This marks the 22nd straight month that the index sits below its 50-year average of 98. As such, it reaffirms that small business sentiment is still struggling somewhat and that most of the growth in the US economy is powered by the strong consumer again. Of note, 22% of business owners are still reporting that inflation is their single most important problem – down 1% from September.
This article was written by Justin Low at www.forexlive.com.
AUD
AUDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that AUDUSD rejected
the key resistance around
the 0.65 handle and erased all the gains seen after the FOMC and the NFP
report. The pair has been ranging for months as the uncertainty in the market
remains high. We will likely need some strong fundamental catalyst to trigger a
more sustained trend.
AUDUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the selloff
from the key resistance found some support around the upward trendline and the
0.64 handle, but eventually the price fell below it triggering even more
selling. The price since then pulled back into support now turned resistance where
the sellers stepped in once again with a defined risk above the level to
position for another drop into the lows.
AUDUSD Technical Analysis –
1 hour Timeframe
On the
1 hour chart, we can see that the last leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got a pullback into the resistance, but the break
above the trendline is making things less clear. We should now have a mini
range between the 0.64 resistance and the 0.6365 support. A break on either
side is likely to lead to a more sustained move with the buyers targeting the
0.65 handle on the upside and the sellers targeting the 0.63 handle on the
downside.
Upcoming Events
This week we have some top tier economic releases. We
begin today with the US CPI report which might be one of the most important
events of the week. Tomorrow, we have the Australian Wages data and later in
the day the US Retail Sales and PPI reports. On Thursday, we conclude with the
Australian labour market report and the latest US Jobless Claims figures.
This article was written by FL Contributors at www.forexlive.com.
The headline remarks points to the ongoing narrative that they are keeping the door open just in case inflation is stickier than expected. That is the playbook now for all major central banks, with the Fed taking the lead.
This article was written by Justin Low at www.forexlive.com.
This will be a much anticipated meeting as Kishida had previously touted for big wage hikes next year that will exceed what we have seen this year. Considering what is at stake, this is something worth keeping an eye out for as it tees up the upcoming spring wage negotiations next March. In turn, that will act as a cornerstone for the BOJ to start normalising monetary policy.
The meeting tomorrow will involve representatives from Japan’s largest labour group, Rengo, and business lobby, Keidanren, alongside other business leaders and labour unions.
This article was written by Justin Low at www.forexlive.com.
The movement among major currencies has been rather dull in European morning trade but the dollar is losing some slight ground now against the euro and pound notably. EUR/USD is up 0.3% on the day to 1.0726 while GBP/USD is up 0.2% to 1.2305 currently. The moves aren’t much but it reaffirms the more bullish near-term bias in the former at least.
As seen in the chart above, buyers have been stepping in at the 200-hour moving average (blue line) to prevent any break of the upside momentum since Friday. But overall, the pair is still largely consolidating in and around the 1.0700 mark ahead of the US CPI data later today.
The next key technical upside level to watch will be the confluence of the 100 and 200-day moving averages at 1.0790-01.
Barring any surprises, the data later today should not offer much of an impetus for the dollar to melt away to that level. But if anything else, keep an eye out on the bond market and Treasury yields as any major moves there will have a spillover impact instead.
Besides the above, there’s not much else happening so far in the major currencies space as other dollar pairs remain more muted currently.
This article was written by Justin Low at www.forexlive.com.
They need to play it this way in order to keep the door open to more rate hikes, or at least keep up that appearance. But for now, as the economy moves to the brink of a recession, the timing to tighten policy further would not be the best suited.
This article was written by Justin Low at www.forexlive.com.
At some point last week, it looked like the bond market rally was about to get going again. And then we got a turn on Thursday and Friday, and suddenly traders aren’t sure anymore that the rally would be a sustainable one. So, what’s the verdict right now as we get into the new week?
Things are looking more tentative as we await key US data releases in the coming days. The big one is the consumer price inflation report tomorrow but barring any surprises, there shouldn’t be much change to the Fed outlook right now.
Markets are anticipating the first rate cut at around June to July and that is actually not too much different from two months ago. In fact, the implied rate shown on the curve right now is higher than it was back then:
As much as it looks like traders are kicking back after months of angst amid the rout and selling, the fundamental picture hasn’t really changed. The Fed is still on course to keep interest rates higher for longer and there is still the risk of them doing more if inflationary pressures are not receding as much as they’d like heading into next year.
However, the key factor driving yields higher is arguably the flood of supply of Treasuries. And even though the quarterly refunding announcement was not as bad as feared, the trend is still set to continue. There will be more bonds coming into the market and that will make for more waves of supply in the months ahead. The Fed and US Treasury are not going to change that.
Taking that into consideration, there will always be a counter-force to keep the selling pressure in Treasuries and prop up yields.
Right now, it looks like we might be caught in a bind between 4.50% and 5.00% for 10-year yields as seen in the chart above. But the longer it takes for this latest rally to stamp their mark and break any significant levels, it seems that there will be an increasing likelihood that we get to revisit 5% yields again at some point in the weeks ahead.
I mean, 2-year yields itself are still hanging in there at 5.05% today. If anything, that shows the latest rally in bonds hasn’t really accomplished anything too notable just yet.
This article was written by Justin Low at www.forexlive.com.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones last
Friday broke above the key trendline and the resistance around
the 34100 level. Given that it wasn’t supported by any bullish catalysts, this
breakout might turn into a fakeout, so the buyers must be extra careful going
forward.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the
breakout. In case we get a pullback into the broken resistance, the buyers will
likely step in with a defined risk below the resistance turned support and
target another extension to the upside. The sellers, on the other hand, will
want to see the price breaking below the support to confirm the fakeout and
pile in for a drop into new lows.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the Friday’s
rally is diverging with
the MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, if we get a pullback, the buyers should pile in around
the support, but if the price breaks below it, the reversal would be confirmed,
and the sellers will regain control.
Upcoming Events
This week we have some top tier economic releases. We
begin tomorrow with the US CPI report which is going to be one of the most
important events of the week. On Wednesday, we have the US Retail Sales and PPI
data, while on Thursday we conclude with the latest US Jobless Claims figures.
This article was written by FL Contributors at www.forexlive.com.
Major currencies are not doing much so far on the session as the overall market mood remains rather tentative to start the new week. Treasury yields are little changed while equities are displaying a more mixed picture in European morning trade. Regional indices are higher but playing catch up to Wall Street gains on Friday, while US futures are pointing lower as investors check back after the Moody’s downgrade on the US outlook after the close last week.
That is not leaving much for FX to work with, as the dollar sits little changed and more mixed at the moment. USD/JPY continues to hold just a touch higher at 151.73 while EUR/USD is also up 0.1% to 1.0688, though the latter is holding within just a 20 pips range today. Talk about a snoozer, eh?
It’s all about key US data releases coming up later in the week and I reckon we won’t get much action later today as well. The consumer price inflation report tomorrow is the big one to watch of course, as traders will use that as a guide to reaffirm any biases from last week.
For now, it’s shaping up to be a slower and diffident start to proceedings this week. Here’s the snapshot at the moment in FX (which is not much different from when we began the day here):
This article was written by Justin Low at www.forexlive.com.
After a big jump in new loans at the end of Q3, there is a bit of a dip in October (likely seasonal factors) but it comes in above estimates. This is also still higher than the same period a year ago, which saw ¥615.2 billion in new loans then. Overall, it still shows that China is maintaining support for the economy as outstanding yuan loans are seen roughly 11% higher than October last year.
This article was written by Justin Low at www.forexlive.com.