• ECB’s Schnabel: If risks materialize, further rate hikes may be necessary
• Halifax says downward pressure on UK house prices likely to last into next year
• German industrial orders rebounded in August
• Italy August retail sales -0.4% vs +0.4% prior
• Mohamed El-Erian on 2 factors that makes a US recession more likely
• JPMorgan’s Marko Kolanovic is preparing for a possible 20% drop in the S&P 500

Markets:

• Gold up $1 to $1821
• US 10-year yields up 2.9 bps to 4.74%
• WTI crude oil up 18-cents to $82.48
• S&P 500 futures up 0.2%
• GBP leads, JPY lags

The news was mostly positive in Europe as German industrial orders rebounded from a dreadful July and Schnabel kept the door open to rate hikes, though the later may have only served to reinforce that it will take a surprise to jar the ECB from the sidelines.

The euro was under some pressure early in Europe as the dollar strengthened broader but it’s since turned around and is trading at the highs of the day. The pound also has some momentum in its third day of gains.

The yen is weaker though as global yields tick higher again. Perhaps the most-intriguing news is that President Biden scheduled an appearance to talk about the jobs report at 11:30 am ET. That’s the kind of thing a President would do to take a victory lap after a good report.

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

It’s likely a fool’s errand to try to make sense of price action in the hour before the non-farm payrolls report but USD/JPY is at the highs of the day, up 58 pips to 149.09. It’s getting help from a 3.4 bps rise in 5-year yields to 4.71% the rest of the curve is up 2.5-3.5 bps as well.

The pair is starting to brush against some post-intervention highs but continue to run to 149.31 and those surely won’t be tested before non-farm payrolls. Afterwards, a strong jobs report would leave some room to the upside before the 150.00 level puts intervention back on the agenda.

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

Despite the strength in the US data this week and
another beat in Jobless Claims
yesterday, the Nasdaq Composite didn’t sell off like we saw in the past week.
The index is hovering around a key support level and it looks like the soft
landing vibes might be returning now that the hangover from the more hawkish
than expected FOMC dot plot might be in the rear view mirror.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite continues to consolidate around the key support at
13174. It’s all bout having the patience to wait for a clear breakout with the
target on the upside standing at the downward trendline around
the 13800 level and on the downside at the 12274 support.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the recent
rally got rejected from the red 21 moving average and the
38.2% Fibonacci retracement level. The
lack of a follow through from the rejection, and the consolidation around the
support level might be a signal that the Nasdaq Composite could be about to
start a correction to the upside.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely that we have a clear range between the low around the 12965 level and
the resistance at the 38.2% Fibonacci retracement level. In such instances, the
best strategy may be to wait for a clear breakout and go with the flow, but one
can also “play the range” by selling at resistance and buying at support.

Upcoming
Events

Today it’s all about the NFP report which is the only one the Fed will
see before its next rate decision. The US jobs data going into the NFP was
strong, so the expectations might be skewed to the upside.

This article was written by FL Contributors at www.forexlive.com.

The US dollar continues to lose ground ahead of today’s non-farm payrolls report. That’s helped to boost EUR/USD up to 1.0558.

For the 10am NY cut, there are some huge expiries today, both in the 1.0650 range and 1.0450 range.

The euro options expirations aren’t the only notable ones with some big Aussie numbers rolling off, particularly at 0.6400, which will surely be in play with AUD/USD trading at 0.6365.

Details:

• EUR/USD: 1.0450 (3.4B), 1.0500-10 (2.5B), 1.0550-60 (2.7B)
  1.0575-80 (1.2B), 1.0600 (900M), 1.0640-50 (3.4B), 1.0685 (2.8B)

• USD/CHF: 0.9030 (800M), 0.9160 (600M), 0.9250 (300M)
• EUR/GBP: 0.8610 (350M), 0.8785 (400M)
• GBP/USD: 1.2100 (400M), 1.2175 (814M), 1.2200 (850M), 1.2225 (1B)
  1.2250 (485M)
• AUD/USD: 0.6300 (1.5B), 0.6350 (700M), 0.6380-85 (1.3B)
  0.6390-0.6400 (4.3B)
• NZD/USD: 0.5880-90 (640M), 0.5940 (200M), 0.5990-95 (600M)
• USD/CAD: 1.3625 (1.5B), 1.3665 (680M), 1.3750 (340M)
• USD/JPY: 148.75 (360M)
  149.00 (895M), 149.35-50 (2.5BLN), 150.00 (2.1BLN)

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

US:

• The Fed left interest rates unchanged as
  expected at the last meeting.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also with
  another strong beat in Jobless Claims
  yesterday and with the beat in Job Openings.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The miss in the ADP report led to
  some USD weakness which might continue if the NFP data misses forecasts.
• The market doesn’t expect the Fed to hike again at
  the moment.

Australia:

• The
  RBA kept interest rates unchanged as expected as they are seeing inflation
  returning to target with the current level of interest rates.
• The
  latest monthly CPI showed that core inflation is
  slowing.
• The
  labour market is weakening as we got a big miss
  in July and the bulk of jobs added in August were part time.
• The
  Australian Manufacturing PMI fell further into contraction while
  the Services PMI jumped back into expansion.
• The
  market expects the RBA to hold rates steady at the next meeting as well.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the AUDUSD pair
recently broke out of the range and pulled back into the broken support now turned resistance which
might end up in a classic “break and retest” pattern. This is where the sellers
should step in with a defined risk above the resistance to
target the 0.6168 level.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have also
the 38.2% Fibonacci retracement level
for confluence and the
price is indeed reacting to the resistance as we already got a double
rejection, which might end up in a double top pattern.
The buyers will want to see the price breaking higher to invalidate the bearish
setup and position for a rally back into the 0.6500 resistance.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a trendline that
should confirm the bearish setup in case the price breaks below it. In fact, we
can expect more sellers to pile in on a break while the buyers should fold,
ultimately increasing the bearish momentum. The buyers, on the other hand, are
likely to lean on the trendline to position for a rally into the 0.65
resistance.

Upcoming Events

Today it’s all about the NFP report which is the only one the Fed will
see before its next rate decision. The US jobs data going into the NFP was
strong, so the expectations might be skewed to the upside.

This article was written by FL Contributors at www.forexlive.com.

US:

• The Fed left interest rates unchanged as
  expected at the last meeting.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also last
  week with a strong beat in Jobless Claims and this
  week with the beat in Job Openings.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The miss in the ADP report
  yesterday led to some USD weakness which might continue if the data in the next
  couple of days misses as well.
• The market doesn’t expect the Fed to hike again at
  the moment.

UK:

• The BoE kept interest rates unchanged at the last meeting.
• The central bank is leaning more
  towards keeping interest rates “higher for longer” but it kept a door open for
  further tightening if inflationary pressures were to be more persistent.
• Key economic data like the latest employment report showed a very high wage growth
  despite the rising unemployment rate, but the latest UK CPI missed expectations across the board.
• The latest UK PMIs showed further contraction, especially in the
  Services sector.
• The market doesn’t expect the BoE to
  hike anymore.

GBPUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the GBPUSD pair
pulled back yesterday into the blue 8 moving average where
it’s finding some resistance. From a risk management perspective, the sellers
would have a much better risk to reward setup if the price pulled back all the
way up to the 1.2398 resistance where we
can find the confluence with the trendline, the
38.2% Fibonacci retracement level
and the red 21 moving average. The buyers, on the other hand, will need the
price to break above the trendline to turn the trend around.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the latest 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 minor trendline around the
1.2180 level where we can also find the Fibonacci retracement levels. The price
started to struggle here as the sellers are stepping in with a defined risk
above the trendline and positioning for more downside. The buyers will need the
price to break above the trendline to pile in with greater conviction and
target the resistance around the 1.2308 level.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
market structure on this timeframe is bullish as the price made a new higher
high yesterday. The buyers are likely to pile in around the 1.2100 support with
a defined risk below it to target a break above the trendline and ultimately
the 1.2308 resistance. More conservative buyers may want to wait for the price to
take out the trendline first before joining the rally. The sellers, on the
other hand, will want to see the price breaking below the 1.2100 support to
position for further downside and new lows.

Upcoming Events

Today we have the Jobless Claims report, which
continues to show a solid labour market and given the reaction to the miss in
the ADP yesterday, we can expect a rally in case of a miss and a drop in case
of a beat. Tomorrow, it will be the time for the NFP report which is the only
one the Fed will see before its next rate decision.

This article was written by FL Contributors at www.forexlive.com.

• Prior 75.15k

US-based employers announced 46,457 job cuts last month, down roughly 37% from the 75,151 job cuts announced in August. However, this is still a roughly 58% increase in layoffs compared to September last year and continues the trend of rising job cuts i.e. early signs of softening in the labour market.

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

US:

• The Fed left interest rates unchanged as
  expected at the last meeting.
• The macroeconomic projections were revised higher
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully as
  they are trying to find the optimal level of rates. Powell also added that the
  soft landing is not the base case at the moment, although they are aiming for
  it.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market
  displayed signs of softening although it remains fairly solid as seen also last
  week with a strong beat in Jobless Claims and this
  week with the beat in Job Openings.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The miss in the ADP report
  yesterday led to some USD weakness which might continue if the data in the next
  couple of days misses as well.
• The market doesn’t expect the Fed to hike again at
  the moment.

EU:

• The ECB hiked by 25 bps at the
  last meeting and added a line in the statement that hinted to the end of the
  tightening cycle.
• President Lagarde didn’t push back against the idea
  of them having reached already the terminal rate and highlighted the slowdown
  in Eurozone economy.
• The Eurozone CPI missed
  across the board last week supporting the ECB’s stance.
• The labour market remains
  very tight with the unemployment rate hovering at record low levels.
• Overall, the economic data lately has been showing
  signs of fast deterioration in the economy.
• Most ECB members are leaning towards keeping rates
  higher for longer now.
• The market doesn’t expect the ECB to hike anymore.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the EURUSD pair
has pulled back recently with the miss in the ADP report yesterday giving it a
bit of relief after a series of strong US data. From a risk management
perspective, the sellers would have a much better risk to reward setup shorting
from the resistance around
the 1.0620 level where we have the confluence with the
trendline, the
38.2% Fibonacci retracement level
and the red 21 moving average. The
buyers, on the other hand, will need the price to break above the trendline to
change the trend around.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a divergence with the
MACD right
around the key 1.05 support. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, we might see a pullback
into the previously mentioned 1.0620 resistance zone, so the buyers are likely
to pile around here to position for a rally into the resistance.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
market structure on this timeframe is bullish as the price has made a new
higher high and the moving averages have crossed to the upside. The buyers
should lean on the support around the 1.0495 level with a defined risk below it
to target the 1.0620 level. More conservative buyers may want to wait for the
price to break above the recent high at 1.0532 before joining the rally. The
sellers, on the other hand, will want to see the price breaking below the
1.0495 support to pile in again and extend the drop to new lows.

Upcoming Events

Today we have the Jobless Claims report, which
continues to show a solid labour market and given the reaction to the miss in
the ADP yesterday, we can expect a rally in case of a miss and a drop in case
of a beat. Tomorrow, it will be the time for the NFP report which is the only
one the Fed will see before its next rate decision.

This article was written by FL Contributors at www.forexlive.com.

• It is below what we would have expected last year

This is in part one reason why the ECB has to be careful so as to not tighten financial conditions any further, more so when economic conditions are also weakening considerably. From July: Eurozone firms‘ demand for credit falls to lowest on record in Q2

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

• There are clear signs that rate hikes are having an impact
• But perhaps it may be that the effect is weaker than in the past or still delayed
• Sees UK inflation reaching target in 2 years‘ time

The BOE is in a rather unenviable spot right now. They are starting to move to the sidelines but are worried that they may not have done enough in the inflation fight. Adding to that is a worsening economy amid the rise in recession risks and further tightening could risk a hard landing going into next year.

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