Worries about risks to the UK financial system posed by a global economic downturn have risen sharply to their highest level since the second half of 2019, a Bank of England (BOE) survey showed on Wednesday.

The Bank’s twice-yearly systemic risk survey polled 55 financial firms between July 23 and August 12 and asked each participant to list the five risks they believed would have the greatest impact on the UK financial system if they materialised.

One-third of participants flagged worries about the threat to the UK financial sector associated with an overseas/global economic downturn, an increase of 19 percentage points and the largest single increase compared with the results of the previous survey in March, the BoE said.

Full Story on PiQ Suite

This article was written by Ryan Paisey at www.forexlive.com.

• 30-Year Mortgage Rate
  • Actual: 6.14% Previous: 6.13%
• Mortgage Applications (WoW)
  • Actual: -1.3%
    Previous: 11.0%
• Mortgage Market Index
  • Actual: 292.3
    Previous: 296.1
• Purchase Index
  • Actual: 149.3
    Previous: 148.2
• Mortgage Refinance Index
  • Actual: 1,099.5
    Previous: 1,132.9

This article was written by Ryan Paisey at www.forexlive.com.

• Not in an environment for additional rate hike.
• I want to coordinate with the BoJ on the economy.
• I want to make the economy strong with an economic package.
• We will do all we can to overcome deflation.
• I expect the BoJ to conduct policy to exit from deflation based on 2013 accords.
• I expect the monetary easing trend to stay in place.

When he was elected last week, the JPY rallied while the Nikkei sold off as he was considered a hawk and supportive for further rate hikes. Turns out, he’s not.

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

OPEC+ set to keep output policy unchanged at panel meeting

An OPEC+ ministerial panel scheduled to meet on Wednesday is unlikely to recommend any changes to policy, allowing the group to start gradually increasing production from December, two sources from told Reuters.

The two sources, who declined to be identified, said Wednesday’s meeting is unlikely to bring any surprises. One of them said it will reaffirm the need for member countries to comply with their production targets under the deal.

An OPEC+ source told Reuters last week that clarity on whether the compensation cuts were made in September would allow the December increase to go ahead.

Full Story on PiQ Suite

This article was written by Ryan Paisey at www.forexlive.com.

LINK TO FULL NOTE

Summary –

• European bourses are generally on a firmer footing whilst US futures are modestly lower with slight underperformance in the RTY
• Dollar is flat unable to continue the prior day’s geopolitical-indued gains, JPY underperforms with USD/JPY around 144.25
• USTs are flat and Bunds give back some of its recent strength, Gilts follow peers and took another leg lower following an auction
• Crude continues to benefit from the geopolitical risk premium, XAU slips off best levels whilst base metals gain
• Looking ahead, ADP National Employment, NBP Policy Announcement; OPEC+ JMMC Meeting, Speakers including ECB’s Elderson, Schnabel, Fed’s Hammack, Musalem, Bowman & Barkin. Earnings from Conagra & Levis.

This article was written by Ryan Paisey at www.forexlive.com.

• Euro falls to fresh lows on the day
• Eurozone September preliminary CPI +1.8% vs +1.8% y/y expected
• UK September final manufacturing PMI 51.5 vs. 51.5 prelim
• ECB’s Rehn: The scale is tipping towards a rate cut in October
• US, China reportedly set to hold talks on trade and economic ties
• ECB’s Rehn: Direction of monetary policy is clear
• Eurozone September final manufacturing PMI 45.0 vs 44.8 prelim
• Germany September final manufacturing PMI 40.6 vs 40.3 prelim
• France September final manufacturing PMI 44.6 vs 44.0 prelim
• Italy September manufacturing PMI 48.3 vs. 49.0 expected
• Japan prime minister Ishiba unveils new Cabinet members
• Switzerland September manufacturing PMI 49.9 vs 48.0 expected
• Spain September manufacturing PMI 53.0 vs 50.2 expected
• European equities a little mixed at the open today
• Deutsche see ECB cutting rates in October with potential for a 50 bps move in December
• What are the main events for today?
• Eurostoxx futures +0.2% in early European trading
• FX option expiries for 1 October 10am New York cut
• Japan top FX diplomat says yen shorts that had been built up until July have been unwound
• Eurozone inflation in focus in the session ahead
• The dollar long con
• Close but no cigar again for EUR/USD buyers

Markets:

• USD leads, NZD lags on the day
• European equities higher;
  S&P 500 futures down 0.07%
• US 10-year yields down 4 bps to
  3.741%
• Gold
  up 0.52% to $2,647
• WTI
  crude down 0.70% to $67.71
• Bitcoin
  up 0.69% to $63,747

We had a
relatively quiet session in terms of fresh data releases. The main highlight was the
Eurozone Flash CPI report, and the data came out in line with estimates. The
market has already fully priced in a back-to-back 25 bps cut in October and that’s
also something ECB members recently have been touting to.

In the
markets, the US Dollar added to the gains following Fed Chair Powell’s comments
yesterday with EUR/USD being the most notable mover. Another
notable mover this morning has been crude oil as it sold off to a new weekly
low before erasing almost the entire drop. There was no catalyst for the
move though.

The focus
will now switch to the US data in the American session with the US ISM Manufacturing
PMI being the main highlight. We will also get the Canadian PMI and the US Job
Openings data.

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

The USD got a bit of a
boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40%.

The focus remains on the
economic data. If we start to see an improvement, then Treasury yields will likely
rise and drive USDCHF higher. Conversely, if the data weakens significantly,
the market will start to worry about a recession and take USDCHF lower.

For the CHF, the SNB last week cut rates by 25 bps bringing the policy rate
to 1.00%. The central bank mentioned that it’s prepared to intervene in
currency markets as necessary and the new inflation forecasts were revised
significantly lower signalling more rate cuts to follow.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF remains stuck in the range between the 0.8555 resistance and the 0.8400 support. The market
participants will likely keep on playing the range by buying at support and
selling at resistance until we get a breakout.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action. There’s not much to add here as
we will need to wait for a major catalyst or a breakout to see a more sustained
trend. The US ISM Manufacturing PMI and the US NFP this week will likely be
key.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish
momentum on this timeframe. The buyers will likely keep on leaning on the trendline
to position for further upside, while the sellers will want to see the price
breaking lower to pile in for a drop back into the support. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we get the US ISM Manufacturing PMI and the US Job Openings data.
Tomorrow, we have the US ADP report. On Thursday, we get the Swiss CPI, the US
Jobless Claims and the US ISM Services PMI. Finally, on Friday, we conclude the
week with the US NFP report.

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

The pressure is back on the euro now as traders are rebuffing expectations for a rate cut by the ECB in October. That comes after Rehn was out saying that the scale is tipping towards that now, at least in his view. It’s the first sign of any ECB policymaker confirming the recent shift in market pricing.

EUR/USD is down and while that also is in part due to the dollar keeping steadier, the euro is not finding much cheer elsewhere. EUR/JPY is down 0.3% to 159.40 levels and EUR/CHF down 0.2% to 0.9393. Both are also trading to fresh session lows currently.

In the case of EUR/USD, there are large option expiries at 1.1100 that could anchor price action a little.

But from a technical perspective, the downside momentum is starting to build. The minor support around 1.1121-25 has given way and now the key 4-hourly moving averages are starting to crack as well as seen above.

For now, the euro side of the equation has cast its vote. It’s now down to the dollar side of the equation to follow that up later.

When Wall Street enters, we’ll have the US ISM manufacturing PMI and JOLTS job openings to work through.

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

The US Dollar got a bit of
a boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40%.

Moreover, overnight the BoJ Summary of Opinions showed that the proponents for rate
hikes were more inclined to wait and monitor the developments in the overseas
economies and markets.

This week is a big one as
we get the US ISM Manufacturing PMI today and the US NFP report on Friday.
Positive data will likely see the pair drifting higher on rising Treasury
yields, while weak figures should keep the bearish momentum going.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY rallied back to the trendline and it’s now consolidating as we
await the key US data. The buyers will likely pile in around these levels to
position for a rally into the 150.00 handle, while the sellers will want to see
the price falling back below the trendline to keep pushing towards new lows.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a resistance
zone around the 145.50 level where the price got rejected from several times in
the past weeks. This is where the sellers are stepping in with a defined risk
above the resistance to position for a drop into the 140.00 handle. The buyers,
on the other hand, will want to see the price breaking higher to position for a
rally into the 150.00 handle.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the rejection from the resistance zone as the sellers are
trying to build some momentum to the downside. The US ISM Manufacturing PMI
today will be a key report as strong data will likely trigger a rally, while
weak figures should increase the bearish momentum. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US ISM Manufacturing PMI and the US Job Openings data.
Tomorrow, we have the US ADP report. On Thursday, we get the latest US Jobless
Claims figures and the US ISM Services PMI. Finally, on Friday, we conclude the
week with the US NFP report.

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

• Prior +2.2%
• Core CPI +2.7% vs +2.7% y/y expected
• Prior +2.8%

The readings are as expected with headline annual inflation ticking below 2% for the first time since 2021. That said, core annual inflation only eased ever so slightly to 2.7%. So, that’s still the bigger focus with services inflation continuing to sit higher mostly. But all of this just rebuffs market expectations for an ECB rate cut in October. And Rehn’s comments earlier are also supportive of that.

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