Headlines:

• Treasury yields ticking higher again as market fears abate
• Dollar remains in a good spot so far this week
• A bit of a whipsaw in the Japanese yen on old news
• BOJ reportedly mulls raising price outlook for the current fiscal year
• China reportedly tells banks to roll over local government debt at lower rates
• Japan’s trade union plans to ask for more than 5% wage hike next spring – report
• Germany October ZEW survey current conditions -79.9 vs -80.8 expected
• UK September payrolls change -11k vs 0k prior

Markets:

• AUD leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields up 5.5 bps to 4.765%
• Gold up 0.3% to $1,924.37
• WTI crude up 0.1% to $86.79
• Bitcoin up 0.2% to $28,470

With US president Biden only arriving in Israel on Wednesday, there weren’t much further developments in the Israel-Hamas conflict for markets to really work with. As such, there is still uncertainty but bonds got back to their usual pattern and were sold. 10-year Treasury yields climbed during the session and that is giving broader markets some food for thought.

Equities were steadier earlier on but are now pinned down while the dollar is trading mixed across the board with some headlines keeping things interesting in European morning trade.

A softer set of partial UK jobs data is pinning the pound lower while there was a whipsaw in the yen amid a rehash of old news detailing that the BOJ is set to revise higher its inflation outlook later this month.

GBP/USD dropped from 1.2190 to 1.2150 before recovering most of that drop but is still down 0.2% to 1.2185 currently. Meanwhile, USD/JPY saw a plunge from 149.60 to 148.72 before recovering back some ground to 149.35 at the moment.

Elsewhere, the euro and aussie are holding slight gains while the kiwi is reversing course after the gap higher from the NZ elections yesterday.

In the commodities space, gold is up slightly alongside oil as safety bets are not yet completely abandoned on the week. It’s now over to US retail sales to provide the next point of action for markets, in particular Treasuries (in turn, the spillover to stocks and FX).

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

As yields are holding higher so far on the day, we are seeing equities slip a little further as the focus turns towards US trading later. S&P 500 futures are down 0.3% while European indices are down by 0.2% to 0.4% mostly at the moment. The gains from yesterday were very much a relief rally after the Friday flight to safety but we’re now slowly reverting back to the bigger picture view in markets again.

10-year Treasury yields are up nearly 6 bps to 4.768% and that is one to watch out for especially since we also have key US data on the agenda later. US retail sales will give traders more to think about later in the day and that could drag around bonds even more before the end of the day.

In turn, that could lead to spillover movements in broader markets with stocks getting caught in the crossfire.

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

US:

• The Fed left interest rates unchanged as expected at the last meeting.
• The macroeconomic projections were revised higher,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts projected in 2024.
• Fed Chair Powell reaffirmed their data dependency but added that
  they will proceed carefully.
• The US CPI last week beat expectations on the
  headline figures, but the core measures came in line with forecasts and the
  market’s pricing barely changed.
• The labour market remains fairly solid as seen once again last week
  with the beat in Jobless Claims, although continuing claims surprisingly missed.
• The US PMIs
  recently showed that the US economy remains pretty resilient.
• The University of Michigan Consumer Sentiment report last Friday missed across the
  board with the inflation expectations figures spiking back up.
• The Fed members continue to cite elevated long-term
  yields as a reason to proceed carefully and will likely pause in November as
  well.
• The market doesn’t expect the Fed to hike anymore.

New Zealand:

• The RBNZ kept its official cash rate
  unchanged while
  stating that demand growth continues to ease and it’s expected to decline
  further with monetary conditions remaining restrictive.
• Today, the New Zealand inflation data missed expectations supporting the
  RBNZ’s stance.
• The employment data surprised to the upside
  recently.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely.
• The recent New Zealand Retail Sales beat expectations although the data
  remains deeply negative.
• The Manufacturing PMI continues to slide further into
  contraction, but the Services PMI jumped back into expansion.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting as well.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD pair
is still stuck in the range between the 0.5860 support and the
0.6000 resistance. Today, the pair dropped following the miss in the New
Zealand inflation data and we can expect the bearish momentum to take the pair
into the support level where the buyers will likely step in with a defined risk
below the level to target another rally into the 0.60 resistance.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the sellers
piled in around the previous swing level at 0.5925 with the red 21 moving average acting
as dynamic resistance. There’s no clear level to lean on at the moment, but the
sellers are likely to keep the momentum going into the 0.5960 support targeting
a break into new lows. The buyers, on the other hand, will want to see the
price breaking above the 0.5925 resistance to position for another rally into
the 0.60 level.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the minor resistance around the 0.5925 level and the support zone at
0.5860. These are the only levels to watch at the moment until we get some more
clarity in the next days with the release of new economic data.

Upcoming Events

Today we will get the US Retail Sales data and it
will be interesting to see if consumer spending has weakened or it’s still
holding on. On Thursday, we will get the US Jobless Claims report and we will
also hear from Fed Chair Powell with the market focused on any hint about the
near term policy outlook.

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

From my broker, USD/JPY caught a whipsaw lower to 148.72 before reversing that move to steady around 149.40 levels again now. The reaction is to the headlines here. It’s a bit of a sensitive one but it just confirms what we already should know heading into the BOJ policy meeting later this month. From last week:

• BOJ mulls raising FY 2023/24 core CPI target to ~3% from 2.5% forecast in July – report
• Japan media ICYMI – Bank of Japan considering raising its inflation outlook to nearly 3%
• BOJ’s Noguchi: We have no choice but to raise inflation forecast for fiscal year 2023

It looks like this is more to do with the algos being sensitive near the 150.00 mark more than anything else.

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

The report says that the price outlook for the fiscal year 2023 is being considered to be revised higher to closer to 3%. Meanwhile, the Japanese central bank is said to discuss raising the price outlook for the fiscal year 2024 to 2% or above but to keep the outlook for the fiscal year 2025 at around 1.6%.

The yen is catching a bit of whipsaw on the headlines but this isn’t anything new. It just confirms the story from last week here: BOJ mulls raising FY 2023/24 core CPI target to ~3% from 2.5% forecast in July – report

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

Headlines:

• Market fears abate slightly to start the new week
• Japan top currency diplomat says intervention is an option during excessive FX moves
• BOE’s Pill: We have done a lot on interest rates
• Eurozone August trade balance €6.7 billion vs €6.5 billion prior
• Germany September wholesale price index +0.2% vs +0.2% m/m prior
• SNB total sight deposits w.e. 13 October CHF 483.8 bn vs CHF 479.9 bn prior
• China economy expected to have slowed down in Q3 – poll

Markets:

• NZD leads, CHF lags on the day
• European equities a little higher; S&P 500 futures up 0.3%
• US 10-year yields up 7.3 bps to 4.701%
• Gold down 0.8% to $1,915.09
• WTI crude up 0.1% to $87.82
• Bitcoin up 2.8% to $27,737

There wasn’t much in terms of major headlines in European trading today as the Israel-Hamas conflict continues to rage on. But the fears surrounding it are abating slightly, as the two big movers were gold and Treasuries as both were offered during the session.

Gold fell down by over 1% at one point to $1,908 but is now keeping lower still by roughly 0.8% to $1,915 on the day. Meanwhile, 10-year Treasury yields slowly advanced from 4.67% to 4.70% now after an opening gap higher amid some unwinding of the flight to safety from Friday.

That being said, there were not any much bigger retracements elsewhere with US futures hanging on to tentative gains after a bit of back and forth during the session. Then, we have oil which remains flattish as traders are still sorting out the outlook after US president Biden warned that any Israeli occupation of Gaza would be a ‚big mistake‘.

As for major currencies, the dollar is seeing a mild retreat but nothing to really shout about. EUR/USD is up 0.2% to 1.0530 while USD/JPY is flattish at 149.55, so there isn’t much for traders to really get excited about.

The big mover is the kiwi with NZD/USD up 0.6% to 0.5920 and held gains throughout after the opening gap higher, following the NZ election results here.

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

Last Friday, the market sold off as the University of Michigan Consumer
Sentiment report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war. This could lead to a relief rally and the technical levels can help in
identifying the likely entry and exit points.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite last Friday fell into the upward trendline where we
have also the confluence with the
red 21 moving average. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for another rally into the major downward trendline
around the 13800 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the support zone
around the 13370 level where we have further confluence from the red 21 moving
average, the 50% Fibonacci retracement level
and the previous resistance turned support. This is
a very good level for the buyers to position for a rally. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will likely pile
in even more aggressively to extend the drop into the lows and target a
complete breakdown.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that more
conservative buyers might want to wait for the price to break above the counter-trendline
to join the rally into the major downward trendline, while the sellers could
use it to target the break below the 13370 support with a better risk to reward
setup.

Upcoming
Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.

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

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

There’s not much going on so far in European morning trade apart from a slight retracement to the Friday moves in gold and bond yields. Major currencies are not much changed while oil is also flattish, with stocks hanging on to tentative gains for now. S&P 500 futures are up 0.2% while European indices are mostly little changed.

The price action so far on the session has been rather sideways and that speaks to the lack of conviction upon the return from the weekend.

As much as tensions surrounding the Israel-Hamas conflict aren’t getting much worse, there’s still much uncertainty in the region at the moment. And that is likely keeping traders on edge for now.

We’ll have to see what Wall Street makes of this later today but as mentioned earlier, the longer we go without any major escalation in the developments in the Middle East, that is every minute that markets will start to breathe a bit easier to step out of the shelter since Friday i.e. adding confidence to the unwinding of the risk-off flows.

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

Last Friday, the market fell as the University of Michigan Consumer
Sentiment report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war “provided that Israel does not dare to attack Iran”. This could lead to
a relief rally and the technical levels can help in identifying the likely
entry and exit points.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
found resistance around
the red 21 moving average and the
previous swing level. The buyers should still be targeting the resistance
around the 34000 level where we have a much stronger confluence from the
previous swing low level, the 61.8% Fibonacci retracement level
and the major trendline. In
fact, if the price continues higher, we can expect the sellers to pile in even
more aggressively around the resistance to position for another selloff into
the lows with a better risk to reward setup.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the buyers are
stepping in around the 33500 level as they have the confluence from the 38.2%
Fibonacci retracement level and the red 21 moving average. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will start to
pile in to target the 32597 support.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the support zone around the 33500 level and the rangebound price action
as the battle between buyers and sellers is starting to heat up. Watch what
happens around this level as a bounce should translate into another rally into
the resistance zone, while a break lower is likely to trigger a selloff into
the 32597 support.

Upcoming Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.

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