Headlines:

• Yen losses ease up a little in European morning trade
• Japanese yen in the spotlight after weekend election
• Japan parliament reportedly to convene special session to vote on prime minister post
• Crude Oil Technical Analysis – Israel spares Iran’s energy facilities
• Weekly update on interest rate expectations
• ECB’s Wunsch: It is premature to discuss December policy decision
• SNB total sight deposits w.e. 25 October CHF 457.4 bn vs CHF 462.3 bn prior
• UK October CBI retailing reported sales -6 vs 4 prior

Markets:

• EUR leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.5%
• US 10-year yields up 2.5 bps to 4.256%
• Gold down 0.6% to $2,731.59
• WTI crude down 5.7% to $67.65
• Bitcoin up 2.8% to $68,660

The main focus in FX was on the Japanese yen, as it opened with a striking gap lower after the weekend election.

Japan’s ruling LDP party surrendered their outright majority in the lower house and that triggered some uncertainty on the BOJ’s confidence to stick to policy normalisation. That as prime minister Ishiba’s position is called into question following the election outcome.

USD/JPY opened with a gap up at 153.23 in Asia before holding around 153.50-60 levels in the handover to Europe. But as the dust settles, traders are slowly getting a grip on the situation that Japan’s political landscape is still likely to remain as it is for the most part – at least for now.

That saw USD/JPY fall back to around 152.60 currently, eating into the opening gap higher but still up by 0.2% on the day.

Besides that, higher bond yields remain a focal point for broader markets. And that helped to underpin USD/JPY and the dollar as well. But yields did slide off a bit during the session, tempering with the dollar mood.

EUR/USD was keeping around 1.0790-00 mostly before nudging up slightly to 1.0815 now and still largely held back by its 200-hour moving average at 1.0825.

Besides that, other dollar pairs are more muted amid the mixed mood in markets to start the new week.

In the equities space, stocks are running higher as tensions in the Middle East abate following the developments over the weekend. That saw oil prices tumble lower by nearly 6% now and is breathing life into equities, with US futures set to run away with gains at the open later.

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

• Prior 4

After a brief respite in September, the UK retail sales balance heads back into negative territory for the month of October. The decline is marginal but it’s not a good start to Q4, which is typically seen as one of the hotter seasons in the run up to the year-end holidays.

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

Fundamental
Overview

Crude oil was one of the biggest
movers today as the price gapped sharply lower following the Israel’s
retaliation over the weekend. The reason for the drop is of course the lack
of attacks against energy facilities. That’s something that’s been already known, so we might see a pullack now that this story is in the rear view mirror.

In the big picture, central
bank easing generally leads the manufacturing cycle, so we can expect global
growth to pick up and support the crude oil market. One risk that might be
weighing on the market is the US election as a Trump victory might be bearish
due to increased supply expectations.

It’s worth remembering that
in 2016, crude oil did fall initially on Trump’s victory but eventually rallied
for more than 20% in the following three months on higher global growth
expectations. So, it’s going to be a tricky one, but global growth should
eventually prevail.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil couldn’t break above the key 71.67 level and eventually sold
off hard. The natural target for the sellers should be the support
zone around the 65 handle where we can expect the buyers to step in to position
for a rally back into the top of the yearly range.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor support level defined by the October swing low when
the Israel-Iran tensions began. This is where we can expect the buyers to step
in with a defined risk below the level to position for a pullback into the
downward trendline.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 65 handle.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the big gap lower today following the weekend news of Israel’s retaliation
and lack of energy infrastructure targets. There’s not much to add here as the
buyers will look for a bounce on the 66.50 swing level, while the sellers will
want to see the price breaking lower to increase the bearish bets into the 65
handle. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Job Openings and the US Consumer Confidence report. On
Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims and the US Employment Cost Index data. Finally, on
Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.

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

The pair is still up 0.4% on the day at around 152.90 but has fallen back below the opening gap of 153.23 upon the return from the weekend. The opening gap higher owes to the Japan election result. More on that from earlier: Japanese yen in the spotlight after weekend election

The losses in the yen are being arrested for now but it doesn’t materially alter the technical picture for USD/JPY.

The near-term chart above continues to see buyers remain in near-term control, holding well above its 100-hour moving average (red line). The key near-term level is seen at 152.13 currently, so there is some way to go in drawing another test of that again.

The opening gap higher in yen pairs owes much to traders pricing in „uncertainty“ with regards to the Japan lower house election outcome. That also sees prime minister Ishiba’s position get called into question.

However, the political landscape is not likely to change much and for the time being, Ishiba might just scrape through in the upcoming vote which is reported to be on 11 November. I mean, there are no major contenders to oust him for now – not least when the party itself is reflecting a more fragile look.

The LDP and Komeito are still likely to form a majority coalition with the help of the smaller parties. So, bigger picture politics won’t see that drastic a change; even if voters are growing increasingly more frustrated.

As the dust settles, that is perhaps what is leading to traders fading the earlier spike in USD/JPY at the open.

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

Fundamental
Overview

Bitcoin has been rallying
steadily in the last few weeks as Trump winning odds continued to soar in
betting markets. The price eventually consolidated around a key trendline as
the market might want to wait for the election result now before breaking out.

A Trump victory is seen as
bullish for Bitcoin given his embracement of the crypto industry and promised de-regulation.
Harris, on the other hand, did embraced the industry as well, but it’s been
more of a political move to attract voters rather than a strong support.

Bitcoin
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that Bitcoin is trading near a key long term downward trendline
that’s been defining the consolidation that started in March. The buyers will
want to see the price breaking higher to increase the bullish bets into a new
all-time high, while the sellers will likely lean on it to position for a
pullback into the upward minor trendline.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price is consolidating around the highs as the market is probably waiting
for the US election result. From a risk management perspective, the buyers will
have a better risk to reward setup around the minor upward trendline where they
will also find the Fibonacci
retracement levels for confluence.
The sellers, on the other hand, will want to see the price breaking below the trendline
to increase the bearish bets into new lows.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor upward trendline defining the bullish momentum
on this timeframe. The buyers will likely keep on leaning on it to position for
further upside, while the sellers will look for a break lower to increase the
bearish bets into the major upward trendline around the 64K level. The red
lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Job Openings and the US Consumer Confidence report. On
Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE,
the US Jobless Claims and the US Employment Cost Index data. Finally, on
Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.

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

UPCOMING
EVENTS:

• Tuesday: Japan Unemployment Rate, US Job Openings, US
  Consumer Confidence.
• Wednesday: UK Budget, Australia Q3 CPI, Germany CPI, Eurozone
  Q3 GDP, US ADP, US Q3 GDP.
• Thursday: Japan Industrial Production and Retail Sales,
  Australia Retail Sales, China PMIs, BoJ Policy Decision, Switzerland
  Retail Sales, French CPI, Eurozone Flash CPI, Eurozone Unemployment Rate,
  Canada GDP, US PCE, US Jobless Claims, US ECI.
• Friday: Australia PPI, China Caixin Manufacturing PMI,
  Switzerland CPI, Switzerland Manufacturing PMI, US NFP, Canada
  Manufacturing PMI, US ISM Manufacturing PM.

Tuesday

The US Job
Openings is expected at 7.990M vs. 8.040M prior. The last report surprised to the upside with the quits rate ticking
slightly lower and the hiring and layoffs rates remaining stable. It’s a labour
market where at the moment it’s hard to find a job but there’s also low risk of
losing one.

The US Consumer
Confidence is expected at 99.3 vs. 98.7 prior. The last report surprised with a big miss. Dana M. Peterson, Chief
Economist at The Conference Board said: “Consumer confidence dropped in
September to near the bottom of the narrow range that has prevailed over the
past two years. September’s decline was the largest since August 2021 and all
five components of the index deteriorated.”

“Consumers’
assessments of current business conditions turned negative while views of the
current labour market situation softened further. Consumers were also more
pessimistic about future labour market conditions and less positive about
future business conditions and future income.”

“The deterioration
across the Index’s main components likely reflected consumers concerns about
the labour market and reactions to fewer hours, slower payroll increases, fewer
job openings—even if the labour market remains quite healthy, with low unemployment,
few layoffs and elevated wages.”

“The proportion of
consumers anticipating a recession over the next 12 months remained low but
there was a slight uptick in the percentage of consumers believing the economy
was already in recession.” Watch also the Present Situation Index as it generally leads the Unemployment Rate.

Wednesday

The Australian Q3
CPI Y/Y is expected at 2.9% vs. 3.8% prior, while the Q/Q measure is seen at
0.3% vs. 1.0% prior. The RBA though is focused on the underlying inflation
measures, so the Trimmed Mean figure will be the one to watch. The Trimmed Mean
CPI Y/Y is expected at 3.5% vs. 3.9% prior, while the Q/Q measure is seen at
0.7% vs. 0.8% prior.

As a reminder, the
RBA delivered a slightly less hawkish hold at the last policy decision, which
is a tiny move towards a more dovish stance, although they don’t see inflation
returning to target for another year or two.

The US ADP is
expected to show 115K jobs added in October vs. 143K in September. The last report surprised to the upside triggering a hawkish
repricing in interest rates expectations. Although the ADP has a poor track
record in predicting the NFP data, the recent market’s sensitivity to labour
market data makes it a bit more important.

Thursday

The BoJ is
expected to keep interest rates unchanged. The central bank toned down its
hawkish stance since the last policy decision and the economic data has yet to
show inflationary threats. Therefore, it’s unlikely that we will see a rate
hike anytime soon and the JPY faith will be shaped by what happens in the US in
the next two weeks.

The Eurozone Flash
CPI Y/Y is expected at 1.9% vs. 1.7% prior, while the Core CPI Y/Y is seen at
2.6% vs. 2.7% prior. The market’s pricing is already very dovish for the ECB,
so we will likely need a very soft report to see the market price in some more
easing.

A hot report
though will likely take off the table the 16% probability of a 50 bps cut in
December. We will also see the Eurozone Unemployment Rate which is expected to
remain unchanged at 6.4%.

The US PCE Y/Y is
expected at 2.1% vs. 2.2% prior, while the M/M measure is seen at 0.2% vs. 0.1%
prior. The Core PCE Y/Y is expected at 2.6% vs. 2.7% prior, while the M/M
figure is seen at 0.3% vs. 0.1% prior.

Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Besides, this report won’t change anything for the
Fed as they are going to cut by 25 bps at the November meeting no matter what.

The market’s
focus is now on the US election.

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims
after an improvement in the last two months, spiked to the cycle highs in the
last couple of weeks due to distortions coming from hurricanes and strikes.

This week Initial
Claims are expected at 233K vs. 227K prior, while Continuing Claims are seen at
1880K vs. 1897K prior.

The US Q3
Employment Cost Index (ECI) is expected at 0.9% vs. 0.9% prior. This is the
most comprehensive measure of labour costs, but unfortunately, it’s not as
timely as the Average Hourly Earnings data. The Fed though watches this
indicator closely.

Although wage
growth remains high by historical standards, it’s been easing for the past two
years, and it’s expected to continue to do so given the fall in the job quit
rate.

Friday

The Swiss CPI Y/Y
is expected at 0.8% vs. 0.8% prior, while the M/M measure is seen at 0.0% vs.
-0.3% prior. Although inflation in Switzerland has been within the SNB’s 0-2%
target for more than a year, it keeps on falling steadily with the Core measure
standing around 1% now.

The market is
pricing at 27% chance of a 50 bps cut in December and a soft report will likely
raise those probabilities to roughly 50%. The central bank mentioned that the
CHF strength has been a major drag on inflation but hasn’t taken any real
action to address this problem yet.

The US NFP is
expected to show 123K jobs added in October vs. 254K in September and the
Unemployment Rate to remain unchanged at 4.1%. The Average Hourly Earnings Y/Y
is expected at 4.0% vs. 4.0% prior, while the M/M measure is seen at 0.3% vs.
0.4% prior.

This is going to
be a tricky report given the distortions from hurricanes and strikes in
October. Thankfully, the market is unlikely to care that much given the focus
on the US election.

The US ISM
Manufacturing PMI is expected at 47.6 vs. 47.2 prior. The New Orders index
should be the one to watch as it should be the first to respond to the recent
developments. The latest S&P Global Manufacturing PMI improved a little with new orders ticking higher
albeit remaining in contractionary territory.

Businesses
continue to mention uncertainty around the US election, so you can see why the
market is so much focused on it. Although the data will still have an
impact this week, everything hinges on the US election.

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

• US UMich October final consumer sentiment 70.5 vs 69.0 expected
• US September durable goods orders -0.8% versus -1.0% expected
• Canada August retail sales +0.4% vs +0.5% expected
• Canada Sept new housing price index 0.0% vs 0.0% prior
• Baker Hughes US oil rig count -2
• BOC Macklem: If population grows slows more than assumed, headline GDP will be lower
• CNN: Trump 47%. Harris 47%. It’s a horse race.
• Nvidia is once again the world’s most-valuable company
• Atlanta Fed Q3 GDPNow 3.3% vs 3.4% prior
• ECB’s Lagarde: Disinflation process is well on track

Markets:

• Gold up $8 to $2743
• US 10-year yields up 3.6 bps to 4.23%
• WTI crude oil up $1.43 to $71.63
• S&P 500 flat
• USD leads, NZD lags

The mood steadily soured throughout US trade and NZD and AUD finished at the lows. The S&P 500 rose as much as 50 points but gave it all back to finish flat.

There wasn’t a catalyst for the change in mood that saw steady US dollar buying and bond selling. Perhaps it’s angst about the election of something happening in the Middle East on the weekend. It’s the time in the election cycle when there is often a big surprise and nerves are frayed.

The shape of the move was steady and most pairs grinded lower against the dollar, including the uro which slid to 1.0795 from 1.0835.

A winner on the day was gold, which finished at the best levels and climbed $25 from the lows despite the dollar strength. It’s had an impressive run, hit a record high earlier int the week and today’s close will be the best weekly close ever.

Crude also bucked the trend in risk assets, perhaps in a sign of Middle East worries or position squaring. It rose more than $1 in US trading including a curious spike late just before midday.

USD/CAD finished at its highest since early August and the highest weekly close since 2020 in the fourth weekly decline. A series of highs over the past two years stretch up to 1.3975 but those are now within striking distance in what could be a major break.

In contrast, AUD/USD finished at the lowest since August but has 400 pips of breathing room before the post-pandemic lows. That pair could be in focus in the weeks ahead if China delivers on the fiscal side of stimulus or disappoints.

This article was written by Adam Button at www.forexlive.com.

A strong gap higher at the open quickly turned into a day of disappointment for bulls. After surging nearly 50 points in early trading to hit 5860, sellers stepped in and methodically unwound those gains throughout the session. The late morning and early afternoon saw particularly steady selling pressure, though buyers did attempt to defend the 5820 level multiple times. A late-day drift lower saw the index ultimately close down just 2 points, a round trip that essentially erased virtually all of the day’s moves.

The weak close despite the strong open could be a warning sign for bulls heading into next week’s trading.

• S&P 500 flat
• NASDAQ Comp +0.6%
• Russell 2000 -0.5%
• Dow Jones Industrial Average -0.6%

On the week:

• S&P 500 -1.0%
• NASDAQ Comp +0.2%
• Russell 2000 -3.0%

This week’s decline in the S&P 500 breaks a six-week winning streak.

Next week is a huge one for the stock market with 5 of the Mag 7 reporting.

This article was written by Adam Button at www.forexlive.com.

The New York Times released a poll today showing Trump and Harris deadlocked. That’s bad news for the Harris campaign as she had previously been leading. Combined with betting odds shifting in Trump’s favor and it’s starting to feel like we’ve hit a tipping point.

The bond market has been selling off steadily today, which reads like a Trump trade. At the same time, the stock market has been selling off steadily after opening higher and is down on the week.

So what gives? Surely there are some people making election bets but real money knows better. Elections are very tough to predict.

I think we all remember the polling errors in 2016 and 2020 but here is a reminder from Bespoke of what the polls looked like in 2012, which ended up being a 4-point win for Obama and 332-206 in the electoral college.

The kicker here is that betting markets had Obama as a decided favorite, even in the final week as the polls tightened. Right now, betting sites are at about 60:40 for Trump.

As I often say: There is always another trade. Politics and betting on binary outcomes is a tough way to make money in markets. All the best trades on the election are going to be after the results are clear, just like in the last two elections.

This article was written by Adam Button at www.forexlive.com.

The Fed blackout starts at midnight but the week ahead is packed with market-moving data, decisions and earnings reports.

Here’s a day-by-day preview of the week ahead:

MONDAY, OCTOBER 28

• US data: Dallas Fed manufacturing activity
• UK: Lloyds Business Barometer
• Japan: Jobless rate, job-to-applicant ratio
• ECB’s Wunsch speaks
• Earnings: Ford, Waste Management
• US Treasury Quarterly borrowing estimates, 2yr ($69bn) and 5yr ($70bn) note auctions

TUESDAY, OCTOBER 29:

• US: JOLTS job openings, Conference Board consumer confidence (98.7 prior)
• UK: Consumer credit, M4 money supply
• Germany: GfK consumer confidence
• Tech earnings: Alphabet (Google), AMD
• Others: McDonald’s, Pfizer, BP, Visa, PayPal

WEDNESDAY, OCTOBER 30

Big data day:

• US: Q3 GDP first reading, ADP employment
• Eurozone: Q3 GDP
• Germany: CPI, Q3 GDP
• France: Q3 GDP
• Australia: Q3 CPI
• Tech earnings: Microsoft, Meta
• Others: Boeing, Volkswagen, BASF
• UK Autumn Budget
• US Treasury quarterly refunding announcement

THURSDAY, OCTOBER 31

• Bank of Japan policy decision
• US: PCE inflation (core seen +0.28% MoM)
• Eurozone: CPI, unemployment
• China: Official PMIs
• Heavyweight earnings: Apple, Amazon, Intel, Samsung
• Energy: Shell, TotalEnergies, ConocoPhillips
• Others: Mastercard, Merck

FRIDAY, NOVEMBER 1

• US: Nonfarm payrolls (some forecasts as low as 0K, consensus at +123K), ISM manufacturing
• China: Caixin manufacturing PMI
• Switzerland: CPI
• Earnings: Exxon Mobil, Chevron

The week’s big focus will be on the US jobs report Friday, but markets will have plenty to digest before then with Q3 GDP, inflation data, and massive tech earnings. With five of the „Magnificent 7“ reporting (representing $12 trillion in market cap), expect some volatility in equity and currency markets throughout the week.

This article was written by Adam Button at www.forexlive.com.