The USD has been on a hell
of a run recently despite the lack of catalysts and no major repricing in interest
rates expectations.

The main culprit for the
recent strength in the US Dollar has been the rally in long term Treasury
yields. The yield curve has been bear-flattening which is what you would expect with
higher growth and potentially higher inflation expectations.

There’s been a good
argument that the markets have been already positioning for a Trump victory
which is expected to strengthen the higher growth and less rate cuts
expectations.

For now, this is the trend
and it’s generally a bad idea to fight such trends without a catalyst.
Unfortunately, we don’t have much left for October as the main events will be
in the first weeks of November when we will get the top tier economic reports,
the US elections and the FOMC decision.

On the GBP side, we got the
UK
Flash PMIs this morning and the data missed expectations slightly across
the board. The market’s pricing didn’t change much though as the market
continues to expect a 25 bps cut at the upcoming meeting followed by another
one in December.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD eventually reached the major trendline
and bounced off of it as the buyers stepped in. The first target for them
should be the 1.31 handle. The sellers, on the other hand, will want to see the
price breaking below the trendline to increase the bearish bets into the 1.27 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor downward trendline defining the current bearish
momentum. If the price gets there, we can expect the sellers to lean on it to
position for a break below the major trendline. The buyers, on the other hand, will
look for a break above the downward trendline to increase the bullish bets into
the 1.31 handle.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor trendline defining the bearish momentum on this timeframe.
The buyers will want to see the price breaking higher to increase the bullish
bets into the next trendline, while the sellers will likely lean on it to
position for a break below the major trendline. The red line define the average daily range for today.

Upcoming
Catalysts

Today we have the US Jobless Claims and the US Flash PMIs.

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

• I’m pretty confident inflation will hit 2% in 2025.

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

• USD/JPY extends gains to nearly 1% on the day now
• USDJPY Technical Analysis – Higher Treasury yields revive the carry trade
• Equities stay more sluggish as rising yields keeps optimism in check
• EUR/USD continues its descent to test the early August low
• ECB reportedly starting to debate whether rates need to go below neutral in latest cycle
• Germany turns to India as their next bet to reduce China reliance
• US MBA mortgage applications w.e. 18 October -6.7% vs -17.0% prior

Markets:

• USD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields up 1.4 bps to 4.219%
• Gold up 0.1% to $2,752.09
• WTI crude down 1.9% to $70.38
• Bitcoin down 1.5% to $66,491

The standout mover on the day is the Japanese yen as it stumbled lower, after an early move in Asia trading as well.

USD/JPY nudged up to near 152.00 in the handover from Asia to Europe and built on that during the session. The pair is now up over 1% to 152.80, holding near the highs. It wasn’t just USD/JPY that moved as it was broad-based yen weakness that prevailed.

Higher yields during the week were a catalyst but that has now led to key technical breaks across multiple yen charts as seen here.

Besides that, the dollar kept firmer across the board as it continues to enjoy a good run in October. EUR/USD dipped lower to test its early August low, not helped by a Reuters report highlighting the potential for the ECB to cut rates quicker and by more than anticipated.

The antipodeans also struggled amid a more dour risk backdrop. Higher yields is weighing on stocks and that in turn is pushing the aussie and kiwi lower. AUD/USD is down 0.5% to 0.6650 with NZD/USD down 0.4% to 0.6020 currently.

Coming up, we have the Bank of Canada policy decision to look out for. The central bank is expected to cut rates by 50 bps to 3.75%, with market odds showing a ~91% probability of such a scenario playing out.

USD/CAD is not too fazed on the day even with oil prices falling further though. The pair is little changed, up just 0.1% to 1.3830 currently and stuck in a 16 pips range.

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

The break below the 200-day moving average (blue line) last week turned the bias in the pair to being more bearish. And sellers reaffirmed that by holding at the key level amid some pushing and pulling towards the end of last week. Flip over to the new week and it’s been rather one-way traffic with the dollar also keeping firmer.

For today though, the euro is also not really helped by this earlier report by Reuters here.

It’s not a direct shift in policy signal by the ECB but it certainly add to the recent dovishness. Money market odds are now showing near 40% probability of a 50 bps rate cut for December. That’s where we’re at right now.

As for the overall outlook, traders are still anticipating roughly five more 25 bps rate cuts by the ECB in the next five meetings through to June next year. So, that is the baseline scenario.

But if economic data continues to worsen and pressure the ECB to pick up the pace on rate cuts, don’t expect the euro to find much comfort amid a divergent outlook with the dollar.

Going back to EUR/USD, the pair is now circling back towards the 1 August low of 1.0777. A break there will see little else standing in the way of a push towards 1.0700 next. The June lows around the region of 1.0666-76 will also be a potential downside target to watch out for.

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

The Nasdaq has been
consolidating around the all-time high as the lack of catalysts and the
pressure from rising Treasury yields kept the market at bay.

We are now near the US
elections and it’s going to be a major event for the market. A Trump victory
will likely give the stock market a boost on better growth expectations, while
a Harris triumph could be more bearish.

Treasury yields and the
stock market often move in the same direction as long as the move is led by
growth expectations. So, the data, the elections result and the Fed’s reaction
function will be key for the market in the next six months.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq is consolidating around the highs. From a risk management
perspective, the buyers will have a better risk to reward setup around the trendline. The sellers, on the other hand,
will want to see the price breaking lower to start targeting the next major
trendline.

Nasdaq Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent rangebound price action with the 20265 level acting
as support. If the price gets there, we can expect the
buyers to step in with a defined risk below the level to position for a rally
into a new high. The sellers, on the other hand, will want to see the price
breaking lower to pile in for a drop into the trendline around the 19800 level.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here. It’s unlikely that we’ll get a breakout today given
the lack of catalysts. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the US Flash PMIs and the US Jobless Claims figures.

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

• Prior -17.0%
• Market index 214.8 vs 230.2 prior
• Purchase index 131.3 vs 138.4 prior
• Refinance index 672.6 vs 734.6 prior
• 30-year mortgage rate 6.52% vs 6.52% prior

Another week, another plunge in mortgage applications as higher rates continue to weigh on the market. Both purchases and refinancing activity fell sharply with the latter once again sliding hard in the past week.

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

• Stocks dribble lower in European morning trade
• Major currencies not doing much so far on the session
• Bonds under the spotlight with little else to focus on
• European equities mostly a touch softer at the open today
• What are the main events for today?
• Eurostoxx futures +0.1% in early European trading
• FX option expiries for 22 October 10am New York cut
• BOE chief economist lambasts ONS over poor jobs data quality
• Chinese equities continue to look more pensive this week
• USD/JPY underpinned by higher yields, faces up against key resistance levels now
• BOJ Executive Director Kato – not targeting FX levels
• USD/JPY above 150.90 again after meek comments from Japan

Markets:

• NZD leads, JPY lags on the day
• European equities lower;
  S&P 500 futures down 0.45%
• US 10-year yields up 1 bps to 4.206%
• Gold
  up 0.61% to $2,735
• WTI
  crude up 0.94% to $71.22
• Bitcoin
  down 0.08% to $67,300

It’s been
another slow session as the lack of key economic releases and limited news flow
kept the price action pretty rangebound.

The US
Dollar continues to get some support from higher Treasury yields and if the
recent days is something to go by, we might see some more legs higher in the US
session.

Gold erased
all of the yesterdays’ decline and it’s now trading right near the all-time
high. It’s been ignoring the rise in real yields, so it will be interesting to
see who gives in.

In the equity
markets, we continue to see some consolidation around the highs as the markets
are probably looking for catalysts to push into new highs and for now are
getting pressures by higher yields.

Unfortunately,
we have to wait until Thursday to get some market moving data with the releases
of the Flash US PMIs and the US Jobless Claims.

For now, it’s
more about capital preservation until we get to one of the most important
events of the year in November, that is the US election. There’s a good
argument that the markets have been already positioning into a Trump victory.

Time will
tell.

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

The lack of catalysts
recently kept the US Dollar supported across the board despite the slowdown in
momentum. The market might now be looking forward to the first weeks of
November when we will get the key economic data, the FOMC decision and the US
elections.

There’s been also a good
argument that the markets are already positioning for a Trump victory and that
should translate in USD strength as it should appreciate on higher growth and
less rate cuts expectations. Nevertheless, not all markets have been in sync
with this view.

On the CAD side, the latest
Canadian CPI missed expectations and sealed the
50 bps cut at the upcoming meeting with the market seeing now a 99% probability
from 48% before the inflation report. The market then sees another rate cut of
at least 25 bps in December and roughly four more in 2025.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD eventually bounced back above the 1.3785 level and extended the
rally into the 1.3850 level. We are now near a key resistance zone.

This is where we can expect
the sellers to step in with a defined risk above the 1.3860 resistance to
position for a drop back into the 1.36 support. The buyers, on the other hand,
will want to see the price breaking higher to increase the bullish bets into
new highs.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the break above the 1.3785 level that led to a more bullish
price action into the key resistance. There’s not much else we can glean from
this timeframe, so we need to zoom in to see some more details.

USDCAD 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.
The buyers will likely keep on leaning on it to position for further upside,
while the sellers will want to see the price breaking lower to target a drop
back into the 1.3785 level. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the BoC rate decision. On Thursday, we get the Flash US PMIs,
and the US Jobless Claims figures. On Friday, we conclude the week with the
Canadian retail sales data.

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

European indices are also all in negative territory, with the DAX also down by 0.1% after a decent open earlier. Other major indices in the region are down some 0.6% to 0.8% with the negative mood also reflected in US futures. S&P 500 futures are down 0.5% with Nasdaq futures down 0.6% currently.

In the bigger picture, it’s a case of shaving some off the top for equities. And investors can look to the bond market as a likely reason for that. 10-year Treasury yields are up again today, touching 4.21% currently.

The technical focus here is starting to get traders to stand up and take notice. And that means broader markets are also going to have to pay attention to that too.

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

The dollar is keeping more mixed with light changes being observed overall. There’s not much appetite or follow through, as traders are keeping a watchful eye on the bond market for anything. USD/JPY is one to pay attention to as such but is running up against a key resistance region as outlined here.

Besides that, all the other major currencies are stuck in narrower ranges on the day. The antipodeans are up slightly but it’s not really saying a lot after the fall yesterday. AUD/USD is up 0.3% to 0.6678 but is still keeping below its own 100-day moving average of 0.6695.

Just be wary though that the risk mood is starting to shift a little with US futures now trending lower. S&P 500 futures are down 0.5% with 10-year Treasury yields keeping higher at around 4.21%.

That might eventually lead to some spillover moves in FX later on in the day.

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