• Sterling the main mover in the FX space on the session
• UK September CPI +1.7% vs +1.9% y/y expected
• The gold train looks to march on
• This catalyst could trigger a huge selloff in gold
• Gold and Silver: A Correlated Duo
• Japan’s largest union group Rengo reportedly eyes wage hike of 5% or more in 2025
• BOJ’s Adachi says no specific timeline on when to raise rates again
• Italy September final CPI +0.7% vs +0.7% y/y prelim
• China reaffirms it will not renounce the use of force over Taiwan

Markets:

• EUR and USD lead, GBP lags on the day
• European equities lower, UK stocks up; S&P 500 futures up 0.1%
• US 10-year yields down 2.8 bps to 4.010%
• Gold up 0.5% to $2,675.48
• WTI crude down 0.4% to $70.29
• Bitcoin up 2.0% to $67,830

The main focus of the session was on the UK CPI report and it came in softer than expected.

The details also showed slowing momentum in core prices and also services inflation, rebuffing expectations for a rate cut by the BOE next month.

It wasn’t too much though, with the OIS market already having implied a ~80% probability of a 25 bps move before the data. After, that was marked up to ~91% as it is currently.

In turn, the pound fell with GBP/USD sliding from 1.3070 to a low of 1.2983 during the session. The pair is holding on to the 1.3000 level though on the daily chart, seen at around 1.3015 now – down 0.4% on the day. EUR/GBP also pushed higher and is up 0.4% to 0.8365 currently.

Besides that, there wasn’t too much to work with for broader markets. The dollar remains steady across the board with EUR/USD keeping in a narrow range just under 1.0900. Meanwhile, USD/JPY is keeping little changed as well around 149.20-30 levels after recovering from the lows in Asia.

The antipodeans are on the softer side with some slight pressure on the Chinese yuan also still persisting. AUD/USD is one to watch as it flirts with its 100-day moving average of 0.6693 on the day.

In other markets, UK stocks are up after the softer inflation numbers but European indices elsewhere are lower but at least off earlier lows. French stocks are the laggard with the CAC 40 down 0.6%, marked down by budget worries.

As for the bond market, yields are looking heavier across the board with the UK leading the way. 10-year Treasury yields nearing 4% is something to keep an eye out for as well.

In the commodities space, gold continues to impress on the week as it closes in on fresh record highs. The precious metal touched $2,682 earlier, just a tad shy of last month’s record of $2,685.

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

• Prior -5.1%
• Market index 230.2 vs 277.5 prior
• Purchase index 138.4 vs 149.2 prior
• Refinance index 734.6 vs 997.3 prior
• 30-year mortgage rate 6.52% vs 6.36% prior

Amid a jump in rates, mortgage applications dropped hard in the past week with both purchase and refinancing activity slumping hard. The latter in particular fell by 26% to its softest number since the first week of August. A sign of a false dawn for the US housing market in after the brief recovery in recent weeks?

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

The bullish momentum in the
US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now
priced out the aggressive rate cuts expectations and it’s almost perfectly in
line with the Fed’s projections.

Therefore, we will likely
need more strong US data to see the market pricing in an earlier pause in the
Fed’s easing cycle and give the US Dollar a further boost. The next big risk
events will be in November when we get the October data, the FOMC policy decision
and the US election.

On the AUD side, the RBA
continues to maintain its hawkish stance although that was toned down a bit in
the last meeting. Tomorrow, we get the Australian labour market report but unless
we get big deviations from the expectations, it’s unlikely to influence the
current pricing.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD continues to drop although the momentum slowed down. The target
for the sellers should be the 0.6622 level. That’s where we can expect the
buyers to step in with a defined risk below the level to position for a rally
back into the 0.68 handle.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a downward trendline defining the current bearish
momentum. The sellers will likely keep on leaning on it to position for further
downside, while the buyers will want to see the price breaking higher to pile
in for a rally into new highs.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action with the trendline acting as a strong
barrier. We have now a strong resistance around the 0.67 handle that the buyers
will need to break to start targeting new highs, while the sellers will look
for a rejection to pile in for new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the Australian Labour Market report, the US Retail Sales and
the US Jobless Claims data.

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

The bullish momentum in the
US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now
priced out the aggressive rate cuts expectations and it’s almost perfectly in
line with the Fed’s projections.

Therefore, we will likely
need more strong US data to see the market pricing in an earlier pause in the
Fed’s easing cycle and give the US Dollar a further boost. The next big risk
events will be in November when we get the October data, the FOMC policy decision
and the US election.

On the GBP side, we got the
UK
CPI report this morning and the data missed expectations across the board
by a big margin. That prompted the market to expect another 25 bps cut in
December.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD is bouncing once again from the 1.30 handle after the quick
drop following the UK CPI report. The buyers are stepping in around these
levels to position for a rally back into the 1.32 handle. The sellers, on the
other hand, will want to see the price breaking lower to increase the bearish
bets into the major trendline.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the bounce on the 1.30 handle as the buyers continue to pile
in for a move back into the top of the recent range at 1.31. The market
participants will likely keep on playing the range until we get a breakout on
either side.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price reached the bottom of the average daily range for today, so it’s unlikely that we
will see much lower prices today. It’s all about waiting for the breakout of
the range now.

Upcoming
Catalysts

Tomorrow we have the US Retail Sales and the US Jobless Claims data, while on
Friday we get the UK Retail Sales figures.

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

The pound is lower owing to the softer UK CPI report earlier here. That rebuffed BOE rate cut expectations for next month, which were already high to begin with. Traders saw ~80% odds of a 25 bps rate cut for November and bolstered that to ~91% now. GBP/USD fell from around 1.3070 to a low of 1.2983 before keeping just above 1.3000 currently.

The figure level is the key line in the sand to watch on the daily chart, with the technical backdrop outlined here.

There’s not much else as the dollar continues to keep steadier and consolidate gains since the start of the month. EUR/USD remains just under 1.0900 while USD/JPY is lightly changed at 149.20 after a brief dip under 149.00 in Asia.

Besides that, AUD/USD remains one to watch as it is flirting with a key technical support level as noted here.

Looking to the equities space, UK stocks are buoyed by the softer inflation numbers but European indices are all lower with declines led by France. Budget worries are weighing on French stocks but they have trimmed declines from over 1% to around 0.4% now.

In the bond market, 10-year Treasury yields are nudging back lower towards the 4% mark and that is something to be mindful of in case yields do turn lower still. In that lieu, gold is being driven higher to $2,680 now as it closes in on fresh record highs last month near $2,685.

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