The Canadian dollar is forecast to extend its recovery against its U.S. counterpart in the coming year as lower borrowing costs bolster economic growth in Canada and increase investor appetite for risk, a Reuters poll found.

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Canada’s loonie has rallied by 3.3% since hitting a near two-year low of 1.3946 per U.S. dollar, or 71.71 U.S. cents, in August.

The median forecast of nearly 40 foreign exchange analysts in the Sept. 30–Oct. 2 poll showed the loonie consolidating those gains in three months, edging 0.1% lower to 1.3514, but remaining stronger than the 1.3650 expected in a September poll.

In a year, the currency was predicted to advance 1.7% to 1.3275, compared to 1.3333 seen previously.

The Bank of Canada is expected to continue reducing its benchmark interest rate over the coming months after cutting it by 75 basis points since June to 4.25%, while the U.S. Federal Reserve began its own easing campaign in September.

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

Goldman Sachs now sees the SNB delivering more easing following today’s lower than expected inflation data

Full Story via Newsquawk on PiQ Suite

• GS writes given the SNB’s dovish guidance at its September meeting, benign inflation developments, a rise in geopolitical tensions adding further upward pressure to the currency, and Chairman Schlegel’s recent comments emphasizing the SNB’s commitment to keep CHF appreciation at bay

• GS now expects a further cut of 25bps at the March 2025 meeting, to a terminal rate of 0.5%

• GS sees risks skewed towards more easing in the event of further downside surprises to inflation and CHF strength, and assigns a 40% probability to a 50bps move in December.

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

Tesla to recall over 27,000 Cybertruck vehicles, NHTSA says

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Tesla is recalling 27,185 Cybertruck vehicles in the U.S. as a delayed rear view image reduces visibility behind the vehicle, the U.S. National Highway Traffic Safety Administration said on Thursday.

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

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Worries about risks to the UK financial system posed by a global economic downturn have risen sharply to their highest level since the second half of 2019, a Bank of England (BOE) survey showed on Wednesday.

The Bank’s twice-yearly systemic risk survey polled 55 financial firms between July 23 and August 12 and asked each participant to list the five risks they believed would have the greatest impact on the UK financial system if they materialised.

One-third of participants flagged worries about the threat to the UK financial sector associated with an overseas/global economic downturn, an increase of 19 percentage points and the largest single increase compared with the results of the previous survey in March, the BoE said.

Full Story on PiQ Suite

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

Latest U.S. Mortgage Data:

• 30-Year Mortgage Rate
  • Actual: 6.14% Previous: 6.13%
• Mortgage Applications (WoW)
  • Actual: -1.3%
    Previous: 11.0%
• Mortgage Market Index
  • Actual: 292.3
    Previous: 296.1
• Purchase Index
  • Actual: 149.3
    Previous: 148.2
• Mortgage Refinance Index
  • Actual: 1,099.5
    Previous: 1,132.9

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

• Not in an environment for additional rate hike.
• I want to coordinate with the BoJ on the economy.
• I want to make the economy strong with an economic package.
• We will do all we can to overcome deflation.
• I expect the BoJ to conduct policy to exit from deflation based on 2013 accords.
• I expect the monetary easing trend to stay in place.

When he was elected last week, the JPY rallied while the Nikkei sold off as he was considered a hawk and supportive for further rate hikes. Turns out, he’s not.

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

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OPEC+ set to keep output policy unchanged at panel meeting

An OPEC+ ministerial panel scheduled to meet on Wednesday is unlikely to recommend any changes to policy, allowing the group to start gradually increasing production from December, two sources from told Reuters.

The two sources, who declined to be identified, said Wednesday’s meeting is unlikely to bring any surprises. One of them said it will reaffirm the need for member countries to comply with their production targets under the deal.

An OPEC+ source told Reuters last week that clarity on whether the compensation cuts were made in September would allow the December increase to go ahead.

Full Story on PiQ Suite

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

Always a ‚must read‘ from the lads at Newsquawk

LINK TO FULL NOTE

Summary –

• European bourses are generally on a firmer footing whilst US futures are modestly lower with slight underperformance in the RTY
• Dollar is flat unable to continue the prior day’s geopolitical-indued gains, JPY underperforms with USD/JPY around 144.25
• USTs are flat and Bunds give back some of its recent strength, Gilts follow peers and took another leg lower following an auction
• Crude continues to benefit from the geopolitical risk premium, XAU slips off best levels whilst base metals gain
• Looking ahead, ADP National Employment, NBP Policy Announcement; OPEC+ JMMC Meeting, Speakers including ECB’s Elderson, Schnabel, Fed’s Hammack, Musalem, Bowman & Barkin. Earnings from Conagra & Levis.

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

• Euro falls to fresh lows on the day
• Eurozone September preliminary CPI +1.8% vs +1.8% y/y expected
• UK September final manufacturing PMI 51.5 vs. 51.5 prelim
• ECB’s Rehn: The scale is tipping towards a rate cut in October
• US, China reportedly set to hold talks on trade and economic ties
• ECB’s Rehn: Direction of monetary policy is clear
• Eurozone September final manufacturing PMI 45.0 vs 44.8 prelim
• Germany September final manufacturing PMI 40.6 vs 40.3 prelim
• France September final manufacturing PMI 44.6 vs 44.0 prelim
• Italy September manufacturing PMI 48.3 vs. 49.0 expected
• Japan prime minister Ishiba unveils new Cabinet members
• Switzerland September manufacturing PMI 49.9 vs 48.0 expected
• Spain September manufacturing PMI 53.0 vs 50.2 expected
• European equities a little mixed at the open today
• Deutsche see ECB cutting rates in October with potential for a 50 bps move in December
• What are the main events for today?
• Eurostoxx futures +0.2% in early European trading
• FX option expiries for 1 October 10am New York cut
• Japan top FX diplomat says yen shorts that had been built up until July have been unwound
• Eurozone inflation in focus in the session ahead
• The dollar long con
• Close but no cigar again for EUR/USD buyers

Markets:

• USD leads, NZD lags on the day
• European equities higher;
  S&P 500 futures down 0.07%
• US 10-year yields down 4 bps to
  3.741%
• Gold
  up 0.52% to $2,647
• WTI
  crude down 0.70% to $67.71
• Bitcoin
  up 0.69% to $63,747

We had a
relatively quiet session in terms of fresh data releases. The main highlight was the
Eurozone Flash CPI report, and the data came out in line with estimates. The
market has already fully priced in a back-to-back 25 bps cut in October and that’s
also something ECB members recently have been touting to.

In the
markets, the US Dollar added to the gains following Fed Chair Powell’s comments
yesterday with EUR/USD being the most notable mover. Another
notable mover this morning has been crude oil as it sold off to a new weekly
low before erasing almost the entire drop. There was no catalyst for the
move though.

The focus
will now switch to the US data in the American session with the US ISM Manufacturing
PMI being the main highlight. We will also get the Canadian PMI and the US Job
Openings data.

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

Fundamental
Overview

The USD got a bit of a
boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40%.

The focus remains on the
economic data. If we start to see an improvement, then Treasury yields will likely
rise and drive USDCHF higher. Conversely, if the data weakens significantly,
the market will start to worry about a recession and take USDCHF lower.

For the CHF, the SNB last week cut rates by 25 bps bringing the policy rate
to 1.00%. The central bank mentioned that it’s prepared to intervene in
currency markets as necessary and the new inflation forecasts were revised
significantly lower signalling more rate cuts to follow.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF remains stuck in the range between the 0.8555 resistance and the 0.8400 support. The market
participants will likely keep on playing the range by buying at support and
selling at resistance until we get a breakout.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action. There’s not much to add here as
we will need to wait for a major catalyst or a breakout to see a more sustained
trend. The US ISM Manufacturing PMI and the US NFP this week will likely be
key.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish
momentum on this timeframe. The buyers will likely keep on leaning on the trendline
to position for further upside, while the sellers will want to see the price
breaking lower to pile in for a drop back into the support. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we get the US ISM Manufacturing PMI and the US Job Openings data.
Tomorrow, we have the US ADP report. On Thursday, we get the Swiss CPI, the US
Jobless Claims and the US ISM Services PMI. Finally, on Friday, we conclude the
week with the US NFP report.

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