Here is a great chart snapshot from BMO showing how Fed pricing has changed in the past year. Most of 2023 involved the market buying into the idea of higher-for-longer Fed funds but since October 18, there has been a fresh attempt to price in rate cuts, despite ongoing hawkish Fed rhetoric. That came after a series of softer US economic data points, including the ISM survey and non-farm payrolls.

This article was written by Adam Button at www.forexlive.com.

Yesterday’s poor 30-year Treasury auction reverberated through the market but later in the day, many people were arguing that it should be ignored because a ransomware attack kept China’s largest bank — ICBC — out of bidding.

Yellen now says there was no impact on the Treasury market from the attack. Could she mean that there’s been no direct impact?

Whatever happened, US 30-year yields are back to where they were before the sale.

This article was written by Adam Button at www.forexlive.com.

Cash funds continuing to attract inflows, set for record year – BofA

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Global investors continued to pour money into cash funds in the week to Wednesday, as higher yields on short-dated debt put cash funds course for record inflows this year, according to Bank of America and data provider EPFR.

BofA’s weekly ‚Flow Show‘ report showed cash funds attracted $77.7 billion of inflows in the week to Nov. 8, putting them on track to see around $1.4 trillion of inflows in 2023.

This article was written by Ryan Paisey at www.forexlive.com.

Italian economy likely to slow in next few months – stats bureau

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The Italian economy is likely to slow further in the next few months after stagnating in the third quarter, national statistics bureau ISTAT said on Friday.

In its monthly economic bulletin ISTAT noted that consumer confidence fell for a fourth month running in October, while business morale also dropped in all sectors barring construction.

The data „suggests the Italian economy could slow down in coming months,“ ISTAT said.

*Italian gross domestic product was flat in the third quarter compared with the previous three months, a preliminary ISTAT estimate showed last week, following a 0.4% contraction between April and June.

This article was written by Ryan Paisey at www.forexlive.com.

Futures mixed after Powell’s hawkish tone; more data awaited

FULL STORY

Wall Street futures were mixed on Friday after Federal Reserve Chair Jerome Powell’s hawkish tone dampened hopes of an end to rate hikes, with investors now looking forward to next week’s economic reports for more cues on the monetary policy path.

Powell on Thursday said central bank officials „are not confident“ that interest rates are yet high enough to finish the battle with inflation and would not hesitate to tighten policy further if needed.

The hawkish comments sent U.S. Treasury yields surging and ended a strong run of gains on Wall Street which had been driven by expectations that the Fed was done with its hiking cycle after the central bank kept rates unchanged at its last meeting.

The S&P 500 and the Nasdaq snapped their longest winning streak in two years in the previous session.

This article was written by Ryan Paisey at www.forexlive.com.

US

• The Fed left interest rates unchanged as
  expected with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US Core PCE came
  in line with expectations.
• The labour market is
  starting to show some weakness as Continuing Claims
  yesterday showed another increase and the NFP data
  last Friday missed across the board.
• The US Consumer
  Confidence fell for the third consecutive month
  although the data beat expectations.
• The US ISM
  Manufacturing PMI last week missed expectations by a big
  margin, followed later on Friday with a disappointing ISM Services PMI,
  although the index remained in expansion.
• The market doesn’t expect the Fed to hike anymore.

New Zealand

• The RBNZ kept its official cash rate
  unchanged while
  stating that demand growth continues to ease and it’s expected to decline
  further with monetary conditions remaining restrictive.
• The New Zealand recent inflation data missed expectations supporting the
  RBNZ’s stance.
• The latest labour market report showed a notable increase in
  the unemployment rate and a slowdown in wage growth which is something that is
  likely to keep the RBNZ on the sidelines.
• The Manufacturing PMI fell further into contraction
  today.
• The market doesn’t expect the RBNZ
  to hike anymore.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD pair
last week surged into the key 0.60 resistance after
the less hawkish than expected FOMC and the disappointing US labour market
data. This week though, the pair sold off erasing most of the gains from last
week as the US Dollar is likely starting to be seen as the best out of a bad
bunch.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the sellers are likely to lean on the downward trendline where we
can find the confluence with the
major trendline, the red 21 moving average and the
61.8% Fibonacci retracement level.
The buyers, on the other hand, will want to see the price breaking higher to
invalidate the bearish setup and position for a rally back to the highs.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a confirmation for a pullback into the
0.5930 resistance zone where the sellers will pile in for a drop into the lows.
If the price manages to drop into the support zone around the 0.5860 level, the
buyers are likely to step in with a defined risk below the level to position
for a rally into the trendline and target a breakout.

Upcoming Events

Today the only market moving event will be the
release of the University of Michigan Consumer Sentiment report.

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

Global equity funds draw massive inflows as rate worries ease

FULL STORY

Global equity funds saw a significant uptick in demand in the week through Nov. 8 as investor sentiment improved following the decision of major central banks to keep policy rates unchanged.

A shift in rate hike expectations and a report from the U.S. Labor Department indicating a slowdown in job growth in October further eased treasury yields, loosening financial conditions.

Investors poured a net $5.63 billion into global equity funds during the week, registering their biggest weekly net purchase since Sept. 13.

This article was written by Ryan Paisey at www.forexlive.com.

Japan lobby head urges BOJ to normalise policy to live with interest rates

FULL STORY

An outspoken leader of a Japanese business lobby said on Thursday the central bank should unwind its easing programmes to live with interest rates although it may take a year to exit monetary stimulus.

Takeshi Niinami, chairman of Keizai Doyukai, who also heads Suntory Holdings Ltd, said the Bank of Japan „must normalise“ monetary policy so that it could help weed out incompetent firms and facilitate labour turnover towards growth industries.

• „The BOJ must make a move,“
• „There must be quite a lot of political reservation about completely abandoning them,“
• „That’s why the BOJ may be thinking it would be better off falling behind the curve.“
• „That should be taken as a message that the BOJ is leaving the YCC behind gradually,“
• „If it’s unwound all at once that would cause ripple effects though.“

This article was written by Ryan Paisey at www.forexlive.com.

Futures listless as markets await more policy cues

FULL STORY

U.S. stock index futures were muted on Thursday as uncertainty about when the Federal Reserve will start easing financial conditions kept investors on edge as they awaited further policy cues from central bank officials.

Signs of a weakening labor market and a tempering of the Fed’s hawkish stance at its last meeting have pulled U.S. Treasury yields down from multi-year highs, helping equities stage a stellar comeback from their October lows.

A majority of traders are betting that the Fed will keep interest rates unchanged this year, with odds of a cut of atleast 25 basis points in May standing at nearly 48%, according to the CME Group’s FedWatch tool.

This article was written by Ryan Paisey at www.forexlive.com.

The Dow Jones managed to hold into the last week
gains and consolidated near a key resistance as the first part of the week
didn’t offer any meaningful catalysts. The things should change today though as
we will see the latest US Jobless Claims data and given the recent weakness in
the labour market data, the market is likely to react strongly to this report.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones erased
all the losses of the past couple of weeks and it’s now consolidating around a
key resistance where we
can find the confluence with the
trendline and the
61.8% Fibonacci retracement level.
This is where the sellers are likely to pile in to position for a selloff into
new lows with a great risk to reward setup.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the
bearish setup with the key resistance highlighted by the blue box. The price in
the first part of the week managed to break the high but erased the gains soon
after. The buyers are likely piling in here with a defined risk below the
trendline to position for another rally into the 35000 level. A break below the
trendline should invalidate the bullish setup and confirm the bearish one.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
recent price action is diverging with
the MACD right
when we are at a key resistance. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, we got a pullback into
the previous higher low, but if the price breaks below it, the reversal would
be confirmed, and it would be another bearish confluence for the sellers.

Upcoming Events

Today we have the US Jobless Claims on
the agenda, while tomorrow it will be the time for the University of Michigan
Consumer Sentiment report. The market is likely to focus on the US Jobless
Claims given the recent weakness in the labour market data. Weak figures are
likely to weigh on sentiment and push the Dow Jones lower, while good readings
might be enough for the market to rally.

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