Headlines:

• 10-year Treasury yields clip the 5% mark
• Equities dragged lower, dollar muted as 10-year US yields hit 5%
• USD/JPY but a whisker away from retesting the 150.00 mark
• The key risk events to watch out for in trading this week
• Heads up: A note on the UK labour market data due tomorrow
• SNB total sight deposits w.e. 20 October CHF 478.8 bn vs CHF 483.8 bn prior

Markets:

• EUR leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields up 6.5 bps to 4.988%
• Gold down 0.1% to $1,978.51
• WTI crude down 0.6% to $86.30
• Bitcoin up 3.7% to $30,690

The session started off with some light relief as the Israel-Hamas conflict did not escalate significantly over the weekend. That saw safety flows abate as equities gained by the slightest of margins while bonds were offered as well. That also saw both gold and oil hold lower ahead of the open in Europe.

But as European traders entered, the focus turned towards the bond market as 10-year Treasury yields jumped up above 5% to its highest levels since 2007. The move is a rather brief one though as yields track back to ~4.98% now as Europe waits on validation from US traders later on.

The push higher in yields weighed on stocks as S&P 500 futures was dragged down by 0.7% at one point, before halving losses now.

However, outside of equities, the reaction to yields touching 5% was rather muted. Gold trimmed its earlier losses alongside oil, with the precious metal climbing back up to $1,978 currently from a low of $1,964 in Asia.

Meanwhile, the dollar barely responded with the euro, yen, and pound all trading flattish against the greenback for almost the entirety of the session. USD/JPY in particular remains one to watch as it seems to be holding back dollar bulls, with the pair continuing to hover just below the 150.00 mark at around 149.80-90 levels today.

It is now over to Wall Street to make do with the bond market and if we are to see yields retrace lower after touching 5% now, I would expect that to translate to some bout of dollar weakness across the board; vice versa.

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

Last week, we got some risk aversion in the market
as the tensions in the Middle East intensified. In fact, going into the weekend
the bearish momentum increased as ABC news reported
that the Israeli military got the „green light“ to move into Gaza
whenever it was ready. Since we haven’t seen any ground offence over the
weekend, we might see a relief rally today.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite “confirmed” the downside breakout as the price fell not only below
the key trendline, but also
below the key support around
the 13174 level. The sellers have now a high chance of reaching the 12274
support where we will find the buyers stepping in more strongly to position for
a rally back to the 13174 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the Nasdaq
Composite now sits at the previous lows and that’s where we can expect the
buyers to pile in with a defined risk below the low to position for a relief
rally today into the broken support turned resistance and
hoping for an upside breakout.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the sellers would be better off waiting for the
price to pull back into the trendline where we can find the confluence with
the 38.2% Fibonacci
retracement level, the red 21 moving average and
the previous support turned resistance. The buyers, on the other hand, will
want to see the price further breaking higher to invalidate the bearish setup
and increase the bullish bets into the next resistance around the 13400 level.

Upcoming
Events

Tomorrow, we will get the US PMIs and the market might
not like bad figures given the fragile risk sentiment. On Thursday, we will see
the US Jobless Claims data with Continuing Claims recently showing some
softness in the labour market. Finally, on Friday, we will get the US PCE
report, which is not expected to change anything for the Fed at this time.

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

In case you missed this headline last week: Heads up: UK labour market data today will only be a partial one

ONS is now out with an operational note stating that the release tomorrow will feature „a new series using additional data sources to produce adjusted levels and rates for employment, unemployment and inactivity for the latest two 3-monthly periods (May to July 2023 and June to August 2023)“.

And that the previously used labour force survey data methodology will not be published in the report tomorrow. As such, just be wary of that when interpreting the numbers that we will see with regards to employment change and the unemployment rate especially.

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

The pair now trades at 149.98 and at the highs for the day, albeit in a rather constricted range. It’s been a while coming and the pair has been teasing for a push back towards 150.00 since last week already. The last attempt in early October was shot down by Japanese officials but amid higher yields, will Tokyo feel necessary to step in again?

I fear that the longer that USD/JPY is handicapped just under the 150.00 mark, it will create much more frustration for dollar bulls. They are getting anxious but looking at the tamer reaction across the board for the dollar, it is looking like traders need this break higher in USD/JPY to really move the other pairs too.

And if that doesn’t come, you have to wonder how long can the dollar hold up especially if at some point we are to run into a retracement in the bond market after all the heavy selling.

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

10-year Treasury yields are at their highest since 2007, touching 5.018% currently as the selling in the bond market continues. I would’ve expected a slightly more reactive function in the dollar but that hasn’t really been the case. The greenback is rather muted across the board and it is equities that have reacted much more. S&P 500 futures are now down at the lows for the day, softer by 0.7%:

It has been one-way traffic for equities since the opening bell in Europe and the fact that 10-year yields in the US have crossed over above the 5% mark is just compounding woes at this point.

Going back to FX, the dollar is rather muted with EUR/USD flattish at 1.0595, USD/JPY still thereabouts at 149.93, and GBP/USD flat at 1.2155 on the day. It is only the aussie and kiwi that has weakened slightly with AUD/USD down 0.3% to 0.6291 currently but that owes more to the drop in risk trades amid higher yields, rather than any outright dollar strength.

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