ECB: -25 basis points of easing implied for October 17th meeting (100% probability implied for a cut)

BoC: -32 basis points of easing implied for October 23rd meeting (100% probability implied for a cut)

BoJ: 1 basis point of tightening implied for the October 31st meeting (87% probability implied for a hold)

RBA: -2 basis points of easing implied for the November 5th meeting (91% probability implied for a hold)

BoE: -21 basis points of easing implied for the November 7th meeting (84% probability implied for a cut)

Fed: -22 basis points of easing implied for the November 7th meeting (88% probability implied for a cut)

RBNZ: -45 basis points of easing implied for the November 27th meeting (100% probability implied for a cut – almost fully priced for another 50bp move)

SNB: -30 basis points of easing implied for the December 12th meeting (100% probability implied for a cut)

This article was written by Arno V Venter at www.forexlive.com.

• Riksbank’s Bunge says more confident that high inflation is behind us
• China’s Premier Li vows stronger policy coordination with timely implementation
• PepsiCo expect higher borrowing costs to impact consumer spending
• ECB’s Centeno: Inflation in the Euro Area converged towards goal
• US September NFIB small business optimism index 91.5 vs 91.2 prior
• Japan’s Akazawa says wage-price cycle progressing but full shift not yet achieved
• ECB’s Elderson: We will continue to gradually ease our restrictive stance
• Chinese equities remains close to session lows
• ECB’s Nagel: Open to October rate cut
• ECB’s Vaslle says a rate cut in October is an option
• Sour mood for risk sentiment this morning
• Iran’s FM to visit Saudi Arabia and regional nations to address escalating tensions
• More from Fed’s Kugler: The Fed is looking at trends in the labour market, not single data
• ECB’s Kazaks: Data points to October rate cut
• Fed’s Kugler: Support additional rate cuts if progress on inflation continues
• The @Newsquawk Europe Market Open: China’s NDRC press conference met with disappointment
• French Trade Balance data for August reveals a shortfall, impacting Exports
• What are the main events for today?
• Iran Warns Israel of Stronger Retaliation if Attacked Amid Rising Tensions
• German Industrial Production Beats Expectations at 2.9% Rise in August
• ECB Elderson Warns of Materialising Risks to Economic Growth Ahead of Key October Meeting
• Fed’s Williams Signals More Rate Cuts Ahead After September Reduction
• China’s Economic Planner Confident in Achieving 2024 Goals Despite Complex Challenges

It’s been another quiet session in terms of data releases. The only notable data point was the US NFIB Small Business Optimism index which ticked higher compared to the prior month.

We had also many ECB speakers confirming a rate cut in October which the market has already priced in weeks ago. The price action in the FX market remains rangebound as we continue to wait for the US CPI release on Thursday.

In the equity space, the Chinese markets continue to trade around the daily lows while the US and European markets have been grinding higher.

In the commodities space, crude oil is down 1.88% on the day since the peak hit in the overnight session at $78.46 with the pullback in the Chinese equities being the likely culprit. Copper is another big loser as it’s been even more sensitive to the Chinese markets lately. Gold, on the other hand, remains rangebound as the recent rally in real yields continues to weigh on the market.

The American session will be empty in terms of key data releases and the Fedspeak will take the centre stage once again as we get Fed’s Bostic and Fed’s Collins speaking.

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

• Libya’s NOC says daily production reached 1,133,133 BPD of crude oil and condensate in the last 24 hours – Statement.
• Libya’s NOC says recovery comes just days after the lifting of the force majeure – Statement.

This article was written by Arno V Venter at www.forexlive.com.

• Riksbank’s Bunge: We are more confident that the period of high inflation is behind us.
• Riksbank’s Bunge: At the same time, we are in a mild downturn and it is important that the Swedish economy now recovers.

This article was written by Arno V Venter at www.forexlive.com.

• China’s State Council held special study session on economic policies on Tuesday – State media.
• China’s Premier Li: Will strengthen policy coordination – State media.
• China’s Premier Li: Policy implementation should reflect good timing, strength, and pace – State media
• China’s Premier Li: All sides should actively roll out policy measures to stabilise growth – State media.

This article was written by Arno V Venter at www.forexlive.com.

• PepsiCo says inflation and higher borrowing costs over the last few years continue to impact consumer spending – Prepared Remarks.
• PepsiCo – Expect 2024 inflationary pressures to moderate vs prior year, but some commodity costs to remain elevated.
• PepsiCo: „Believe our snack categories remain attractive.“
• PepsiCo – Continue to see long runway of profitable growth for international business.
• PepsiCo: Sees improved Quaker Foods North America net revenue in Q4 as recall-affected production resumes.
• PepsiCo: Expects consumers to remain value conscious amid inflation.
• PepsiCo – Pockets of elevated geopolitical tension & macroeconomic pressure expected to persist in some international market in 2024.

Given the Fed and market’s focus on the labour market, there will be increased focus on the consumer for the Q3 earnings season.

This article was written by Arno V Venter at www.forexlive.com.

• Hurricane hunters sees hurricane Milton as a major hurricane
• ING says an October ECB cut is not guaranteed
• All eyes on Chinese equities after last week’s bank holidays
• US 10-year treasury yields back above 4%
• Risk is trading mostly cautious so far across major asset classes
• Eurozone retail sales YY 0.8% vs 1.0% expected
• Reserve Bank of India Urges Banks to Avoid Large Short Bets as Rupee Nears Record Low
• Euro Zone Investor Morale Rebounds in October Amid Rising Expectations
• Market Outlook for the Week of 7th – 11th October
• Japan PM’s Bold Move: No Capital Gains Tax Hike to Boost Investment
• Weekly update on interest rate expectations
• Japanese firms anticipate prolonged China slowdown, BoJ official reveals
• Goldman Sachs Slashes US Recession Odds Following Strong Jobs Report
• What are the main events for today?
• German retail sector faces economic uncertainty, no growth in consumer spending expected
• The @Newsquawk Europe Market Open – APAC stocks began on front foot. Eyes on geopolitics
• BP Shifts Strategy, Eyes Investments in Iraq and Permian Basin
• UK House Prices Rise in September, Beating Expectations Actual: 0.3% Expected: 0.2%
• German Factory Orders Plunge in August -5.8% Expected: -1.9% Previous: 2.9%
• BOJ Report: Price Hikes and Wage Increases Spreading Across Japan
• Japan’s Leading Index Falls Short of Expectations in August Report

It’s been a a quiet session in terms of data releases with the Eurozone retail sales being the only highlight. The data came in better than expected but the market ignored the release.

The most notable movers in the markets have been Treasury yields and crude oil. Regarding the former, the market priced out all the agressive rate cuts expectations and it’s now even leaning on a more hawkish side compared to the Fed’s projections. Speaking of the latter, the tensions in the Middle East remain high and that’s been supporting the price alongside a better macro outlook.

In the FX space, we are seeing a bit of a pullback in the US Dollar given that the market has already priced out the rate cuts. Looking forward, it’s now about the US CPI on Thursday as a hot report could see the market pricing in a pause for the Fed and give the greenback an extra boost.

In the American session, we have some Fedspeak. All of the scheduled speakers are known hawks, so some hawkish comments after the NFP report shouldn’t be surprising.

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

• NHC says NOAA Hurricane Hunters find Milton a major hurricane.
• NHC says Hurricane Milton about 750 mi (1210 km) west-southwest of Tampa Florida; maximum sustained winds 120 mph (195 km/h).

This article was written by Arno V Venter at www.forexlive.com.

• Market expects a 25bp rate cut from the ECB next week, driven by weak economic sentiment and inflation falling below 2%.
• Arguments for a cut include worsening growth and inflation outlooks, with disinflationary trends and some ECB officials showing support for a cut.
• But the bank says there are valid arguments against a cut and point to the lack of new hard data since September, reliance on sentiment indicators which hasn’t been very reliable, and persistent services inflation.
• ECB’s cautious stance suggests there is a risk that the bank may wait until December for more updated projections before cutting rates.
• Market pressure to cut is less influential during an easing cycle, making it less likely for the ECB to act just to meet expectations.
• Outcome is uncertain, with both rate cuts and a potential hawkish surprise possible

Personally I think it’ll be a very hard sell to the doves to argue against a cut after the recent batch of inflation and PMI data.

Yes, PMI data has been unreliable, but the trend has been clear.

This article was written by Arno V Venter at www.forexlive.com.

Crude oil rallied strongly last
week following the tensions in the Middle East between Israel and Iran. We also
got some key technical breakouts that increased the bullish momentum.

Last Friday, we also got a strong US NFP report which cast aside recessionary fears and strengthened the case for a future pick up in activity amid the Fed’s easing.

In the big picture, central
bank easing generally leads the manufacturing cycle, so we can expect global
growth to pick up, especially after the Fed’s 50 bps cut and the Chinese
officials surprising with strong easing measures.

All these reasons should be
bullish for the market and support prices in the next months barring a
recession. As a reminder, positioning in crude oil is still near record lows.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil broke above the major trendline and extended the gains into new
highs as the bullish momentum increased. The target for the buyers should now
be the 80 handle where we can expect the sellers to step in to position for a
drop back into the 70s.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we now have a minor upward trendline defining the current bullish
momentum. If the price were to pull back, we can expect the buyers to lean on
the trendline to position for new highs, while the sellers will look for a
break lower to position for a drop back into the 72 handle.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have the upper bound of the average daily range for today standing right around the
key 77.50 swing level. If the price extends into the swing level we can expect the
sellers to step in for a pullback into the minor trendline, while the buyers
will likely continue to lean on the trendline to keep targeting new highs.

Upcoming
Catalysts

This week the calendar is a bit empty on the data front. The main events are all
scheduled for the latter part of the week. On Thursday, we have the US CPI and
the US Jobless Claims. On Friday, we conclude with the US PPI and the
University of Michigan Consumer Sentiment report.

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