<p>The selling in equities today is utterly merciless.</p><p>The combination of stridently-hawkish talk from Fed officials this week and a decently-strong non-farm payrolls report today has led to an abandonment of the ‚Fed pivot‘ trade.</p><p>The week had started out with a +5% gain but now the Nasdaq is barely in positive territory, up just 0.7%.</p><p>I can’t help but think that the inabilty to maintain even a modest rally from the June/Sept lows is a sign of a potential rout. I pity to think what will happen if next Thursday’s CPI report is hot.</p>

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

<p>USD/JPY is up 20 pips today and trading at 145.30.</p><p>In all liklihood that will be the highest close in 20 years for USD/JPY and it’s the highest intraday trade since they intervened at 145.90.</p><p>The Ministry of Finance may be pressed to intervene again. The problem is that they’re fighting a fundamental battle. The US dollar is strengthening across the board in the aftermath of a strong non-farm payrolls report. The market is beginning to wonder if the Fed hiking to just under 5% will be enough to tame inflation.</p><p>The MOF has often pointed to ‚volatility‘ rather than absolute price levels in its jawboning and intervention. We’ve been around 144.00 now for a month so certainly the one-way moves have been tamed. </p><p>But if they allow the pair to move to new highs, I suspect the market will quickly test 150.00. Domestically, the economic calendar is very light for Japan next week.</p>

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

<p>Yesterday, Bank of Canada governor Tiff Macklem <a target=“_blank“ href=“https://www.forexlive.com/centralbank/bocs-macklem-we-need-additional-info-before-we-consider-moving-to-more-balanced-policy-20221006/“ target=“_blank“>said </a>more data is needed before moving to shifting to an interest rate pause. Today he will get it, with Canadian jobs to be released alongside non-farm payrolls.</p><p>Unlike in the US, Canadian jobs have showed a material deterioration in the past few months. The data is notoriously volatile but there have been three months in a row of losses near 40K. For those who follow the US, a rule of thumb is to multiply by 10, so this would be the equivalent of three months in a row of non-farm payrolls of -400K.</p><p>The consensus today is +20.0K.</p><p>The unemployment rate has ticked up to 5.4% from 4.9% and is expected to stay there.</p><p>As always, the breakdown of full-time and part-time jobs is an important consideration for Canada. Last month there were 77..2K full time job losses, which was the worst since January.</p><p>The Canadian dollar has recently broken down to the lowest levels since May 2020 and the next leg depends on what the BOC does next. A quick pivot is unlikely as Macklem said yesterday that more rate hikes „will be needed“ and market pricing for a 50 bps hike on Oct 26 is 98%, which would take rates to 3.75%.</p><p>From there, a likely path is for the BOC to slow to 25 bps and then pause at year end. A big surprise in today’s jobs report could change the equation but if you’re trading USD/CAD, it will be challenging with the US report due at the same time.</p>

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

<p>It’s an earlier than usual finish for me today, so I’ll leave you with the <a target=“_blank“ href=“https://newsquawk.com/daily/article/?id=2673-us-market-open-tentative-trade-awaiting-nfp-and-fed-speak-for-fresh-pivot-guidance&utm_source=newsquawk&utm_medium=email&utm_campaign=newsletter&utm_content=us-open“ target=“_blank“ rel=“nofollow“>Newsquawk US Market Open Preview</a> and wish you all an amazing weekend.</p><p>Summary</p><p>European bourses are modestly on the backfoot, though have trimmed this slightly as the session progresses, in limited newsflow pre-NFP.</p><p>Stateside, futures are similarly contained and lie either side of the unchanged mark with NQ -0.1% modestly lagging amid yield upside</p><p>Typically tense pre-NFP trade has seen the DXY briefly dip below 112.00, to a 111.94 low, before regathering itself and holding marginally above the figure.</p><p>Core benchmarks dipped to lows amid the morning’s German data release, with Import Prices lifting again, though have gained some poise since in quiet trade.</p><p>WTI and Brent are off highs but still holding onto gains of around USD 0.50/bbl and are at the top-end of the week’s USD 86.35/bbl – 95.00/bbl parameter in Brent Dec’22.</p><p>Fed’s Mester (2022/2024) and Waller (voter) spoke overnight and added to the pivot-pushback</p><p>Looking ahead, highlights include US & Canadian jobs reports, BoE’s Ramsden, Fed’s Williams, Kashkari, Bostic</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/boe-will-consider-whether-market-assessment-of-uk-economic-policy-has-changed-20221007/“>BoE will consider whether market assessment of UK economic policy has changed</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/bofa-flow-show-bull-bear-indicator-remains-at-00-extreme-bearish-20221007/“>BofA Flow Show: Bull & Bear indicator remains at 0.0 (Extreme Bearish)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/the-natgasweatherandrepaltry-natgasweather-daily-report-20221007/“>The @NatGasWeather/@andrepaltry NatGasWeather Daily Report</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/euro-zone-demand-surge-playing-increasing-role-in-excessive-inflation-ecb-20221007/“>Euro zone demand surge playing increasing role in excessive inflation: ECB</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/the-newsquawk-nfp-preview-looking-for-250k-payroll-additions-vs-315k-in-august-20221007/“>The @Newsquawk NFP Preview: Looking for 250k payroll additions (vs 315k in August)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-currency-diplomat-never-felt-a-limit-to-ammunition-for-currency-intervention-20221007/“>Japan Currency Diplomat: Never Felt A Limit To Ammunition For Currency Intervention</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/italy-retail-sales-fall-04-mm-in-august-20221007/“>Italy retail sales fall 0.4% m/m in August</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/french-trade-balance-1530b-forecast-14425b-previous-1454b-20221007/“>French Trade Balance: -15.30B (Forecast -14.425B, Previous -14.54B)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-halifax-house-prices-mom-01-previous-04-20221007/“>UK Halifax House Prices MoM: -0.1% (Previous 0.4%)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/german-real-retail-sales-mom-13-forecast-12-previous-19-20221007/“>German Real Retail Sales MoM: -1.3% (Forecast -1.2%, Previous 1.9%)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/german-industrial-production-mom-08-forecast-05-previous-03-20221007/“>German Industrial Production MoM: -0.8% (Forecast -0.5%, Previous -0.3%)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/the-newsquawk-market-open-sentiment-sullied-as-fed-officials-push-back-on-incoming-pivot-20221007/“>The @Newsquawk Market Open: Sentiment sullied as Fed officials push back on incoming pivot</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/swiss-unemployment-rate-adjusted-21-forecast-21-previous-21-20221007/“>Swiss Unemployment Rate Adjusted: 2.1% (Forecast 2.1%, Previous 2.1%)</a></li></ul>

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

<p>BoE will consider whether market assessment of UK economic policy has changed, says Ramsden</p><p>“One key consideration for the (BoE’s monetary policy committee) at its upcoming meetings will be whether the recent repricing of UK assets reflects a changed assessment by markets of the UK macroeconomic policy mix between fiscal and monetary policy,“ Ramsden said in a speech to the Securities Industry Conference 2022.</p><p><a target=“_blank“ href=“https://twitter.com/PriapusIQ/status/1578337433439338502?s=20&t=1RQFCJsRY74tUsB-8qcRwQ“ target=“_blank“ rel=“nofollow“>Full Reuters Note on this</a></p>

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

<p>BofA Flow Show: Bull & Bear indicator remains at 0.0 (Extreme Bearish) </p><p>Equities (USD) </p><p>US: outflows recommence, 3.4bln </p><p>Europe: outflow for the past 34 weeks, 0.6bln </p><p>Japan: inflows for the past two weeks, 1.5bln </p><p>Fixed Income (USD) </p><p>Gov’t/Tsy: inflows for the past seven weeks, 4.2bln </p><p>IG: outflows for the past five weeks, 12.5bln </p><p>HY: inflows for the past seven weeks, 0.6bln </p><p>Source: BofA</p>

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

<p>The guys at NatGasWeather.com have once again allowed me to share with you their daily report </p><p><a target=“_blank“ href=“https://natgasweather.com/wp-content/uploads/2022/10/NatGasWeather.com__Daily__Report_Oct__7.pdf“ target=“_blank“ rel=“nofollow“>Full Report Here</a></p><p>7-Day Weather Summary (Oct 7-13): An early season cool shot will sweep across the Great Lakes, Ohio Valley, and Northeast Fri-Sun w/showers and chilly lows of upper 20s to 40s. The rest of the US will be comfortable w/highs of 60s to 80s besides hotter 90s California and Southwest deserts. </p><p>Much of the US will again be comfortable next week as highs of 60s to 80s rules besides cooler 50s N. Rockies & N. Plains.</p><p>Overall, moderate national demand Fri-Sun, then light.</p>

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

<p>ECB Minutes: <a target=“_blank“ href=“https://www.ecb.europa.eu/press/accounts/2022/html/ecb.mg221006~a5f7fb03f3.en.html“ target=“_blank“ rel=“nofollow“>Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 7-8 September 2022</a></p><p><a target=“_blank“ href=“https://newsquawk.com/headlines/ecb-minutes-inflation-was-far-too-high-and-likely-to-stay-above-the-governing-council-s-target-for-an-extended-period-projected-inflation-path-remained-tilted-to-the-upside-over-the-entire-projection-horizon-06-10-2022″ target=“_blank“ rel=“nofollow“>Newsquawks Bitesize Post</a></p><p>Key Points:</p><p>Inflation was far too high and was expected to remain above the governing council’s target for an extended period of time.</p><p>A large number of members favoured raising the key ECB interest rates by 75 basis points.</p><p>Expectations for inflation remained stable, and wage growth remained moderate, with little evidence of second-round effects.</p><p>Over the entire projection horizon, the risks associated with the projected inflation path remained skewed to the upside.</p><p>The size of the upward revision in the staff inflation projection for 2024 was not deemed large enough to necessitate a more aggressive response.</p><p>The expected slowdown in economic activity would not be sufficient to significantly reduce inflation.</p><p>Without a timely reduction in monetary policy accommodation, inflationary pressures caused by euro depreciation may worsen.</p>

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

<p>US Challenger Layoffs: 29.989k (Previous 20.485k)</p>

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

<p> BoE: The move in gilt yields last week threatened to exceed the size of the cushion for many LDI funds.</p><p>They go on to say..Had BoE not intervened, a large number of pooled LDI funds would have been left with negative net asset value and would have faced shortfalls in the collateral posted to banking counterparties.This is basically an exercise by the BoE in making it clear that they singlehandedly saved the Gilt market – Some may beg to differ and side with ‚it was a storm in a tea cup‘ </p><p><a target=“_blank“ href=“https://twitter.com/PriapusIQ/status/1577953767097602050?s=20&t=PlizH2fMlTkq9S3-dBknEQ“ target=“_blank“ rel=“nofollow“>BOE’s Cunliffe: Closely monitoring LDI funds to ensure resilience</a></p><p><a target=“_blank“ href=“https://twitter.com/PriapusIQ/status/1577953712101900289?s=20&t=PlizH2fMlTkq9S3-dBknEQ“ target=“_blank“ rel=“nofollow“>BoE says it will unwind gilt market intervention once risks have subsided</a></p><p><a target=“_blank“ href=“https://www.forexlive.com/terms/g/gbp/“ target=“_blank“ id=“3a5ab7c1-ff09-45ea-87d4-eea6613bb754_1″ class=“terms__main-term“>GBP</a></p>

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