Copper is still trading
inside a major triangle as the fundamental outlook remains murky. The Chinese
stimuli had a positive effect in the past months as the data picked up, but
this week the PMIs fell again and the Manufacturing sector went
back into contraction. Moreover, the economic data in other major economies
like Europe is deteriorating pretty quickly as the block is falling into a
recession. The US economy remains resilient for now, but recently the labour
market data has started to weaken, so that is something that the market will
watch carefully.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper is still
trading inside the descending triangle. The
latest bounce on the 3.55 support led to a
rally into the minor downward trendline where
the price got rejected. This where we can expect the sellers to step in with a
defined risk above the trendline to position for a drop into the support aiming
for a breakout. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and increase the bullish bets
into the next major trendline around the 3.75 level.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the buyers
failed to break out of the trendline on their first try as the price fell back
below it. The price is now bouncing on the upward trendline where we can find
the confluence with the
50% Fibonacci retracement level
and the red 21 moving average. This is
where the buyers should step in with a defined risk below the trendline and
target a breakout. The sellers, on the other hand, will want to see the price
breaking lower to invalidate the bullish setup and increase the bearish bets
into the 3.55 support.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that
Copper is now consolidating between the resistance around the 3.68 level and
the support around the 3.66 level. A breakout on either side should lead to a
strong and sustained move, so the market participants will be watching it
carefully.

Upcoming Events

This week, we will get lots of tier one data points with
the US labour market and the FOMC decision in focus. Today we will get the US
ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate
decision. Tomorrow, we will see the US Jobless Claims data, while on Friday we
conclude the week with the US NFP report and the ISM Services PMI. Weak data is
likely to weigh on Copper as recessionary fears will come back.

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

One of Japan’s top lenders, MUFG Bank (the banking arm of Mitsubishi UFJ) has said that it will lift the interest rate of its 5-year and 10-year yen deposits for the first time since 2011. The former will see a bump from 0.002% to 0.07% while the latter will see a jump from 0.002% to 0.20%.

They are the first large bank to announce such a move and that is a big bet on the likely fact that the BOJ is going to start normalising policy soon. But there’s also the other side of the story as the announcement comes amid a further rise in Japanese government bond yields.

For the longest of time, these rates have been near zero and now with a push towards 1% for 10-year yields, that’s a welcome development for lenders. And with the BOJ stating that the 1% mark is now more of a reference rate, higher yields look set to stay – for now at least – in Japan.

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

• Prior -1.0%
• Market index 161.8 vs 165.2 prior
• Purchase index 125.2 vs 127.0 prior
• Refinance index 341.7 vs 354.0 prior
• 30-year mortgage rate 7.86% vs 7.90% prior

Once again, mortgage activity in the US fell declined in the past week with both purchases and refinancing also falling. This comes as the average rate of the most popular US home loan cools slightly by 4 bps to 7.86%, from its highest since September 2000 in the week before.

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

GBPJPY Fundamental Analysis

UK

• The BoE kept interest rates unchanged at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it kept a door open for
  further tightening if inflationary pressures were to be more persistent.
• The latest employment report showed a slowdown in wage growth
  and some job losses in September which could point to a softening labour
  market.
• The recent UK CPI slightly beat expectations but given the
  softening in the labour market it’s unlikely to change the BoE’s stance.
• The UK PMIs showed further contraction in the services
  sector, which accounts for 80% of UK’s economic activity.
• The market doesn’t expect the BoE to
  hike anymore.

Japan

• The BoJ kept its monetary policy basically unchanged but formally widened the YCC to 1%
  on the 10-year JGBs stating that it will be a reference cap.
• Governor Ueda repeated once again that they won’t
  hesitate to take easing measures if needed and that they are not foreseeing
  sustainable price increases.
• The recent Japanese CPIshowed that inflationary pressures
  remain high with the core-core reading hovering at the cycle highs.
• The Unemployment Rate last month
  remained unchanged near cycle lows.
• The Japanese Manufacturing PMI matched the prior reading remaining
  in contraction with the Services PMI falling but holding on in expansion.
• The BoJ officials continue to repeat
  that the central bank should keep the current monetary policy.
• The latest Japanese wage data missed expectations again which is
  unlikely to lead to a more hawkish BoJ in the near future.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, beat expectations last week.
• The market expects the BoJ to keep
  interest rates unchanged at the next meeting as well.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the GBPJPY pair
has been consolidating for a month below the 183.50 resistance. The
price yesterday surged into the resistance zone as the BoJ disappointed. The
buyers will now try to break out and target the cycle high around the 186.74
level. The sellers, on the other hand, are likely to step in here with a
defined risk above the resistance to position for another drop into the lows.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the
support at 181.00 and the resistance around the 183.50 level. The first try out
of the range failed, but the buyers are coming back again. After such a strong
and quick rally there’s also a risk that we see a fakeout as the momentum might
weaken right after the breakout, so the buyers will need to be careful.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action around the resistance zone. If the price stays
above the resistance, the bias will remain bullish, and we can expect the
buyers to pile in to target the cycle high. The sellers, on the other hand,
will want to see the price falling back below the resistance and break the
recent swing low around the 183.14 level to confirm a fakeout and position for
a drop into the 181.00 support.

Upcoming Events

This week, we will get lots of tier one data points with
the US labour market and the FOMC decision in focus. Today we will get the US
ADP, the ISM Manufacturing PMI, the Job Openings data and the FOMC rate
decision. Tomorrow, we will have the BoE rate decision and the US Jobless
Claims data, while on Friday we conclude the week with the US NFP report and
the ISM Services PMI. Weak US data is likely to lead to a fall in global yields
which should favour the JPY. Conversely, strong data should support global
yields and weigh on the JPY, especially after the recent BoJ disappointment.

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

At the turn of the month, it’s not looking too optimistic for stocks ahead of the main events later today. US futures are still pointing lower after a brief recovery at the start of European trading. In turn, European indices are also now trading little changed as investors sense caution more than anything else.

The Fed is one to watch but I reckon the US Treasury refunding announcement will be the more important event for broader market sentiment today. If bonds come under further pressure with 10-year yields looking to 5%, that could yet pile on the hurt for stocks as we get things going in November.

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