Headlines:

• Euro takes a ride on the PMI seesaw
• ECB’s Holzmann: A 25 bps rate cut is probable in December
• ECB’s Holzmann says will cut rates if circumstances, inflation allow for it
• ECB’s Vasle says should keep cutting rates in „measured steps“
• France October flash services PMI 48.3 vs 49.9 expected
• Germany October flash manufacturing PMI 42.6 vs 40.8 expected
• Eurozone October flash services PMI 51.2 vs 51.5 expected
• UK October flash services PMI 51.8 vs 52.4 expected
• UK October CBI trends total orders -27 vs -28 expected
• German wages continuing to grow despite economic headwinds – Bundesbank

Markets:

• JPY leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.5%
• US 10-year yields down 5 bps to 4.192%
• Gold up 0.7% to $2,735.56
• WTI crude up 1.0% to $71.49
• Bitcoin up 0.7% to $67,071

Bond yields are coming off the boil and that’s the main driver leading markets so far today.

USD/JPY is down 0.6% as such to 151.90, pushing lower in European morning trade from around 152.20 earlier. The greenback surrendered some of its gains from earlier in the week as well given the circumstances.

10-year Treasury yields are marked down by 5 bps to under 4.20% and that’s giving broader markets a bit of a breather.

The euro was in focus amid PMI data, which saw mixed fortunes for France and Germany. That resulted in a bit of a seesaw action with EUR/USD falling initially to 1.0771 before climbing back up to around 1.0790 levels now. Large option expiries at 1.0800 is helping to keep price action in check.

As yields are keeping lower, equities are also looking to seek some relief. Tech shares led gains early on after Tesla’s earnings beat overnight. But that eventually translated to broader bids in European morning trade with regional indices also nudging higher.

S&P 500 futures are up 0.5% as stocks look to bounce back later in Wall Street trading.

All in all, that is pinning the dollar down a little across the board as the gains cool off. GBP/USD is up 0.4% to 1.2975 and AUD/USD up 0.3% to 0.6650 as the greenback’s run pauses ahead of the jobless claims and US PMI data later.

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

The inaugural Finance Magnates Annual Awards (FMAA) Gala kicked off last night at Lemon Park Venue in Nicosia, Cyprus, drawing some of the biggest name companies and executives in the industry. The black tie event was powered by AWS and constituted the highest standards of both transparency and excellence in the financial services arena. After a nomination and voting stage, the final winners were unveiled last night – to the surprise of nobody, the list included some standout companies and outperformers.

What it Wins to Mean a FMAA

Winning a FMAA award is the highest honor that any brand can achieve. This requires not only being nominated as one of the elite companies in the industry but also being voted on by a panel of independent judges. This year’s awards covered several different categories that were up for grabs, recognizing such attributes as innovation, outstanding client service, and best performing brokers. The following judges took part in the voting:

The awards helped shine a bright spotlight on the winning brands, showcasing both their strengths as well as leadership in the industry. There is no better way to set oneself apart from the competition, given the enormous weight and validation placed behind these titles.

And the Winners Are….

Finance Magnates is proud to recognize the winners of this year’s coveted FMAA:

Global:

• Broker of the Year – Deriv
• Most Trusted Broker – FP Markets
• Fastest Growing Broker – Trading PRO
• Best Customer Experience Broker – XM

Regional:

• Broker of the Year – Asia – FP Markets
• Most Trusted Broker – Asia – FBS
• Fastest Growing Broker – Asia – ATFX
• Broker of the Year – Africa – Trading PRO
• Most Trusted Broker – Africa – Deriv
• Fastest Growing Broker – Africa – Headway
• Broker of the Year – LATAM – FBS
• Most Trusted Broker – LATAM – FxPro
• Fastest Growing Broker – LATAM – FP Markets
• Best Customer Experience Broker – LATAM XM

National:

• Broker of the Year – Vietnam – Axi
• Broker of the Year – Thailand – EC Markets
• Broker of the Year – Malaysia – Headway
• Broker of the Year – South Africa – Amega

A big congratulations to this year’s winners!

This article was written by Jeff Patterson at www.forexlive.com.

• Collective wage agreements in Germany were up 6.2% y/y between January and August
• These findings do not fundamentally call into question the expected disinflation process
• But labour market situation is of great importance for the speed and extent of disinflation
• GDP likely shrank again in Q3 but should avoid a significant and broad-based decline in output

Just a couple of small notes but as mentioned by the Bundesbank, the higher wages are not quite reflected in the consumer prices presently. That said, it is still a spot worth keeping an eye out for just in case.

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

• Prior -35

UK factory order book balance holds in negative territory in October, keeping not much changed to the month before. The volume of new orders, measured quarterly, declined to -11 from +1 previously and that hints at softer sentiment with the reading being the weakest since October 2020.

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

Fundamental
Overview

The USD has been on a hell
of a run recently despite the lack of catalysts and no major repricing in interest
rates expectations.

The main culprit for the
recent strength in the US Dollar has been the rally in long term Treasury
yields. The yield curve has been bear-flattening which is what you would expect with
higher growth and potentially higher inflation expectations.

There’s been a good
argument that the markets have been already positioning for a Trump victory
which is expected to strengthen the higher growth and less rate cuts
expectations.

For now, this is the trend
and it’s generally a bad idea to fight such trends without a catalyst.
Unfortunately, we don’t have much left for October as the main events will be
in the first weeks of November when we will get the top tier economic reports,
the US elections and the FOMC decision.

On the GBP side, we got the
UK
Flash PMIs this morning and the data missed expectations slightly across
the board. The market’s pricing didn’t change much though as the market
continues to expect a 25 bps cut at the upcoming meeting followed by another
one in December.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD eventually reached the major trendline
and bounced off of it as the buyers stepped in. The first target for them
should be the 1.31 handle. The sellers, on the other hand, will want to see the
price breaking below the trendline to increase the bearish bets into the 1.27 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor downward trendline defining the current bearish
momentum. If the price gets there, we can expect the sellers to lean on it to
position for a break below the major trendline. The buyers, on the other hand, will
look for a break above the downward trendline to increase the bullish bets into
the 1.31 handle.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor trendline defining the bearish momentum on this timeframe.
The buyers will want to see the price breaking higher to increase the bullish
bets into the next trendline, while the sellers will likely lean on it to
position for a break below the major trendline. The red line define the average daily range for today.

Upcoming
Catalysts

Today we have the US Jobless Claims and the US Flash PMIs.

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

• I’m pretty confident inflation will hit 2% in 2025.

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

Headlines:

• USD/JPY extends gains to nearly 1% on the day now
• USDJPY Technical Analysis – Higher Treasury yields revive the carry trade
• Equities stay more sluggish as rising yields keeps optimism in check
• EUR/USD continues its descent to test the early August low
• ECB reportedly starting to debate whether rates need to go below neutral in latest cycle
• Germany turns to India as their next bet to reduce China reliance
• US MBA mortgage applications w.e. 18 October -6.7% vs -17.0% prior

Markets:

• USD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields up 1.4 bps to 4.219%
• Gold up 0.1% to $2,752.09
• WTI crude down 1.9% to $70.38
• Bitcoin down 1.5% to $66,491

The standout mover on the day is the Japanese yen as it stumbled lower, after an early move in Asia trading as well.

USD/JPY nudged up to near 152.00 in the handover from Asia to Europe and built on that during the session. The pair is now up over 1% to 152.80, holding near the highs. It wasn’t just USD/JPY that moved as it was broad-based yen weakness that prevailed.

Higher yields during the week were a catalyst but that has now led to key technical breaks across multiple yen charts as seen here.

Besides that, the dollar kept firmer across the board as it continues to enjoy a good run in October. EUR/USD dipped lower to test its early August low, not helped by a Reuters report highlighting the potential for the ECB to cut rates quicker and by more than anticipated.

The antipodeans also struggled amid a more dour risk backdrop. Higher yields is weighing on stocks and that in turn is pushing the aussie and kiwi lower. AUD/USD is down 0.5% to 0.6650 with NZD/USD down 0.4% to 0.6020 currently.

Coming up, we have the Bank of Canada policy decision to look out for. The central bank is expected to cut rates by 50 bps to 3.75%, with market odds showing a ~91% probability of such a scenario playing out.

USD/CAD is not too fazed on the day even with oil prices falling further though. The pair is little changed, up just 0.1% to 1.3830 currently and stuck in a 16 pips range.

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

The break below the 200-day moving average (blue line) last week turned the bias in the pair to being more bearish. And sellers reaffirmed that by holding at the key level amid some pushing and pulling towards the end of last week. Flip over to the new week and it’s been rather one-way traffic with the dollar also keeping firmer.

For today though, the euro is also not really helped by this earlier report by Reuters here.

It’s not a direct shift in policy signal by the ECB but it certainly add to the recent dovishness. Money market odds are now showing near 40% probability of a 50 bps rate cut for December. That’s where we’re at right now.

As for the overall outlook, traders are still anticipating roughly five more 25 bps rate cuts by the ECB in the next five meetings through to June next year. So, that is the baseline scenario.

But if economic data continues to worsen and pressure the ECB to pick up the pace on rate cuts, don’t expect the euro to find much comfort amid a divergent outlook with the dollar.

Going back to EUR/USD, the pair is now circling back towards the 1 August low of 1.0777. A break there will see little else standing in the way of a push towards 1.0700 next. The June lows around the region of 1.0666-76 will also be a potential downside target to watch out for.

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

Fundamental
Overview

The Nasdaq has been
consolidating around the all-time high as the lack of catalysts and the
pressure from rising Treasury yields kept the market at bay.

We are now near the US
elections and it’s going to be a major event for the market. A Trump victory
will likely give the stock market a boost on better growth expectations, while
a Harris triumph could be more bearish.

Treasury yields and the
stock market often move in the same direction as long as the move is led by
growth expectations. So, the data, the elections result and the Fed’s reaction
function will be key for the market in the next six months.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq is consolidating around the highs. From a risk management
perspective, the buyers will have a better risk to reward setup around the trendline. The sellers, on the other hand,
will want to see the price breaking lower to start targeting the next major
trendline.

Nasdaq Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent rangebound price action with the 20265 level acting
as support. If the price gets there, we can expect the
buyers to step in with a defined risk below the level to position for a rally
into a new high. The sellers, on the other hand, will want to see the price
breaking lower to pile in for a drop into the trendline around the 19800 level.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here. It’s unlikely that we’ll get a breakout today given
the lack of catalysts. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the US Flash PMIs and the US Jobless Claims figures.

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

• Prior -17.0%
• Market index 214.8 vs 230.2 prior
• Purchase index 131.3 vs 138.4 prior
• Refinance index 672.6 vs 734.6 prior
• 30-year mortgage rate 6.52% vs 6.52% prior

Another week, another plunge in mortgage applications as higher rates continue to weigh on the market. Both purchases and refinancing activity fell sharply with the latter once again sliding hard in the past week.

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