOJ policymakers have said that as long as markets stay that way, they would be uncomfortable in hiking rates again.

In the bond market, 2-year Treasury yields are seeing a bit of a push and pull on the day. It was down to around 3.57% earlier but is now back up closer to 3.60%. 10-year yields were also marked down to 3.70% at the lows but are now up to just above 3.72%.

As much as the USD/JPY bounce is looking to play out, there’s still limited scope for a major rebound unless dollar sentiment switches up.

Traders are looking to try and see how far they can push the Fed in terms of pricing for November. So, there’s that to consider. And then there’s the 23.6 Fib retracement level of the swing lower from July to the low earlier this month, seen at 144.85. That before larger offers are lined up at the figure level itself at 145.00.

Those will be the bigger levels to watch as we gauge the extent of this latest rebound in the pair.

But again, I would argue it needs to be vindicated by movement in rates as well. So, we’ll see about that.

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

On Wednesday, the Fed
finally started its easing cycle and decided to do it with a 50 bps
cut. The market was already leaning towards a 50 bps move, so it wasn’t a
surprise.

The larger cut was framed
as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by
the end of the year and less than the market expected in 2025.

The US Dollar didn’t get a
boost despite the rise in Treasury yields. Now that the decision is behind us,
the focus will be on the economic data.

If we start to see an
improvement, then Treasury yields will likely continue to rise and lead to a
reprising in the dovish expectations supporting the greenback in the
short-term.

Conversely, if the data
weakens, the market will likely go ahead with expecting more 50 bps cuts by
year-end and weighing on the US Dollar.

On the GBP side, the BoE
kept interest rates unchanged yesterday and sounded more hawkish than expected
with the markets now pricing just 39 bps of easing by year end.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD managed to rally to a new high following the Fed’s and BoE’s
decisions. From a risk management perspective, the buyers would have a much
better risk to reward setup around the 1.30 handle. The sellers, on the other
hand, will likely wait for the price to fall below the previous high level at
1.3265 to start piling in for a correction lower.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have trendline
defining the current bullish momentum. If we get a pullback, the buyers will
likely lean on the trendline with a defined risk below it to position for the
continuation of the uptrend. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 1.30 handle.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much else we can add but a move below the 1.3265 level will likely increase
the bearish momentum into the trendline as the sellers are likely to pile in. The
red lines define the average daily range for today.

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

On Wednesday, the Fed
finally started its easing cycle and decided to do it with a 50 bps
cut. The market was already leaning towards a 50 bps move, so it wasn’t a
surprise.

The larger cut was framed
as kind of an “insurance” cut with the dot plot showing two more 25 bps cuts by
the end of the year and less than the market expected in 2025.

The US Dollar didn’t get a boost
despite the rise in Treasury yields. Now that the decision is behind us, the
focus will be on the economic data.

If we start to see an
improvement, then Treasury yields will likely continue to rise and lead to a
reprising in the dovish expectations supporting the greenback in the short-term.

Conversely, if the data
weakens, the market will likely go ahead with expecting more 50 bps cuts by
year-end and weighing on the US Dollar.

On the EUR side, the ECB speakers seem to prefer a rate cut in December while the market is pricing a 68% chance of a cut in October nonetheless. The central bank is data-dependent, so that’s what will drive their decisions.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD is back around the 1.12 handle after some choppy price action
following the Fed’s decision. From a risk management perspective, the buyers
would have a much better risk to reward setup around the trendline,
although a break of the high will likely see the bullish momentum increasing. The
sellers, on the other hand, will likely step in around these levels to position
for a drop into the trendline.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a consolidation right around the 1.1155 level. This might act
as kind of a barometer with the price staying above being more bullish and
staying below being more bearish.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add as the price action has been very choppy and fundamentally
there’s also a good chance to see some strengthening in the USD if the data
starts to improve. The red lines define the average daily range for today.

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