• Inflation expected to rise again in the latter part of this year – ECB accounts
• China imposes sanctions on three US military firms on Taiwan arms sales
• New Whales Drop $100B on BTC, is It Time for New Rally?
• BOJ’s Himino: We have enough time to carefully monitor financial markets
• Weekly update on interest rate expectations
• BOJ’s Himino: We will hike rates if outlook for economy, prices in July report is achieved
• European equities in a mixed mood to start the day
• What is the distribution of forecasts for the US CPI?
• EUR/USD sits on the edge as sellers eye further downside
• What are the main events for today?
• Eurostoxx futures -0.2% in early European trading
• Germany August retail sales +1.6% vs +0.1% m/m expected
• FX option expiries for 10 October 10am New York cut
• Japan households still largely expecting prices to be higher a year from now – BOJ survey
• US inflation the main event in the day ahead

The European session was empty in terms of data releases. Everyone is waiting for the US CPI release due in an hour. In the markets, we’ve been seeing some hawkish moves into the CPI with Treasury yields and the USD adding to the prior gains.

There’s clearly some fear that we could get an upside surprise, therefore some hedging into such a key report ahead of the Fed decision in November is what you would expect.

Heading into the release, the market is pricing 43 bps of easing by year end with 20% probability of a pause in November. For 2025 the market sees an additional 90 bps of easing by year end. These expectations are a little more hawkish compared to the latest Fed’s projections.

Below you can find the range of estimates and the distribution of forecasts for the US CPI report:

• Range of estimates
• Distribution of forecasts

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

• But inflation is then expected to decline towards target over the second half of next year
• Too early to declare victory against inflation
• Core inflation and services inflation might be stickier and not decline as much as expected
• But disinflationary process remains on track
• The risk of delays in reaching the target warrants some caution against dialing back policy restriction prematurely
• Need to carefully monitor whether inflation would settle sustainably at target in a timely manner
• Full accounts

There’s nothing in there that is out of the ordinary. The thing is that since last month’s meeting, recent data has pushed markets to expect another rate cut by the ECB for next week. That is the bigger development in play currently. A 25 bps rate cut is now ~94% priced in based on the rates market.

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

The USD rallied across the
board last Friday following the hot US NFP report. The market priced out all the
aggressive rate cuts expectations and it’s now finally in line with the Fed’s
projections.

This week, the greenback
extended the gains as the market started to price in some chances of a pause in
November. The focus remains on the economic data.

Today we get the US CPI
report. We will likely need a hot report to see some more upside in the pair,
while a miss could see the pair falling on the market paring back the hawkish
expectations.

For the CHF, the Swiss CPI recently surprised once again to
the downside. As a reminder, the SNB cut rates by 25 bps at the last policy
decision and mentioned that it’s prepared to intervene in currency markets as
necessary.

Moreover, the new inflation
forecasts were revised significantly lower signalling more rate cuts to come.
The market is pricing a 14% probability for a 50 bps cut in December.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF pulled back to retest the previous resistance now turned support around the 0.8550 level and rallied
back to test the recent highs. The buyers will want to see the price breaking
higher on a hot CPI to increase the bullish bets into the 0.8730 level next.
The sellers, on the other hand, will want to see a soft CPI and a drop back
below the 0.8550 support to increase the bearish bets into the 0.8333
level next.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have an upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on it to position for a break
above the resistance at 0.8607. The sellers, on the other hand, will want to
see the price breaking lower to pile in for a drop into the 0.8550 support and
beyond.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action. We can see that we have a nice
support zone around the 0.8580 level where we can find the confluence of the trendline and the previous
swing high level. All eyes are now on the US CPI report as it will likely
decide the trend for the next weeks. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US CPI report and the US Jobless Claims figures. Tomorrow,
we conclude with the US PPI and the University of Michigan Consumer Sentiment
report.

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

The USD rallied across the
board last Friday following the hot US NFP report. The market priced out all the
aggressive rate cuts expectations and it’s now finally in line with the Fed’s
projections.

This week, the greenback
extended the gains as the market started to price in some chances of a pause in
November. The focus remains on the economic data.

Today we get the US CPI
report. We will likely need a hot report to see some more downside in the pair,
while a miss could see the pair rising on the market paring back the hawkish
expectations.

On the NZD side, the RBNZ
this week cut
interest rates by 50 bps as expected. The market is pricing an 83% probability
of another back-to-back 50 bps cut in November.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD sold off all the way down to the key 0.6050 support
zone. This is where we can expect the buyers to step in with a defined risk below
the support to position for a rally into the 0.6217 resistance. The sellers, on
the other hand, will want to see the price breaking lower to increase the
bearish bets into the 0.5850 support next.

NZDUSD 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 the trendline 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.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action. There’s not much else to add here as
the next direction will likely be decided by the US CPI report today. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US CPI report and the US Jobless Claims figures. Tomorrow,
we conclude with the US PPI and the University of Michigan Consumer Sentiment
report.

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

The sanctions will apply to the following firms: Edge Autonomy Operations LLC, Huntington Ingalls Industries Inc, and Skydio Inc. At the same time, ten US individuals are also being sanctioned as part of the same countermeasures. The list is as per the following (h/t @ Sino_Market):

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

• US mortgage applications -5.1% vs -1.3% prior
• Morgan Stanley expecting slight deceleration in tomorrow’s CPI
• ECB’s Patsalides says room for rate cut but Middle East implications need assessment
• Interest rate expectations for upcoming policy decisions
• Israeli PM Netanyahu held extensive talks with senior officials on response to Iran
• Views on major FX from UBS
• ECB’s Kazaks: Rate cuts are necessary as the economy is weak
• China’s new yuan loans likely surged in September as stimulus ramps up
• Market mood a bit sour this morning
• Category 5 Hurricane Milton to hit Florida Gulf Coast tonight with 160 mph winds
• Lloyd’s of London warning on potential $14.5 trillion global economic loss
• ECB’s Kazimir: Not as convinced as media reports on October cut
• Europe’s STOXX 600 bolstered by defensive sectors amidst China uncertainty
• What are the main events for today?
• British envoy Lammy embarks on China mission to mend ties
• Geopolitical risk premium in oil market eases slightly, says Goldman Sachs
• The @Newsquawk Europe Market Open: China finance briefing, ECB and Fed speakers ahead
• China’s finance ministry to detail fiscal stimulus plans on Saturday
• Japanese machine tool orders decline in September
• German Imports Drop More Than Expected, Exports Rise
• ECB ‚very likely‘ to reduce interest rates next week, says Villeroy
• China’s finance ministry briefing set for October 12; fiscal policy adjustments revealed
• Dollar Holds Steady Pre-Fed Minutes; Kiwi Drops on Rate Cut
• India cenbank keeps rates steady at 6.50%, shifts to ’neutral‘ stance
• World Bank says China growth rate will drop next year, doubt over recent stimulus measures

It’s been another dull session as we continue to wait for the US CPI release tomorrow. The price action remains rangebound in most markets.

The only notable news was about the China’s finance ministry holding a news conference on Saturday to
provide details on fiscal stimulus measures aimed at reviving the
faltering economy.

We had also some ECB speakers continuing to talk about the October cut which is already fully priced in by the markets. On the geopolitical front, nothing has changed as Israel has not decided yet on the scope and the timing for the retailiation against Iran.

In the American session, there’s no economic data to be released but we will hear from lots of Fed speakers. Finally, we will conclude with the FOMC Meeting Minutes later in the day, but as it’s almost always the case, they won’t matter.

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

US mortgage market index 277.5vs 292.3 prior

US mortgage purchase index 149.2 vs 149.3 prior

US MBA 30-year mortgage rate 6.36% vs 6.4% prior

This article was written by Arno V Venter at www.forexlive.com.

Core CPI is projected at 0.26% MM and 3.2% YY

Headline CPI is projected at of 0.09% MM and 2.3 YY

The main components to watch for tomorrow:

• Housing inflation is expected to soften, with rents anticipated to decelerate, particularly due to adjustments in the Owner’s Equivalent Rent (OER) calculations and seasonal factors.

• Used car prices are expected to accelerate, which will push goods inflation into positive territory.
• Car insurance is expected to continue its downward path, with car insurance expected around 13% YY (versus the prior of 17% YY).

In terms of the possible broader economic and Fed policy impact the bank suggests that the disinflation trend aligns with the Fed’s projections, and along with the solid labor market data should support the forecast of two more 25 basis point cuts in November and December.

This article was written by Arno V Venter at www.forexlive.com.

• ECB’s Patsalides: There seems to be room for a rate cut.
• ECB’s Patsalides: But we should discuss all new data as usual.
• ECB’s Patsalides: Middle East implications should be assessed.

This article was written by Arno V Venter at www.forexlive.com.

ECB: -25 basis points of easing implied for October 17th meeting (100% probability implied for a cut)

BoC: -32 basis points of easing implied for October 23rd meeting (100% probability implied for a cut)

BoJ: 1 basis point of tightening implied for the October 31st meeting (87% probability implied for a hold)

RBA: -2 basis points of easing implied for the November 5th meeting (91% probability implied for a hold)

BoE: -21 basis points of easing implied for the November 7th meeting (84% probability implied for a cut)

Fed: -22 basis points of easing implied for the November 7th meeting (88% probability implied for a cut)

RBNZ: -45 basis points of easing implied for the November 27th meeting (100% probability implied for a cut – almost fully priced for another 50bp move)

SNB: -30 basis points of easing implied for the December 12th meeting (100% probability implied for a cut)

This article was written by Arno V Venter at www.forexlive.com.