The ranges for the day aren’t overly interesting but the dollar is seen holding a slight edge in European morning trade. It comes as Treasury yields are pushing higher as well, allowing for some light action on the session. USD/JPY is now marked up by 0.3% to 149.95 from a low of 149.10 in Asia earlier in the day.

In the bigger picture, USD/JPY remains pinned closer to the 150.00 mark and that remains a key level to watch. There is also key resistance closer to the 50.0 Fib retracement level and the 100-day moving average (red line) near 150.76 currently. So, that is the bigger technical region in play for now.

Besides that, GBP/USD is down 0.2% to 1.3020 and AUD/USD down 0.2% to 0.6690 currently. The latter is in an interesting spot as it slips back below its own 100-day moving average of 0.6695.

The moves are coming as bond yields are seen nudging higher again today. 10-year Treasury yields are up another 3 bps to 4.116% with 2-year yields at 3.982% on the day. The former is seeing a bounce after testing the 4% mark last week, with bond sellers drawing a line at the key level.

There’s not much else to work with besides flow movement in European trading thus far. The economic calendar to start the week isn’t anything enticing. So, traders will be left to deal with the technical plays and getting a feel of trading sentiment with each passing session.

That until we get the next key catalyst to really move markets. And that might not come until later in the week.

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

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UPCOMING
EVENTS:

• Monday: PBoC LPR.
• Tuesday: Canada PPI.
• Wednesday: BoC Policy Decision.
• Thursday: Australia/Japan/Eurozone/UK/US Flash PMIs, US
  Jobless Claims.
• Friday: PBoC MLF, Tokyo CPI, German IFO, Canada Retail
  Sales, US Durable Goods Orders.

Monday

The PBoC is expected
to cut the LPR rates by 20 bps bringing the 1-year rate to 3.15% and the 5-year
rate to 3.65%. This follows the recent announcement by governor Pan Gongsheng on Friday which aims to
achieve a balance between investment and consumption.

He also added that
monetary policy framework will be further improved, with a focus on achieving a
reasonable rise in prices as a key consideration. China is in a dangerous deflationary spiral and they must do whatever it takes to avoid
Japanification.

Wednesday

The Bank of Canada
is expected to cut interest rates by 50 bps and bring the policy rate to 3.75%.
Such expectations were shaped by governor Macklem mentioning that they could
deliver larger cuts in case growth and inflation were to weaken more than
expected.

Growth data wasn’t
that bad, but inflation continued to miss expectations and the last report sealed the 50 bps cut. Looking ahead, the market
expects another 25 bps cut in December (although there are also chances of a
larger cut) and then four more 25 bps cuts by the end of 2025.

Thursday

Thursday will be
the Flash PMIs Day for many major economies with the Eurozone, UK and US PMIs
being the main highlights:

• Eurozone Manufacturing PMI: 45.3 expected vs. 45.0
  prior.
• Eurozone Services PMI: 51.6 expected vs. 51.4 prior.
• UK Manufacturing PMI: 51.4 expected vs. 51.5
  prior.
• UK Services PMI: 52.4 expected vs. 52.4 prior.
• US Manufacturing PMI: 47.5 expected vs. 47.3
  prior.
• US Services PMI: 55.0 expected vs. 55.2 prior.

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 247K vs. 241K prior, while there’s no consensus for Continuing
Claims at the time of writing although the last week we saw an increase to 1867K vs. 1858K prior.

Friday

The Tokyo Core CPI
Y/Y is expected at 1.7% vs. 2.0% prior. The Tokyo CPI is seen as a leading
indicator for National CPI, so it’s generally more important for the market
than the National figure.

The latest news we
got from the BoJ is that the central bank is likely to mull changing their view
on upside price risks and see prices in line with their view, thus enabling a
later hike.

Therefore, a rate
hike can come only in 2025 if the data will support such a move.

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

aCrude Oil Futures Weekly Forecast: Bears in Control, Watching Key Support Levels

📉 Crude Oil Futures (CL1!) are showing clear signs of bearish momentum, with prices falling sharply in recent weeks. This is reflected in the weekly chart, where the market has consistently respected a long-term descending resistance line (marked in red as the bottom of the triangle) stretching back to the highs seen in 2022.

Key Technical Levels to Watch for Oil:

• Current Price: $68.69 (as of the latest close, down -2.80%)
• Resistance at $78.50: The August 2023 open, just below $78.59, represents a critical resistance area. This level is near prior high liquidity zones and has proven to be a key barrier for crude oil prices, pushing back bullish attempts to rally.

Support Levels in Focus:

1. $67.75 Support Zone: Currently, bears are pusheing prices toward this next key support level – pobably to be tested next. Breaking below $67.75 could open the door for another leg down, with additional targets below.

2. Further Downside Targets:

   • $66.80: A key level being eyed by traders as a potential stopping point after breaking through $67.75.
   • $65.27: If selling pressure continues, this lower support could come into play. Any sustained breach of this zone would likely signify a more significant bearish trend. However, a sustained break down is less likely and even if oil price pierces down the big triangle, expect a bullish reversal.

Bearish Momentum and Indicators:

• The descending red trendline has acted as firm resistance, indicating that sellers remain in control. Multiple attempts to break above this line have failed, leading to the recent retest of lower levels.

• The sharp 9.09% weekly decline highlights increased selling pressure. Unless bulls can defend these key support levels, the bearish outlook remains intact.

Possible Scenarios Moving Forward:

• Bullish Reversal: For a bullish case to emerge, crude oil would need to break decisively above the $78.50 area. However, given the recent failure to sustain upward momentum, this scenario looks less likely in the short term.

• Continuation of Bearish Trend: If the $67.75 support gives way, crude oil could quickly test lower levels at $66.80 and beyond. Any break below $65.27 would solidify a deeper bearish trend, potentially targeting even lower price points as sellers continue to dominate.

So, what should oil traders expect:

Bears remain firmly in control of crude oil futures, and the market is teetering on the edge of a critical support level. Traders should keep a close eye on $67.75, as a breakdown here could lead to further declines. On the flip side, any reversal that pushes prices back above $78.50 would shift the momentum back toward the bulls. For now, the path of least resistance appears to be lower, so caution is advised.

Trade carefully, and stay tuned for more updates from ForexLive.com for additional perspectives and insights! Always trade oil at your own risk only.

This article was written by Itai Levitan at www.forexlive.com.

China sets loan prime rate (LPRs) on Monday, October 21, 2024.

Last month the PBoC cut the 7-day reverse repo rate, and the Medium-term Lending Facility (MLF) rate:

• PBOC 1-year Medium-term Lending Facility (MLF), rate cut to 2% (2.3% previously)

and a matching cut to LPRs is expected tomorrow. Indeed, on Friday PBoC Governor Pan foreshadowed Monday’s rate cut, by 20 to 25 basis points he says.

Current LPRS are:

• 1-year (which most new loans are based on) 3.35%
• 5-year (reference for mortgages) 3.85%

Coming up later in the week from China, on Friday, is the latest Medium-term Lending Facility (MLF). No rate change is expected for this given the cut last month (see link above).

China’s National People’s Congress is yet to come, towards the end of October. Further stimulus measures seem likely from this.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Mon: PBoC LPR
• Tue: NBH Announcement, IMF World Economic Outlook
• Wed: BoC Announcement
• Thu: EZ/UK/US Flash PMIs (Oct)
• Fri: PBoC MLF (TBC), CBR Announcement, Japanese Tokyo CPI (Oct), German Ifo (Oct), US Durable Goods (Sep), US University of Michigan Final (Oct)

PBoC LPR (Mon):

PBoC will announce the latest Loan Prime Rates next week in which Chinese banks are likely to reduce the benchmark lending rates from the current levels after the slew of recent policy support measures by China’s central bank and government departments. As a reminder, China’s Loan Prime Rates were maintained last month with the 1-Year LPR (which most new loans are based on) kept at 3.35% and the 5-Year LPR (reference for mortgages) held at 3.85%, as expected. However, since then, the PBoC have announced a 50bps cut RRR cut and reduced the 7-day reverse repo rate by 20bps to 1.50%, while it also lowered the 1-year MLF rate by 30bps to 2.00% and said it will guide LPRs lower. Furthermore, the PBoC instructed banks to lower interest rates on existing mortgages by October 31st and it was also reported that Chinese banks will reduce rates on as much as CNY 300tln of deposits. This had already set the backdrop for a reduction in the LPRs, while the latest developments further signalled an upcoming cut to the benchmark rates as the major Chinese banks recently lowered interest rates on CNY fixed-rate deposits by 25bps and PBoC Governor Pan noted the LPR is expected to drop by 20bps-25bps on Monday, as well as reiterated that they may further lower RRR this year by 25bps-50bps based on market liquidity.

BoC Announcement (Wed):

The Bank of Canada is expected to cut rates by 50bps to 3.75% on Wednesday, according to 19/29 analysts surveyed by Reuters, while 10 analysts look for a smaller 25bps rate cut. Alongside the rate decision, the latest monetary policy report will be released as well as a speech from Governor Macklem. Remarks from BoC Governor Macklem on 10th September, a week after the BoC cut by 25bps, stated that bigger cuts are possible if the economy and CPI is weaker. The August data was soft, which started to see 50bps being priced in with more certainty, although a strong September jobs report saw money markets price in a 25 or 50bps as a coin flip. Nonetheless, the September inflation data was notably softer than forecast and 50bps bets ramped up. As things stand, money markets are pricing in 48bps of easing at the upcoming meeting, implying a 92% probability of a 50bps cut. The focus of the meeting will largely be on the rate decision, however the statement will be eyed for guidance and how the BoC are explaining the recent soft inflation data. We will also look to the MPR for the BoC’s economic forecasts. Looking ahead, the BoC Business Outlook Survey noted business sentiment remains subdued, while excess capacity is leading to restrained investment and hiring. Firms also expect both wage and price growth to soften. Analysts at RBC note that the recent soft inflation data, coupled with the BOS, sees the desk expect a 50bps rate cut. Looking ahead, the Reuters poll found that there was no clear consensus on what the BoC will do at the December meeting, 10/29 expect rates to finish the year at 3.50%, nine expect rates to at 3.75%, while one analyst sees rates at 4.00% from the current 4.25%.

EZ PMI (Thu):

Expectations are for October’s manufacturing PMI to rise to 45.1 from 45.0, services to pick up to 51.5 from 51.4, leaving the composite at 49.7 vs. prev. 49.6. As a reminder, the prior release saw a decline in the manufacturing print from 45.8 to 45.0, services slip to 51.4 from 52.9, leaving the composite in contractionary territory at 49.6 vs. prev. 51. The accompanying report noted „our GDP nowcast model, which takes into account the PMI indicators, points to only minimal growth.“ This time around, analysts at Investec expect an extension of some of the weakness seen in the September composite metric to follow through into the upcoming report. That being said, the desk acknowledges that there is some scope for stabilisation on the manufacturing front on account of Chinese stimulus efforts. Note, this is unlikely to have any follow-through to the services sector, which instead may be hampered by news of French tax-raising measures. From a policy perspective, given the impact of the prior report on pricing for the ECB’s October meeting, this is very much a tier 1 release for ECB watchers, particularly given the increased importance of the growth outlook at the bank. As such, a soft release could see an acceleration of dovish pricing for the December meeting with a deeper 50bps cut currently priced at around 20%.

UK PMI (Thu):

Expectations are for October’s services PMI to slip to 52.2 from 52.4, manufacturing to fall to 51.3 from 51.5, leaving the composite at 52.4 vs. prev. 52.6. As a reminder, the prior report showed a decline in the services print to 52.4 from 53.7, manufacturing decline to 51.5 from 52.5, leaving the composite at 52.6 vs. prev. 53.8. The accompanying report noted „The September PMI surveys suggest that the UK economy is still on a positive trajectory“. This time around analysts at Investec expect similar themes in the October release to those of September which was characterised by an optimistic picture of the UK economy, albeit with some concerns over the upcoming UK budget. On the latter, the desk notes “if the fear of fiscal tightening turns out to be greater than the net impact of what will be announced, then we could be in store for a rebound in November”. From a policy perspective, a 25bps rate is very much baked in for the BoE’s November meeting. However, a strong report could temper expectations for how fast the MPC will move thereafter with a December cut priced at around 64%.

This article originally appeared on Newsquawk.

This article was written by Newsquawk Analysis at www.forexlive.com.

The major indices are closing higher for the day with the Nasdaq leading the way. The Dow and the S&P are also higher. The small cap Russell 2000 is closing lower but is higher on the week.

The final numbers are showing:

• Dow Industrial Average rose 36.86 points or 0.09% at 43275.91
• S&P rose 23.20 points or 0.40% at 5864.67
• Nasdaq rose 115.94 points or 0.63% at 18489.55
• Russell 2000. – 4.76 points or -0.21% at 2276.09

For the trading week, the major indice rose for the six consecutive week:

• Dow industrial average rose 0.96%
• S&P index rose 0.85%
• NASDAQ index rose 0.80%
• Russell 2000 rose 1.85%

The six week winning streak is the largest since late 2023

This article was written by Greg Michalowski at www.forexlive.com.

• US Sept housing starts 1.354m vs 1.350m expected
• Bostic: Neutral policy rate is in the 3-3.50% range
• Fed’s Bostic: We may see a lull in activity and spending around the election
• Baker Hughes US oil rig count +1
• Fed’s Waller does not comment on monetary policy or the economic outlook
• Biden: Understands how and when Isreal will respond to Iran missile attack
• ECB’s Makhlouf: I do not believe rates should have been cut faster
• Atlanta Fed GDPNow remains unchanged 3.4% for the third quarter
• Putin: A BRICS unified currency is premature

Markets:

• Gold up $27 to record $2719
• US 10-year yields down 2 bps to 4.07%
• WTI crude oil down $1.27 to $69.40
• S&P 500 up 0.3%
• JPY leads, CAD lags

Happy Friday and an especially happy on to the gold bugs, who are being richly rewarded with a 4-day rally and a fresh all-time high. The bids were strong and steady with dips being bought, despite much better sentiment in Chinese equities today (MCHI up 4.4%).

The upbeat mood in China led to a decent retracement in the US dollar and erased most of yesterday’s retail-sales-driven bid. The thinking is that a stronger economy in China will spill over to Europe and world growth, narrowing the gap with the US. The market is also getting excited about 2025 growth in general as equities continue to send positive signals.

The euro rebounded from a two-month low yesterday and gained 33 pips on the day in steady bids up to 1.0864 as the market tries to sniff out a 50 bps cut in December (odds at 23%). Perhaps that reflects optimism that inflation will stay low in light of another decline in oil prices.

The pound climbed back above 1.30 but carved out a minor double top ahead of 1.3075 and that’s a level to watch next week. Last at 1.3042.

Running against the upbeat trend was the loonie, once again. That was largely an oil trade but eyes are also on the Bank of Canada decision next week as the market prices in a 50 basis point rate cut, with the odds now up to 93%.

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

The earnings season heats up a bit next week with Tesla, Boeing, AT&T, and Coca-Cola leading the way.

Monday

After Close:

• SAP (SAP)
• Nucor (NUE)
• Logitech (LOGI)
• Zions Bancorporation (ZION)

Tuesday

Before Open:

• Verizon (VZ)
• General Motors (GM)
• 3M (MMM)
• RTX (RTX)
• Freeport McMoRan (FCX)
• GE Aerospace (GE)
• Lockheed Martin (LMT)
• Sherwin-Williams (SHW)

After Close:

• Enphase Energy (ENPH)
• Baker Hughes (BKR)
• Seagate Technology (STX)
• Texas Instruments (TXN)

Wednesday

Before Open:

• Boeing (BA)
• AT&T (T)
• Coca-Cola (KO)
• Thermo Fisher Scientific (TMO)
• CME Group (CME)
• Boston Scientific (BSX)
• General Dynamics (GD)

After Close:

• Tesla (TSLA)
• Lam Research (LRCX)
• IBM (IBM)
• ServiceNow (NOW)
• Viking Therapeutics (VKTX)
• T-Mobile (TMUS)
• Sands (LVS)

Thursday

Before Open:

• American Airlines (AAL)
• UPS (UPS)
• Southwest Airlines (LUV)
• Nasdaq (NDAQ)
• Carrier (CARR)
• Tractor Supply Company (TSCO)

After Close:

• Dexcom (DXCM)
• Deckers Brands (DECK)
• Western Digital (WDC)
• Skechers (SKX)

Friday

Before Open:

• New York Community Bancorp (NYCB)
• Colgate-Palmolive (CL)
• Piper Sandler (PIPR)

The bigger names are still week or more away:

– Nvidia: November 14- Meta – October 30- Apple – October 31- Amazon – October 31- Alphabet/Google – October 29- Microsoft – October 30-

This article was written by Greg Michalowski at www.forexlive.com.

There are some small wins for seller in the USDJPY from a technical perspective:

• The price stalled ahead of a topside trend line yesterday on the hourly chart (see chart above) . The inability to get to the level is a small negative.
• The price fell below an upward-sloping trend line on the hourly chart above near 149.61
• The price fell below the 100-hour MA at 149.61
• The price run-up to extend above the 150.00 level, but only extended to 150.313 before rotating back to the downside.
• The move higher fell short of the 50% midpoint of the move down from the July high at 150.757 (see daily chart below).
• It also fell short of its falling 100-day moving average just above that level on the daily chart (see chart below).

Those are little chinks in the bullish bias that may be a downward clue.

What has not happened that would increase the bears control at least in the short term?

• The swing high from August 15 comes in at 149.356. The price has tested that level, but has NOT broken below the level (see 4-hour chart below).

• The price has NOT broken below the rising 200-hour MA at 149.242 (and moving higher). The price has not traded below that MA since October 2 (see the green line on the hourly chart).

The little breaks and bearish nuances are good news for sellers looking for more downside, but there is more work to do.

Nevertheless, if the price can stay below the 100-hour moving average 149.610 (and broken trend line at the same level) , the sellers have some hope for the start of something more/some more downside probing in the new week.

Fundamentally, if the BOJ sees more global stability. If China starts to show signs of bottoming or if China continues to stimulate. If the BOJ hints of more hikes to come, there could be a reversal. Also if US growth starts to weaken from strength or the Fed continues to recalibrate, the USDJPY can also correct lower (or reverse back down).

This article was written by Greg Michalowski at www.forexlive.com.