• Prior 90.8

This marks the 22nd straight month that the index sits below its 50-year average of 98. As such, it reaffirms that small business sentiment is still struggling somewhat and that most of the growth in the US economy is powered by the strong consumer again. Of note, 22% of business owners are still reporting that inflation is their single most important problem – down 1% from September.

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

• 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 are now
  rising at a fast pace and the recent NFP report
  missed across the board.
• The US Consumer
  Confidence and University of
  Michigan Consumer Sentiment continue to fall.
• The recent US ISM
  Manufacturing PMI missed expectations by a big margin,
  followed by a disappointing ISM Services PMI,
  although the latter remained in expansion.
• The recent Fedspeak has been leaning on
  the hawkish side, but the inflation and labour market reports before the next
  meeting will decide whether they will indeed hike or not.
• The market doesn’t
  expect the Fed to hike anymore.

AUD

• The
  RBA raised the cash rate by 25 bps as expected as the central bank
  judged that the move was warranted to be more assured that inflation would
  return to target in a reasonable timeframe.
• The
  CPI report recently surprised to the upside
  prompting the market to price in a higher chance of another rate hike from the
  RBA in November, which is what we eventually got.
• The
  RBA Governor Bullock downplayed the beat in the CPI data
  and made the market to pare back the rate hike bets.
• The
  labour market continues to weaken as seen also
  recently with the miss in the employment change and the losses in full-time
  employment.
• The
  Australian Manufacturing PMI fell further into contraction with
  the Services PMI plummeting back into contraction as well.
• The
  market expects the RBA to hold rates steady at the next meeting.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD rejected
the key resistance around
the 0.65 handle and erased all the gains seen after the FOMC and the NFP
report. The pair has been ranging for months as the uncertainty in the market
remains high. We will likely need some strong fundamental catalyst to trigger a
more sustained trend.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the selloff
from the key resistance found some support around the upward trendline and the
0.64 handle, but eventually the price fell below it triggering even more
selling. The price since then pulled back into support now turned resistance where
the sellers stepped in once again with a defined risk above the level to
position for another drop into the lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the
1 hour chart, we can see that the last leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got a pullback into the resistance, but the break
above the trendline is making things less clear. We should now have a mini
range between the 0.64 resistance and the 0.6365 support. A break on either
side is likely to lead to a more sustained move with the buyers targeting the
0.65 handle on the upside and the sellers targeting the 0.63 handle on the
downside.

Upcoming Events

This week we have some top tier economic releases. We
begin today with the US CPI report which might be one of the most important
events of the week. Tomorrow, we have the Australian Wages data and later in
the day the US Retail Sales and PPI reports. On Thursday, we conclude with the
Australian labour market report and the latest US Jobless Claims figures.

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

• Some measures of economic uncertainty, particularly for inflation, are elevated
• Policy decisions taken under uncertainty may look different from those optimal under certainty

The headline remarks points to the ongoing narrative that they are keeping the door open just in case inflation is stickier than expected. That is the playbook now for all major central banks, with the Fed taking the lead.

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

This will be a much anticipated meeting as Kishida had previously touted for big wage hikes next year that will exceed what we have seen this year. Considering what is at stake, this is something worth keeping an eye out for as it tees up the upcoming spring wage negotiations next March. In turn, that will act as a cornerstone for the BOJ to start normalising monetary policy.

The meeting tomorrow will involve representatives from Japan’s largest labour group, Rengo, and business lobby, Keidanren, alongside other business leaders and labour unions.

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

The movement among major currencies has been rather dull in European morning trade but the dollar is losing some slight ground now against the euro and pound notably. EUR/USD is up 0.3% on the day to 1.0726 while GBP/USD is up 0.2% to 1.2305 currently. The moves aren’t much but it reaffirms the more bullish near-term bias in the former at least.

As seen in the chart above, buyers have been stepping in at the 200-hour moving average (blue line) to prevent any break of the upside momentum since Friday. But overall, the pair is still largely consolidating in and around the 1.0700 mark ahead of the US CPI data later today.

The next key technical upside level to watch will be the confluence of the 100 and 200-day moving averages at 1.0790-01.

Barring any surprises, the data later today should not offer much of an impetus for the dollar to melt away to that level. But if anything else, keep an eye out on the bond market and Treasury yields as any major moves there will have a spillover impact instead.

Besides the above, there’s not much else happening so far in the major currencies space as other dollar pairs remain more muted currently.

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