Fundamental
Overview

Crude oil rallied strongly
on Tuesday following the first news of an imminent missile
attack from Iran against Israel. We had also the US
ISM Manufacturing PMI release with the new orders index ticking higher in a
potentially first sign of an improvement in demand.

Yesterday, crude oil
extended the gains as we got the news that Israel could target Iran’s oil infrastructure
in a potential retaliation. That also triggered a breakout of a key resistance
which increased the bullish momentum.

In the big picture, central
bank easing generally leads the manufacturing cycle, so we can expect global
growth to pick up, especially after the Fed’s 50 bps cut and the Chinese
officials surprising with strong easing measures.

All these reasons should be
bullish for the market and support prices in the next months barring a
recession. As a reminder, the positioning in crude oil is at record lows and
the sentiment is still very bearish. These factors can generally offer great
contrarian opportunities when we get to an inflection point in the
fundamentals.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil finally broke above the key 71.67 resistance and extended the rally into the major
trendline
where we can also find the 61.8% Fibonacci
retracement level for confluence.

This is where we can expect
the sellers to step in with a defined risk above the trendline to position for
a drop back into the 71.67 level, while the buyers will want to see the price
breaking higher to increase the bullish bets into the 80.00 handle.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have now a minor upward trendline defining the current bullish
momentum. If the price were to pull back, we can expect the buyers to lean on
the trendline to position for new highs, while the sellers will look for a
break lower to increase the bearish bets into the 65.00 handle.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action with the major spikes higher triggered
by the Israel and Iran tensions. There’s not much else we can add here as the buyers
will look for a bounce around the trendline or a break above the 75 handle,
while the sellers will want to see a stronger rejection and a break below the
minor upward trendline. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the US NFP report where the consensus sees
140K jobs added and the unemployment rate to remain unchanged at 4.2%.

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

EU Moves Forward with Tariffs on Chinese EVs Following Member Vote

Full Story on PiQ Suite

The European Commission announced it has secured enough support to impose tariffs of up to 45% on imports of Chinese-made electric vehicles, marking a significant trade decision that could provoke retaliation from Beijing.

The tariffs, aimed at countering what the EU considers unfair Chinese subsidies, will be in place for the next five years following a year-long anti-subsidy investigation.

In the vote, 10 EU members supported the tariffs, while five opposed and 12 abstained.

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

Headlines via the terminal

• LIBYA TO RESUME OIL PRODUCTION TODAY
• SAYS OIL MINISTER

  LIBYA’S LARGEST OIL FIELD TO TO RESUME OUTPUT THURSDAY

Kneejerk lower in crude.As always with Libya info – it’s rarely straightforward, and rarely stays that way for long.

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

• Challenger layoffs 72.821K vs 75.891K prior.

U.S.-based employers announced 72,821 cuts in September, a 4% decrease from the 75,891 cuts announced one month prior. It is up 53% from the 47,457 cuts announced in the same month in 2023,
according to a report released Thursday from global outplacement and
business and executive coaching firm Challenger, Gray & Christmas,
Inc.

In the third quarter, companies announced plans to cut
174,597 jobs, down 16% from the 177,391 cuts announced in the second
quarter of this year. It is up 19% from the 146,305 cuts announced in
the same quarter of 2023.

For the year, companies have announced 609,242 job cuts,
up 0.8% from 604,514 announced during the same period last year. Though
less than a percentage point separates them, this is the first time this
year that year-to-date cuts are higher than those tracked during the
same period in 2023.

“We’re at an inflection point now, where the labor
market could stall or tighten. It will take a few months for the drop in
interest rates to impact employer costs, as well as consumer savings
accounts. Consumer spending is projected to increase, which may lead to
more demand for workers in consumer-facing sectors.

“Layoff announcements have risen over last year, and
job openings are flat. Seasonal employers seem optimistic about the
holiday shopping season. That said, many of those who found themselves
laid off this year from high-wage, high-skill roles, will not likely
fill seasonal positions,” said Andrew Challenger, Senior Vice President
of Challenger, Gray & Christmas, Inc.

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

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.

Full Story on PiQ Suite

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

Full Story on PiQ Suite

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.

Full Story on PiQ Suite

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.