10-year Treasury yields are down to 4.707% now after returning from the long weekend, down notably from 4.782% at the end of Friday. That being said, they are much higher than the opening gap lower of 4.636% earlier today. We already saw how stocks brushed aside the Middle East conflict yesterday, will we see the same for the bond market later in the day?

That’s certainly something to watch out for and that could hurt risk sentiment, despite the strong rebound we are seeing in stocks since late yesterday. My gut feel tells me that investors are likely to keep any optimism in check, so perhaps we might not get roaring gains especially since the US CPI data is coming up on Thursday. But if bonds are going to topple over, it could see selling flows spill over to broader markets as well in the session(s) ahead.

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
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market remains
  fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The market doesn’t expect the Fed to hike anymore.

Australia:

• The
  RBA kept interest rates unchanged as expected as they are seeing inflation
  returning to target with the current level of interest rates.
• The
  latest monthly CPI showed that core inflation is
  slowing.
• The
  labour market is weakening as we got a big miss
  in July and the bulk of jobs added in August were part time.
• The
  Australian Manufacturing PMI fell further into contraction while
  the Services PMI jumped back into expansion.
• The
  market expects the RBA to hold rates steady at the next meeting as well.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the AUDUSD pair
was diverging with the
MACD right
when it was trying to break out of the range. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, the
pair failed to sustain the breakout and bounced back into the range. The buyers
might now have enough conviction to target the top of the range around the 0.65
handle.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
action within the range is a real mess with frequent spikes and erratic
movements. From a risk management perspective, the buyers would be better off
to wait for the price to pull back into the lower bound of the regression
channel around the 0.6380 level where they will also have the confluence with the
red 21 moving average. The
sellers, on the other hand, will want to see the price breaking below the support zone
around the 0.6370 level to position again for new lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup with the 61.8% Fibonacci
retracement level adding further confluence to the
support around the 0.6380 level. As previously mentioned, the sellers will want
to see the price breaking below the lower bound of the channel to invalidate
the bullish setup and position for another selloff into new lows.

Upcoming Events

This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report.

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

• Prior 91.3

This marks 21 months in a row now that the index has come in below the 49-year average of 98. Of note, 23% of business owners continue to report that inflation remains their single biggest problem in operating their business – similar to last month. The full report can be found here.

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

• OPEC+ action helped to reduce oil market volatility
• Will have a pavilion at COP28 to showcase how OPEC members are dealing with emissions
• Hopes that all voices will be at the table at COP28

Just some token remarks there by Al Ghais. He’s trying to sound reassuring on China but really, no one can say with relative comfort that there are issues over there that can be easily brushed aside for now.

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
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market remains
  fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The market doesn’t expect the Fed to hike anymore.

Canada:

• The BoC left interest rates at 5.00% as expected but remains prepared to
  raise rates further if needed.
• BoC Governor Macklem delivered a hawkish speech which points to another rate hike
  if the data remains strong into the next policy meeting.
• The Canadian underlying inflation
  data has been beating expectations month after month with another beat across the board recently.
• On the labour market side, the recent
  report beat expectations and showed another uptick in wage growth, which is something that Governor
  Macklem said the BoC is watching carefully.
• The market doesn’t expect the BoC to
  hike at the upcoming meeting with odds hovering around 40%, but the central
  bank is not afraid to deliver surprising decisions.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCAD pair
recently broke above a key resistance level
around 1.3668, but sold off soon after helped by a strong Canadian jobs report
that raised the chances of another rate hike from the BoC on October 25. We can
notice also that the last leg higher diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see the price falling into the trendline before
finding strong buyers.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that as soon as the
price broke through the strong support around the 1.3660 level, the bearish
momentum intensified as more sellers piled in to target the upward trendline
around the 1.35 handle. We have another support zone around the 1.3550 level
where we can find the previous swing level and the 61.8% Fibonacci retracement level
for confluence. That’s
where we can expect the buyers to step in with a defined risk below the zone to
target a new high.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor downward trendline that coupled with the red 21 moving average is
likely to act as resistance for the current downtrend. In fact, we can expect
the sellers to lean on the trendline with a defined risk above it to position
for a drop into the 1.35 handle. The buyers, on the other hand, will want to
see the price breaking above the trendline to pile in and target a new high.

Upcoming Events

This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report.

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

It’s been a quiet one to start the new week and with it being a partial holiday in the US, that should also make for a slower session later on. The big news so far is still the surprise attacks by Hamas on Israel, leading to plenty of uncertainty in the Middle East at the moment. The latest is Israel calling for Chevron to shut down natural gas production at its Tamar platform amid safety concerns. The conflict is leading to plenty of anxiety all around for now.

S&P 500 futures are still down 0.6% and not much changed since the opening gap lower today. Meanwhile, European indices are keeping in the red but not much worse than their opening losses as well.

In FX, the dollar and yen continue to stay more bid with EUR/USD down 0.5% to 1.0530 and AUD/USD down 0.3% to 0.6360 currently.

It seems like markets are just waiting for this to quickly pass and get back to the usual business order before we get to the US CPI data later in the week.

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

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

Last Friday, the NFP report
massively beat forecasts with 336K jobs added against 170K expected. The
unemployment rate remained unchanged at 3.8% and average hourly earnings were a
touch lower. Overall, the market viewed it as a good release with the
soft-landing narrative prevailing. Over the weekend, Hamas launched a big attack
against Israel which might cause some risk aversion in the
markets, although it’s likely to be short-lived as long as the conflict remains
in the Levant.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq Composite
eventually rallied strongly from the trendline and the
38.2% Fibonacci retracement level
following the strong NFP report. The buyers might now be in control and the
target should be the downward trendline around the 13800 level. The sellers, on
the other hand, will need the rally to fail completely and the price to get
back below the 13174 support to
increase the bearish momentum and take the Nasdaq Composite to new lows.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely that
the Nasdaq Composite broke out of the consolidation around the support zone as
the price breached the resistance defined by the 38.2% Fibonacci retracement
level. The buyers are likely to pile in with more conviction now targeting the
13800 level.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
had a divergence with
the MACD right
into the strong support zone which is generally a sign of weakening momentum
often followed by pullbacks or reversals. The Nasdaq Composite might open lower
today following the events over the weekend, but the buyers should take that as
a dip-buying opportunity and pile in around the resistance turned
support with a defined risk below the most recent swing low.
The sellers, on the other hand, will want to see the price breaking lower to
start positioning for further downside and break of the most recent low.

Upcoming
Events

This week we have some important inflation reports. On
Wednesday, we will get the US PPI data and later in the day the FOMC Meeting
Minutes. On Thursday, it will be the time for the main release of the week,
that is the US CPI report, and at the same time we will see the latest Jobless
Claims figures. Finally, on Friday we will get the University of Michigan
Consumer Sentiment report.

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

Last Friday, the NFP report
massively beat forecasts with 336K jobs added against 170K expected. The
unemployment rate remained unchanged at 3.8% and average hourly earnings were a
touch lower. Overall, the market viewed it as a good release with the
soft-landing narrative prevailing. Over the weekend, Hamas launched a big attack
against Israel which might cause some risk aversion in the
markets, although it’s likely to be short-lived as long as the conflict remains
in the Levant.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
rallied last Friday following the strong NFP report before pulling back a bit
into the close. The buyers might now be eyeing the resistance around
the 34000 level where we can find the confluence with the
trendline, the
61.8% Fibonacci retracement level
and the red 21 moving average. That
will be a strong level where the sellers will be leaning on to position for
another selloff into new lows.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price
broke out of the downward trendline and the minor resistance around the 33258
defined by the 38.2% Fibonacci retracement level. We might see this resistance
becoming support now with the buyers leaning on it to position for another
rally into the 34000 resistance.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the divergence with
the MACD was
signalling a loss of bearish momentum which is often followed by pullbacks or
reversals. The break of the trendline should point to a reversal and the target
should be the 34000 resistance. The support zone around the 32258 level will be
key now as a bounce should point to further upside, while a break lower is
likely to give back control to the sellers and lead to another drop into the
32600 level.

Upcoming Events

This week we have some important inflation reports. On
Wednesday, we will get the US PPI data and later in the day the FOMC Meeting
Minutes. On Thursday, it will be the time for the main release of the week,
that is the US CPI report, and at the same time we will see the latest Jobless
Claims figures. Finally, on Friday we will get the University of Michigan
Consumer Sentiment report.

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

It’s all about the risk-off vibes for now amid the kneejerk reaction to the events over the weekend, in which we saw a surprise attack by Hamas on Israel. That is keeping equities on the defensive while the dollar is bid in European morning trade so far.

But just be wary that while European bond yields are lower amid safety flows, Treasuries are not open for trading today. And that is a major caveat to take note of, considering how the US bond market has been leading the rest of the market over the last three weeks or so.

Wall Street will still be open to trade stocks but it’s hard to read too much into the moves today until we get bond traders back in. For now, there is the broader element of risk aversion but once the fear is faded, we’ll get back to the regular scheduled programming soon enough. And I reckon it could only take a day or two since we do have the US CPI data coming up later in the week.

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