Here is a reminder from two years ago what the other side of that trade looks like. In October 2022, the gilt market blew up and that led to the ouster of Liz Truss while the market puked to the lows of the year when US CPI rose to 8.2% y/y.

But the doom and gloom proved to be a buying signal as this article showed, published exactly two years ago.

What were we doing in October 2022. Here is what I wrote on the day of the exact bottom at 3505 as the selling began to reverse intraday, resulting in a 5% intraday move:

What I can tell you is that there’s no mystery headline behind it.

There’s
no easy answer to explain the market moves. One thing I would highlight
is that sentiment right now is as negative as it’s been since 2008.
There aren’t many bulls out there and people are feeling pain. The
liquidation trades in utilities and telecom show mom & pop puking
stocks, which is generally a sign of the bottom.

Along
the same lines, JPMorgan was talking about a 5% decline in stocks if
CPI was hot today. When serious people are talking about a 5% daily
fall, sentiment is awful.

So the best you could
say is that this is something of a short squeeze or those on the
sidelines with cash stepping in. The UK pension system also doesn’t seem to be imploding so the ‚Fed will hike until something breaks‘ crowd will have to move onto the next target.

Now it was tough to maintain conviction at the very bottom and few people were hammering the bid but the lesson going forward is that you want to look for horrible sentiment at the bottom and euphoria at the top.

Also if you go back two years, this was something I was repeatedly pointing to, when almost no one else was watching it.

The bad news is that euphoria is tougher to spot than capitulation and fear, it can also last longer. Still, I don’t think we’re there yet and here is the recent bullish indicator from the same AAII survey.

I think the fear-and-greed index is probably a better one for tops but I think it’s a good time to tune into sentiment and these kinds of things.

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

• Weekly update on interest rate expectations
• Gold Technical Analysis – Yet another all-time high
• USD/JPY lower on the day but buyers stay in control for now
• Japan’s largest union group Rengo targets wage hikes of at least 5% for next year
• BOJ governor Ueda remarks that Japanese economy is recovering moderately
• UK September retail sales +0.3% vs -0.3% m/m expected
• Eurozone August current account balance €31.5 billion vs €39.6 billion prior
• North Korean troops reportedly shipped to Russian bases for training and likely for combat

Markets:

• GBP leads, CHF lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 1.2 bps to 4.108%
• Gold up 0.6% to $2,709.82
• WTI crude down 0.4% to $70.40
• Bitcoin up 0.6% to $67,809

It was another quiet session with some light market moves at best before we get into the final stretch of the week.

The dollar is slightly on the softer side but remains in prime position to try and build on the gains so far in October. EUR/USD is up slightly by 0.2% to 1.0850 while GBP/USD is up 0.3% to 1.3045 on the day. The latter was helped by stronger UK retail sales data as well, with the pair briefly touching a high of 1.3071 earlier.

Besides that, USD/JPY saw a quick whipsaw from 149.85 to 149.58 on the back of some BOJ headlines which reaffirmed that the central bank will stay sidelined in October. The pair was then quickly bought back up to keep around 150.00 now, down 0.1% on the day.

The antipodeans are also up slightly with Chinese stocks having rallied back alongside the yuan earlier in the day. A more positive risk mood is also helping, with European indices pulled higher alongside US futures during the session.

There weren’t any major headlines to guide markets, so this is all roughly a continuation of sentiment during the month. Take gold for example, as it runs up above $2,700 to fresh record highs once more.

The dollar might be down slightly but it doesn’t take away from the upside momentum in the weeks before, at least not yet.

Have a great weekend, everyone.

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

When put into context to the near-term chart below, the quick 30 pip drop earlier isn’t that meaningful. As our reader Alex pointed out, there were some headlines noting that the BOJ is said to see „little need to rush an October rate hike“ and that they are „mulling a change to their view on upside price risks“. But here’s a look at how things are playing out on the hourly chart for the pair:

Sellers did try to wrestle back some momentum earlier in the week but were thwarted in their attempts to push below 149.00. Since then, the 100-hour moving average (red line) has returned back to be a key near-term support level for the pair. And it looks to be doing the job again now amid the drop earlier.

Hold above and buyers will continue to keep a more bullish near-term bias. But break below and sellers will start to come back into the picture again. But just be wary that we are closing in on key resistance points as well the longer price action holds up here.

The 100-day moving average is seen at 150.81 currently and has already made a crossover back under the 200-day moving average as noted here at the time.

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

The bullish momentum in the
US Dollar seems to be waning as GBPUSD couldn’t print a new low despite another
set of strong US data. In fact, the US Retail Sales beat expectations across the board
by a big margin and the US Jobless Claims came out much better than expected.

One caveat is that the
market has now priced out the aggressive rate cuts expectations and it’s almost
perfectly in line with the Fed’s projections. Therefore, we will likely need stronger
US data and especially signs of a pickup in inflation to see the market pricing
in an earlier pause in the Fed’s easing cycle.

The next big risk events
will be in November when we get the October data, the FOMC policy decision and
the US election.

On the NZD side, the New
Zealand Q3 CPI this week missed expectations solidifying the market’s view
for another 50 bps cut at the upcoming meeting and even pricing 12% chance of a
75 bps move.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD is consolidating around the key 0.6050 support zone. This is where we can expect the buyers
to step in with a defined risk below the support to position for a rally into
the 0.6217 resistance. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the 0.5850 support next.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action as the bearish momentum waned. We
have the 0.61 handle acting as resistance here so a break above it will likely
see the buyers increase the bullish momentum into the 0.6217 resistance.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much more we can glean from this timeframe as the market participants will
likely keep on playing the range until we get a breakout. The red lines define
the average daily range for today.

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

Just a bit of a geopolitical update as it looks like North Korea is now getting involved with the war between Russia and Ukraine. It is being reported that North Korean troops have been shipped to Russian bases in the far east for training and adjustment. Following which, they will likely be subsequently „deployed for combat“.

Besides that, North Korea is also said to have sent artillery shells, anti-tank rockets and ballistic missiles to Russia.

Earlier in the day, Ukraine president Zelensky warned that North Korea will be sending „about 10,000 soldiers“ for the cause.

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

The bullish momentum in the
US Dollar seems to be waning as GBPUSD couldn’t print a new low despite another
set of strong US data. In fact, the US
Retail Sales beat expectations across the board by a big margin and the US
Jobless Claims came out much better than expected.

One caveat is that the
market has now priced out the aggressive rate cuts expectations and it’s almost
perfectly in line with the Fed’s projections. Therefore, we will likely need stronger
US data and especially signs of a pickup in inflation to see the market pricing
in an earlier pause in the Fed’s easing cycle.

The next big risk events
will be in November when we get the October data, the FOMC policy decision and
the US election.

On the GBP side, we got the
UK CPI report this week where the data missed
expectations across the board and prompted the market to expect another 25 bps
cut in December. This morning, we got strong UK
Retail Sales figures which boosted the GBP.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD failed to break below the 1.30 handle and eventually bounced
higher despite strong US data. The buyers are stepping in around these levels
to position for a rally back into the 1.3265 level. The sellers will want to see
the price breaking lower to extend the drop into the major trendline.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we got a nice spike upward this morning following the UK retail sales
data but got rejected from the downward trendline. The buyers will need the price
to break above the trendline to start targeting new highs, while the sellers
will likely continue to lean on it to position for new lows.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price is bouncing around a strong support zone around the 1.3035
level where we can find the confluence of the previous swing level and a minor
upward trendline.

The buyers will likely pile
in around these levels to target a break above the major downward trendline,
while the sellers will look for a break lower to increase the bearish bets into
the 1.29 handle. The red line define the average daily range for today.

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

• AUD/USD advance after jobs data held back by key technicals for now
• AUDUSD Technical Analysis – Breakout or fakeout?
• ECB the main event on the agenda in the session ahead
• China says have invited EU technical team over for next phase of EV negotiations
• US must have healthy relationship with China based on level playing field – Yellen
• Eurozone September final CPI +1.7% vs +1.8% y/y prelim
• Eurozone August trade balance €4.6 billion vs €21.2 billion prior
• Switzerland September trade balance CHF 4.95 billion vs CHF 4.58 billion prior

Markets:

• AUD leads, CAD lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields up 1.8 bps to 4.033%
• Gold up 0.5% to $2,687.18
• WTI crude up 0.2% to $70.56
• Bitcoin down 1.0% to $66,912

It was a session bereft of any major headlines and market moves were relatively light as well overall.

In FX, the aussie largely held its gains from Asia Pacific trading following a hotter jobs report. AUD/USD was marked up to a high of 0.6710 then before keeping around 0.6680-90 in European morning trade. The pair is now up 0.5% to near 0.6700 with large option expiries and a couple of key technical levels in play.

Besides that, the action elsewhere among major currencies is relatively muted. The dollar remains steady, keeping in a decent spot after the gains in the past few weeks. EUR/USD is little changed at 1.0865 and USD/JPY flat at 149.60 currently.

In the equities space, European indices are nudging higher with French stocks bouncing back after the budget worries yesterday. UK stocks are also following up the gains from yesterday with the FTSE 100 seen up 0.4%. This comes with US futures also looking in a better mood, looking to scale back towards record highs again.

Elsewhere, gold is tracking higher again as it clips fresh record highs at $2,687 at the moment. The gold train marches on.

Coming up next, we have the ECB where a 25 bps rate cut is very much expected before we move on to US trading.

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

The US Dollar has been
gaining ground across the board this week despite the lack of economic data and
lower Treasury yields, essentially moving forward by inertia.

Stanley Druckenmiller said
in an interview yesterday that the market is already positioning for a Trump
victory given the moves in some stocks like DJT for example.

That could explain the
recent USD strength as it should appreciate on higher growth and less rate cuts
expectations. Nevertheless, not all markets have been in sync with this view,
so it could be just noise.

For now, we can only work
with data and today we get the US retail sales and jobless claims figures which
will likely be market moving. The key events though will be in November when we
get the October data and the US election.

On the AUD side, the Australian
labour market report today beat expectations across the board by a big
margin. Although it didn’t change much in terms of interest rate expectations,
it reinforces the RBA’s hawkish stance.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD is getting closer to the 0.6622 level. 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 back into the 0.68 handle. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
0.64 handle next.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price is tentatively breaking above the downward trendline. The sellers will likely keep on defending
the 0.67 handle but if the buyers manage to break higher, we might see a rally into
the 0.6750 level next.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action with the spike higher on the strong Australian
jobs report. There’s not much else we can add here as the buyers will look for
a break above the 0.67 handle, while the sellers will likely lean on it to
position for new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Retail Sales and US Jobless Claims data.

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

• Sweeping, untargeted tariffs would raise prices for US households
• There is a growing international consensus that China must shift its economic practices
• China policies are leading to industrial overcapacity, threatening US firms and workers

All I see there is that if Trump wins the election and locks horns with China, it is likely to stoke inflation pressures. Expect that to be one of the potential election trade in the weeks ahead. That will not only impact the dollar based on the Fed outlook but also broader risk sentiment too.

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

The US Dollar has been
gaining ground across the board this week despite the lack of economic data and
lower Treasury yields, essentially moving forward by inertia.

Stanley Druckenmiller said
in an interview yesterday that the market is already positioning for a Trump
victory given the moves in some stocks like DJT for example.

That could explain the
recent USD strength as it should appreciate on higher growth and less rate cuts
expectations. Nevertheless, not all markets have been in sync with this view,
so it could be just noise.

For now, we can only work
with data and today we get the US retail sales and jobless claims figures which
will likely be market moving. The key events though will be in November when we
get the October data and the US election.

On the CAD side, the latest
Canadian
CPI missed expectations and sealed the 50 bps cut at the upcoming meeting
with the market seeing now a 73% probability from 48% before the inflation
report.

The Loonie appreciated
following the data release although that might have had to do more with a “sell
the fact” reaction as the market priced in already a very aggressive rate cuts
path for the BoC.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD fell below the key 1.3785 level following the Canadian CPI report.
The sellers will likely keep on stepping in around this level to position for a
drop into the 1.36 support,
while the buyers will look for a break higher to increase the bullish bets into
the 1.39 handle next.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price broke below the steep trendline that was defining the strong
bullish momentum. The sellers piled in on the break to position for new lows
and the price is now testing again the 1.3785 level. The buyers will want to
see the price breaking higher to start targeting new highs.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the resistance zone around the 1.3785 level. There’s not much
else to add here as the buyers will look for a break higher, while the sellers
will step in for a move lower. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Retail Sales and US Jobless Claims data.

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