<ul><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/recap-of-the-bank-of-england-to-lend-against-a-wider-range-of-assets-20221010/“>Recap of the Bank of England to lend against a wider range of assets</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/fitch-says-the-actual-opec-oil-output-fall-will-be-less-than-the-cuts-20221010/“>Fitch says the actual OPEC+ oil output fall will be less than the cuts</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/the-ecb-and-pboc-have-extended-their-currency-swap-deal-for-a-further-three-years-20221010/“>The ECB and PBoC have extended their currency swap deal for a further three years</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-covid-update-shanghai-requires-arrivals-to-take-3-covid-tests-within-3-days-20221010/“>China COVID update – Shanghai requires arrivals to take 3 covid tests within 3 days</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-to-publish-medium-term-fiscal-plan-obr-forecast-to-october-31-20221010/“>UK to publish medium term fiscal plan OBR forecast on October 31</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/german-gas-commission-expert-russwurm-says-we-are-heading-towards-recession-20221010/“>German gas commission expert Russwurm says we are heading towards recession</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-centeno-says-normalisation-of-monetary-policy-is-absolutely-needed-and-desired-20221010/“>ECB’s Centeno says normalisation of monetary policy is absolutely needed and desired</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-knot-expects-significant-moves-by-ecb-will-be-needed-in-2023-to-get-inflation-down-20221010/“>ECB’s Knot – expects significant moves by ECB will be needed in 2023 to get inflation down</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-covid-update-highest-number-of-locally-transmitted-cases-reported-since-august-20-20221010/“>China COVID update – highest number of locally transmitted cases reported since August 20</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/reminder-its-a-canada-and-us-sorta-holiday-today-monday-10-october-2022-20221010/“>Reminder – it’s a Canada and US (sorta) holiday today, Monday, 10 October 2022</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/swiss-sight-deposits-of-domestic-banks-fell-for-the-week-ended-october-7-20221010/“>Swiss sight deposits of domestic banks fell for the week ended October 7</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/more-on-the-french-central-bank-cutting-its-economic-growth-forecast-20221010/“>More on the French central bank cutting its economic growth forecast</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/Education/what-is-market-volatility-and-why-you-need-to-consider-it-in-your-trading-20221010/“>What is Market Volatility and Why You Need to Consider it in Your Trading</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-hk-stock-markets-plunged-monday-10-october-2022-us-chip-restrictions-cited-20221010/“>China, HK stock markets plunged Monday, 10 October 2022 – US chip restrictions cited</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/more-on-the-boe-operation-to-calm-gilt-gbp-market-ready-to-increase-daily-purchases-20221010/“>More on the BoE operation to calm gilt, GBP market – ready to increase daily purchases</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/bitcoin-technical-analysis-20221010/“>Bitcoin technical analysis</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/more-on-russian-missile-strikes-into-major-ukraine-cities-targeting-civilians-20221010/“>More on Russian missile strikes into major Ukraine cities – targeting civilians</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-villeroy-says-the-ecb-is-working-to-bring-down-inflation-to-2-in-2-to-3-years-20221010/“>ECB’s Villeroy says the ECB is working to bring down inflation to 2% in 2 to 3 years</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/frances-central-bank-has-cut-its-q3-french-gdp-forecast-for-025-from-03-previously-20221010/“>France’s central bank has cut its Q3 French GDP forecast to 0.25% (from 0.3% previously)</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/bank-of-england-says-launching-temporary-expanded-collateral-repo-facility-20221010/“>Bank of England says launching temporary expanded collateral repo facility</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/2-shanghai-districts-have-closed-all-venues-due-to-covid-restrictions-imposed-monday-20221010/“>2 Shanghai districts have closed all venues due to COVID restrictions imposed Monday</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/Orders/fx-option-expiries-for-10-october-2022-at-the-10am-new-york-cut-20221010/“>FX option expiries for 10 October 2022 at the 10am New York cut</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/explosion-in-kyiv-reports-of-cloud-of-black-smoke-rising-from-buildings-in-citys-centre-20221010/“>Explosion in Kyiv, reports of cloud of black smoke rising from buildings in city’s centre</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/dutch-central-bank-says-high-inflation-could-persist-longer-than-models-now-predict-20221010/“>Dutch central bank says high inflation could persist longer than models now predict</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/g20-finance-ministers-meeting-12-13-october-co-ordinated-usd-intervention-speculation-20221010/“>G20 finance ministers meeting 12 & 13 October – co-ordinated USD intervention speculation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/el-erian-fed-made-2-big-mistakes-thatll-go-in-history-books-spur-a-damaging-recession-20221010/“>El-Erian: Fed made 2 big mistakes that’ll go in history books, spur a damaging recession</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/trade-ideas-thread-monday-10-october-2022-20221010/“>Trade ideas thread – Monday, 10 October 2022</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/forexlive-asia-pacific-fx-news-wrap-moderate-negative-tone-kicks-off-the-new-week-20221010/“>Forexlive Asia-pacific FX news wrap: Moderate negative tone kicks off the new week</a></li></ul><p class=“western“>
It
was a significant session for news items.
</p><p class=“western“>Russia
sent missiles into Ukrainian cities, terrorising communities during
morning rush hour in apparent retaliation for the loss of its bridge
linking Russia to Crimea. Markets responded in a ‘risk off’
fashion. As I post Nasdaq futures on Globex are down around half a
percent, S&P500 futures are down around 0.4%. Major FX has fallen
against the US dollar.</p><p class=“western“>From
the UK we had the news that Chancellor Kwarteng will announce his
fiscal strategy and economic forecasts on October 31, bringing the
plans forward by more than three weeks. Kwarteng is seeking to calm
volatile UK by bringing the date forward. He had been insisting it
was vital to have the date in November (the 23rd)
to allow the OBR to make a proper assessment, Guess not after all.
GBP has managed to bounce somewhat on the news.</p><p class=“western“>The Swiss National Bank cut overnight deposits by 30bn CHF.</p><p class=“western“>Chinese
and Hong Kong stocks slumped today; ongoing renewed COVID
restrictions and US chip bans cited (see bullets above).
</p>

This article was written by Eamonn Sheridan at forexlive.com.

<p>Bloomberg have a recap up, related to:</p><p class=“article-slot__title title top“><a target=“_blank“ href=“https://www.forexlive.com/centralbank/bank-of-england-says-launching-temporary-expanded-collateral-repo-facility-20221010/“ rel=“follow“ target=“_self“>Bank of England says launching temporary expanded collateral repo facility</a></p><p class=“article-slot__title title top“><a target=“_blank“ href=“https://www.forexlive.com/centralbank/more-on-the-boe-operation-to-calm-gilt-gbp-market-ready-to-increase-daily-purchases-20221010/“ rel=“follow“ target=“_self“>More on the BoE operation to calm gilt, GBP market – ready to increase daily purchases</a></p><p>Link is here (may be gated). In brief:</p><ul><li>The BOE said Monday it will launch a Temporary Expanded Collateral Repo Facility, or TECRF, that will run until Nov. 10 to help banks ease pressure on the so-called liability-driven investment strategies that many pensions use. </li><li>Banks could therefore accept more types of assets as collateral from the LDI funds and turn to the BOE to convert those assets into cash.</li></ul><p>Cable update:</p>

This article was written by Eamonn Sheridan at forexlive.com.

<p>Caixin Services Purchasing Managers‘ Index (PMI) for September 2022 came in at 49.3</p><ul><li> from 55.0 in August</li></ul><p>China’s economy is struggling under the weight of ongoing COVID outbreaks and the imposition of restrictions on activity. As well as the imploding property sector, burdened by debt servicing issues. After August’s improvement, the roller-coaster has taken the September services PMI back into contraction. </p><p>From the sub-indexes to the PMI, a couple of notable points:</p><ul><li>input prices have risen again, they have increased every month since June 2020 – higher prices for raw materials and labour (China’s inflation is officially reported as being well within target ranges)</li><li>the employment index stayed in contraction, at 48.5, for September, its ninth straight month in contraction</li></ul><p>—</p><p>For financial markets the services PMI will add to concerns over China’s growth. Markets do tend to have a great focus on the many PMI though. </p><p>—</p><p>China has been out on holiday (Golden Week) all last week. Prior to the holiday we had the other September PMIs released:</p><ul class=“text-align-start vertical-align-baseline“><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-official-manufacturing-pmi-501-expected-496-20220930/“ target=“_blank“ data-article-link=“true“ class=“article-link“>China official Manufacturing PMI 50.1 (expected 49.6)</a></li><li>China official services PMI 50.6 (expected 52.0, prior 52.6) </li><li><a target=“_blank“ href=“https://www.forexlive.com/news/china-caixin-markit-manufacturing-pmi-for-september-481-expected-495-prior-495-20220930/“ target=“_blank“>China Caixin / Markit Manufacturing PMI for September 48.1 (expected 49.5, prior 49.5)</a></li></ul><p>(The official and private PMIs use different surveys. The official figures are more heavily weighted towards larger and state-owned enterprises.)</p>

This article was written by Eamonn Sheridan at forexlive.com.

<p class=“MsoNormal“>MON: Norwegian CPI (Sep); EZ Sentix Index (Aug); Japan Holiday.</p><p class=“MsoNormal“>TUE: UK Jobs Report (Sep).</p><p class=“MsoNormal“>WED: G20 Meeting (1/2); BoK
Announcement; UK GDP (Aug); US PPI (Sep); FOMC Minutes (Sep); EIA STEO; Hong
Kong Holiday.</p><p class=“MsoNormal“>THU: G20 Meeting (2/2); German Final
CPI (Sep); Swedish CPI (Sep); US CPI (Sep).</p><p class=“MsoNormal“>FRI: Chinese Inflation (Sep); Chinese
Trade Balance (Sep); Indian Inflation (Sep); US Retail Sales (Sep); US
University of Michigan (Oct).</p><p class=“MsoNormal“>NOTE:
Previews are listed in day-order</p><p class=“MsoNormal“>UK Jobs
Report (Tue): </p><p class=“MsoNormal“>Expectations
are for the unemployment rate in the 3M period to August to hold steady at
3.6%, employment change to pick up to 128k from 40k and headline average weekly
earnings growth to advance to 5.8% from 5.5% (ex-bonus is forecast at 5.3% vs.
prev. 5.2%). The prior report saw an unexpected decline in the unemployment
rate to 3.6% from 3.8% (lowest since 1974) amid a notable pick-up in the number
of those classified as “inactive” as opposed to an increase in the number of
people employed. The other notable takeaway was the pick-up in wages with
annualised pay growth (ex-bonus) running at a rate of 7.0%; something which
would have been a source of concern on Threadneedle St. This time around,
analysts at Investec expect the intensification of the cost-of-living crisis
will have prompted a reversal in the trend of declining participation and the
“vast number of vacancies should have provided employment to many of these
returning to the market”. Elsewhere, on the wages front, Investec cautions that
any pick-up will be as a result of favourable base effects, as opposed to an
intensification of pay demands. In terms of recent guidance from the MPC (ahead
of the UK’s mini-budget), policymakers in September noted that there had “been
some indications that the demand for labour is weakening, although the labour
market nonetheless tightened further over the summer, with inactivity
materially higher than anticipated”.</p><p class=“MsoNormal“>G20 Finance
Ministers/Central Bank Heads (Tue/Wed): </p><p class=“MsoNormal“>Heading
into the IMF’s annual meetings, there seem to be some expectations that finance
chiefs and central bank heads will discus a coordinated response to alleviate
some of the stress seen in financial markets of late, which has seen the likes
of Japan announce interventions in FX to manage JPY weakness, and the UK’s BoE
enter the Gilt market again to arrest the surge in yields. Although the latter
likely has some domestic influences at play, both have come about amid an
aggressive Federal Reserve, which is moving to contain inflation via rate
hikes, and has sent the USD and Treasury yields higher. The FT notes that this
has given rise to hopes of a Plaza Accord II. (The original Plaza Accord was a
deal finance ministers and central banks struck in 1985 in response to a
surging USD, where co-ordinated rate rises and FX interventions followed).
While the FT says that investors should be prepared for a Plaza Accord II, it
also argues that “a reboot of the Plaza Accord is for the moment fantasy
economics,” adding that “it may remain so if the dollar weakens naturally in
tandem with growth, but the unique strengths of the US economy mean an
international party to bash the greenback is a scenario investors should
include in their planning.”</p><p class=“MsoNormal“>UK GDP (Wed): </p><p class=“MsoNormal“>Expectations
are for M/M GDP in August to be flat with the 3M/3M rate at -0.2%. The prior
report saw M/M growth of just 0.2% in July (vs. exp. 0.4%) with the UK economy
unable to benefit from a post-bank holiday rebound after the Queen’s Jubilee
marred the June release. This time around, analysts at Oxford Economics note
that “there are grounds to expect a rebound in construction output, given the
unexpected weakness of July’s outturn, but otherwise our expectations are set
low”. PMI data for August saw the composite metric slip into contractionary
territory at 49.6 (vs. 52.1 in July) with S&P Global noting that the data
was consistent with the economy contracting at a modest quarterly rate of 0.1%.
Other data points saw August retail sales decline by 1.6% with the ONS stating
that “all main sectors (food stores, non-food stores, non-store retailing and
fuel) fell over the month”. In terms of guidance from the MPC, at the time of
the September meeting, policymakers forecast negative growth of 0.1% in Q3 (vs
the August Announcement’s projection of +0.4%), marking a second successive
quarter of decline. However, the subsequent mini-budget and growth plan
presented by the government has yet to be included in the MPC’s forecasts.</p><p class=“MsoNormal“>FOMC Minutes
(Wed): </p><p class=“MsoNormal“>The FOMC
hiked rates by 75bps to 3.00-3.25% in September, in line with the consensus
expectation. The statement was largely unchanged from the July meeting, noting
that “the Committee… anticipates that ongoing increases in the target range
will be appropriate.” That left the focus on the updated economic projections,
which were judged as hawkish: officials now see rates at 4.25-4.50% by end-2022
(previously 3.25-3.50%); officials also raised their view of the terminal rate
(now see the FFR range peaking out between 4.50-4.75% in 2023 vs previous
forecast of 3.75-4.00%); after 2023, the Fed expects rates will decline to
3.25-4.00% by the end of 2024, and then fall to 2.75-3.00% in 2025; it left its
estimate of the neutral rate unchanged at 2.5%. Inflation projections were
unsurprisingly lifted, and the central bank does not expect headline PCE to be
at target before 2025; growth projections were slashed, and at least one
official sees a contraction in 2023. Chair Powell’s press conference was
underwhelming by comparison, and he revealed little by way of fresh insight,
affirming many of the points he made at the recent Jackson Hole Economic
Symposium. Powell once again caveated the dot plots, stating that it does not
represent a plan or commitment from the Fed. The Fed chief was asked about the
conditions that officials would need to see before endorsing arguments for
lower rates, and repeated that there would have to be a confidence that
inflation is moving back down to 2%. In wake of the meeting, one point analysts
picked up on is the divergence of views on the Fed over how far it needs to get
into restrictive territory, and Powell danced around that, saying the Fed has
now moved to the “very lowest” level of what it considers restrictive, saying
there is still a ways to go on rates, without giving specifics on where he sees
the terminal level, aside from his comment that the Fed would likely get to
levels in the Dot Plot. Goldman Sachs said the updated dot plot suggests that
the Fed would hike rates by 75bps again at its November meeting, followed by a
50bps rate rise in December, and then a 25bps hike in January. For 2023, GS
says that the path of rates will depend on how quickly growth, hiring and
inflation slow, and whether the FOMC will really be satisfied with a
sufficiently high level of the funds rate and willing to slow or stop
tightening while inflation is still uncomfortably high. NOTE: The Fed meeting
minutes are an account of that particular meeting, they do not factor in
commentary or developments that followed in wake of the meeting; as such, while
many desks will be keeping a close eye on them for any remarks that suggest the
Fed would be prepared to halt the course of its policy normalisation if it
triggered an unnecessary US recession or financial stability risks, the minutes
may not feature some of the more recent thinking of officials. For instance,
traders have attributed some of the recent commentary from Fed chair Brainard,
Atlanta Fed’s Bostic, San Fran Fed’s Daly, where they suggested that the Fed
was cognizant of these concerns in its policymaking (adding that they have a
domestic mandate, and fighting inflation remains the priority).</p><p class=“MsoNormal“>US CPI (Thu): Consumer price data for
September will have a mixed feel, analysts believe. The headline is seen rising
0.2% M/M, picking up from the prior rate of 0.1% in August, but the annual
headline is seen paring back to 8.1% Y/Y from 8.3%. A similarly mixed showing
is expected to be seen in the core measures, with the street estimating a
monthly rise of 0.5% M/M (prev. 0.6%), though the annual measure of core
inflation is likely to pick-up to 6.5%. The data will be one of the last pieces
of the puzzle officials will want to see ahead of the November 2nd FOMC, where
money markets currently price in a greater chance of another 75bps rate rise,
which would take rates to 3.75-4.00%, rather than a ‘smaller’ 50bps increment.
Amid the softer tone of some incoming data points recently (ISM manufacturing,
JOLTs data), as well as activism from some global jurisdictions (BoE for
instance, while Japan’s government has also been active in FX) on financial
stability concerns, there have been some hopes that the Fed will relent on
hawkish policy. However, commentary from Fed officials has been resolute in its
focus, with all officials generally arguing that the central bank remains fixed
on inflation, and will continue lifting rates until the fight against surging
prices has been won – even if that means tilting the US economy into a
recession.</p><p class=“MsoNormal“>Chinese
Inflation (Fri): </p><p class=“MsoNormal“>The
latest Chinese inflation data is due next week with CPI expected to increase to
2.8% from 2.5% and PPI expected to slow further to 1.0% from 2.3%. The previous
readings for August were softer than expected as the economy was hampered by a
flagging property sector and with softer demand amid China’s strict zero-COVID
policy, as well as the disruptions from power restrictions during a record
heatwave. Nonetheless, the PBoC has suggested that consumer inflation could top
the government’s target of around 3% in the latter half of the year as
structural inflation pressure may increase in the short-term and with China’s
various support measures, including the cuts in benchmark lending rates during
the second half of August, likely to provide a driving force for prices.
Conversely, factory gate prices are expected to continue to slow after rising
by the slowest pace in 18 months which China’s stats bureau attributed to a
decline in energy prices and raw materials.</p><p class=“MsoNormal“>Chinese
Trade Balance (Fri): </p><p class=“MsoNormal“>Chinese
Trade Data for September is scheduled next week where market participants will
be hoping for an improvement following the disappointing figures for August. As
a reminder all components of the release for August missed forecasts in which
the trade balance showed a narrow than expected surplus, as exports slowed to
7.1% vs. Exp. 12.8% (Prev. 18.0%) and imports also printed short of estimates
at 0.3% vs. Exp. 1.1% (Prev. 2.3%). This was due to economic activity being
mired by slowing demand, COVID restrictions and a heatwave which resulted in a
severe drought and a power shortage that prompted authorities in Sichuan and
Chongqing to impose power cuts for industrial plants and households.
Nonetheless, the power restrictions were eased in late August which provides
some optimism for the September data, while demand was also likely boosted
prior to the National Day holidays.</p><p class=“MsoNormal“>US Retail
Sales (Fri): </p><p class=“MsoNormal“>Analysts
expect US retail sales to rise +0.2% M/M in September (prev. +0.3%). While
Credit Suisse expects nominal retail sales to be flat in the month, the bank
thinks that the retail deflator will be -0.3% M/M, suggesting that real retail
sales of +0.3%, which it says would be the third consecutive month of increase
in real retail sales. “Auto spending should be a boost this month as unit
vehicle sales improved, but gasoline spending will likely drag headline
significantly as prices declined on average in September.” The consensus view expects
the ex-autos measure of retail sales is likely to be unchanged (prev. -0.3%).
“High-frequency card spending data showed a small decline in consumption in
September,” CS writes, “elevated inflation and tighter borrowing costs have led
to a steep drop in sentiment, putting a ceiling on consumption growth.” The
bank says that an earlier decline in gasoline prices may have helped boost
consumption on the margin, but overall, real goods spending is seen falling
towards trend rates through the rest of this year.”</p><p class=“MsoNormal“>For the
full report and more content like this check out <a target=“_blank“ href=“https://newsquawk.com/affiliate/Hz98Tye9tzPD58aLr7Et“ target=“_blank“ rel=“nofollow“>Newsquawk</a> and start a seven-day trial.</p>

This article was written by Newsquawk Analysis at forexlive.com.

<ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-september-non-farm-payrolls-263k-vs-250k-expected-20221007/“>US September non-farm payrolls +263K vs +250K expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/canada-september-employment-change-211k-vs-200k-expected-20221007/“>Canada September employment change +21.1K vs. +20.0K expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-williams-the-economy-has-shown-extraordinary-strength-post-pandemic-20221007/“>Fed’s Williams: The economy has shown extraordinary strength post-pandemic</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/atlanta-fed-gdpnow-estimate-for-3q-growth-rises-to-29-from-27-20221007/“>Atlanta Fed GDPNow estimate for 3Q growth rises to 2.9% from 2.7%</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-nagel-the-next-ecb-meetings-must-send-out-clear-signals-on-reacting-to-inflation-20221007/“>ECB’s Nagel: The next ECB meetings must send out clear signals on reacting to inflation</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/baker-hughes-oil-rigs-down-2-to-602-in-the-current-week-20221007/“>Baker Hughes oil rigs down -2 to 602 in the current week.</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/scholz-everyone-knows-that-energy-bailout-packages-are-necessary-and-coming-everywhere-20221007/“>Scholz: Everyone knows that energy bailout packages are necessary and coming everywhere</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-august-wholesale-sales-01-vs-04-expected-20221007/“>US August wholesale sales +0.1% vs +0.4% expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/snbs-jordan-swiss-inflation-above-3-is-clearly-too-high-20221007/“>SNB’s Jordan: Swiss inflation above 3% is ‚clearly too high'</a></li></ul><p>Markets:</p><ul><li>Gold down $16 to $1695</li><li>US 10-year yields up 6 bps to 3.88%</li><li>WTI crude up $4.06 to $92.51</li><li>S&P 500 down 115 points to 3629</li><li>USD leads, NZD lags</li></ul><p>The Fed-pivot talk went down in flames today and it didn’t even take a big surprise in the jobs report. The headline was basically bang-on expectations but unemployment fell two ticks to 2.5% with half of that from a dip in labor force participation.</p><p>Beyond that the details didn’t matter and I have to think that the weight of all the hawkish Fed talk this week added to the tumble. The dollar rose on the data and then rose again late in the day as equities crumbled. The Nasdaq fell 4% to nearly give up the week’s gains.</p><p>Cable fell nearly a full cent to 1.1063 from as high as 1.1225 before the jobs report. It’s trading at the lows just ahead of the close.</p><p>AUD and NZD are similar while EUR/USD is just above the knee-jerk lows after the jobs data. The real worry going into Monday’s open may be USD/JPY as it presses to 145.40 and test’s the Japanese Ministry of Finance’s patience. </p><p>USD/CAD was able to hold the earlier highs on a sizzling day for oil. Crude has swung from demand worries to supply fears and rallied every day this week. Mission accomplished for OPEC+ and the moves will make the BOC’s job a bit easier.</p><p>All told, this was a rough day for risk assets and a strong start to Q4 has turned into a dud.</p>

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

<p>Closing changes for the main US markets:</p><ul><li>S&P 500 down 104 points to 3639 or -2.9%</li><li>Nasdaq Comp -3.8%</li><li>Russell 2000 -3.2%</li><li>DJIA -2.1%</li><li>Toronto TSX Comp -2.35%</li></ul><p>On the week:</p><ul><li>S&P 500 +1.4%</li><li>Nasdaq Comp +0.5%</li><li>Russell 2000 +1.9%</li><li>Toronto TSX Comp +0.4%</li></ul><p>That SPX candle was looking really nice earlier this week. Meanwhile, WTI crude finished the week up 17%.</p>

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

<p>The trade in the first half of the year was to sell stocks and buy oil. </p><p>That’s shaping up to be the trade of Q4 as well. WTI crude oil are up 5% today and briefly touched $93.00, which is the highest since August 30. It’s also come on a day with a strong US dollar and a brutal decline in equities.</p><p>Energy could be a big problem for the global economy next year. There are people talking about the potential for a second wave of inflation on renewed strength in oil and gas.</p><p>I don’t think that that’s a big risk. Oil and gas alone in a soft economy aren’t going to stoke inflation. Even if commodity strength extends to metals and softs it won’t offset weakness in things like housing and manufactured goods.</p><p>In any case, what’s the trade for oil next?</p><p>It’s turned around on a fundamental surprise — OPEC+ cutting 2 million barrels per day from quotas and around 1mbpd in real production. Moreover, that move sets a floor under oil prices and sends a signal that they mean business.</p><p>Up until last week, the trade was demand destruction but risks are growing of supply destruction from Russia and demand growth from China reopening. In addition, the SPR releases are coming to an end.</p><p>Technically, have a look at the weekly chart:</p><p>That’s a powerful three-candle reversal. What’s needed next is a decisive move about the series of lows in the $93-95 region.</p>

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

<p>The selling in equities today is utterly merciless.</p><p>The combination of stridently-hawkish talk from Fed officials this week and a decently-strong non-farm payrolls report today has led to an abandonment of the ‚Fed pivot‘ trade.</p><p>The week had started out with a +5% gain but now the Nasdaq is barely in positive territory, up just 0.7%.</p><p>I can’t help but think that the inabilty to maintain even a modest rally from the June/Sept lows is a sign of a potential rout. I pity to think what will happen if next Thursday’s CPI report is hot.</p>

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

<p>USD/JPY is up 20 pips today and trading at 145.30.</p><p>In all liklihood that will be the highest close in 20 years for USD/JPY and it’s the highest intraday trade since they intervened at 145.90.</p><p>The Ministry of Finance may be pressed to intervene again. The problem is that they’re fighting a fundamental battle. The US dollar is strengthening across the board in the aftermath of a strong non-farm payrolls report. The market is beginning to wonder if the Fed hiking to just under 5% will be enough to tame inflation.</p><p>The MOF has often pointed to ‚volatility‘ rather than absolute price levels in its jawboning and intervention. We’ve been around 144.00 now for a month so certainly the one-way moves have been tamed. </p><p>But if they allow the pair to move to new highs, I suspect the market will quickly test 150.00. Domestically, the economic calendar is very light for Japan next week.</p>

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

<p>Yesterday, Bank of Canada governor Tiff Macklem <a target=“_blank“ href=“https://www.forexlive.com/centralbank/bocs-macklem-we-need-additional-info-before-we-consider-moving-to-more-balanced-policy-20221006/“ target=“_blank“>said </a>more data is needed before moving to shifting to an interest rate pause. Today he will get it, with Canadian jobs to be released alongside non-farm payrolls.</p><p>Unlike in the US, Canadian jobs have showed a material deterioration in the past few months. The data is notoriously volatile but there have been three months in a row of losses near 40K. For those who follow the US, a rule of thumb is to multiply by 10, so this would be the equivalent of three months in a row of non-farm payrolls of -400K.</p><p>The consensus today is +20.0K.</p><p>The unemployment rate has ticked up to 5.4% from 4.9% and is expected to stay there.</p><p>As always, the breakdown of full-time and part-time jobs is an important consideration for Canada. Last month there were 77..2K full time job losses, which was the worst since January.</p><p>The Canadian dollar has recently broken down to the lowest levels since May 2020 and the next leg depends on what the BOC does next. A quick pivot is unlikely as Macklem said yesterday that more rate hikes „will be needed“ and market pricing for a 50 bps hike on Oct 26 is 98%, which would take rates to 3.75%.</p><p>From there, a likely path is for the BOC to slow to 25 bps and then pause at year end. A big surprise in today’s jobs report could change the equation but if you’re trading USD/CAD, it will be challenging with the US report due at the same time.</p>

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