Yesterday, the US Consumer Confidence report surprised to the downside
with one of the largest drops since 2021. The labour market data in the report
softened a lot and it generally leads the unemployment rate.

The market responded by
raising the probabilities for the Fed to cut by 50 bps in November to roughly
60%. The question now is whether this is just about the low hiring rate or
something worse. We will have to wait for the NFP report next Friday.

On the GBP side, the UK
PMIs on Monday were a touch softer than expected but still solid compared
to its peers. The market expected the BoE to deliver at very least another 25
bps cut in November.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD extended the gains above the 1.34 handle before giving back
some today. If we were to get a bigger pullback, the buyers will likely step in
around the support
zone around the 1.3265 level where we can also find the 38.2% Fibonacci
retracement level for confluence.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into new lows.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a trendline defining the current bullish
momentum. If we get a pullback, the buyers will likely lean on the trendline
with a defined risk below it to position for the continuation of the uptrend.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into new lows.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we
have another minor trendline defining the bullish momentum on this timeframe. Again,
the buyers will likely lean on it to position for new highs, while the sellers
will look for a break lower to target a fall into the next trendline. The red
lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow, we get the latest US Jobless Claims figures, while on Friday, we
conclude the week with the US PCE.

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

• ECB’s Muller: An October cut isn’t totally excluded
• The central bank bonanza wraps up with the SNB later this week
• Germany September Ifo business climate index 85.4 vs 86.0 expected
• BOJ governor Ueda says unwinding of speculative yen positions has likely run its course
• European equities open higher as the positive mood keeps up
• What are the main events for today?
• BOE’s Bailey: Inflation has come down a long way
• BOJ governor Ueda: Global markets remain somewhat unstable
• RBA’s Bullock: We are prepared to respond in either direction depending on the data
• Eurostoxx futures +0.6% in early European trading
• RBA’s Bullock: Rates are to remain on hold for the time being
• BOJ governor Ueda says must conduct monetary policy in timely, appropriate fashion
• AUD/USD continues to set its sight on the December high as RBA reiterates hawkish stance
• RBA leaves cash rate unchanged at 4.35%, as expected
• Heads up: RBA monetary policy decision set for the bottom of the hour
• Chinese yuan gains alongside more positive mood in domestic markets

Markets:

• NZD leads, JPY lags on the day
• European equities higher;
  S&P 500 futures up 0.03%
• US 10-year yields up 4 bps to
  3.791%
• Gold
  up 0.08% to $2,630
• WTI
  crude up 2.49% to $72.13
• Bitcoin
  up 0.28% to $63,517

It’s been a
quiet session in terms of data releases with just the German IFO on the agenda.
The data was a touch softer than expected but no big deal. We got ECB’s Muller opening
the door for a cut in October with the market now pricing in a 95% probability
of a 25 bps move.

In the
markets, the surprising announcement of a big stimulus from Chinese officials
is still reverberating with commodities like copper and crude oil up notably on
the day. Treasury yields are also up as the market is now focusing on global
growth.

The focus
will now switch to the US consumer confidence and the labour market details in
the report. Looking forward, a pick-up in the US data in the next weeks and months
could see long term Treasury yields rising further.

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

• An October cut isn’t totally excluded.
• Too early to have strong view on October meeting.
• It will be easier to decide on cut in December.
• Services inflation needs to slow further.

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

Last week, the Fed finally started its easing cycle and decided to do it with a 50 bps
cut. The market was already leaning towards a 50 bps move, so it wasn’t a
surprise.

The larger cut was framed
as kind of a risk management move with the dot plot showing two more 25 bps
cuts by the end of the year and less than the market expected in 2025.

The US Dollar didn’t get a
boost despite the rise in Treasury yields as the market might be focusing more
on global growth expectations. Now that the decision is behind us though, the
focus will be on the economic data.

If we start to see an
improvement, then Treasury yields will likely continue to rise and lead to a
reprising in the dovish expectations potentially supporting the greenback in
the short-term.

Conversely, if the data
weakens, the market will likely go ahead with expecting more 50 bps cuts by
year-end and weighing on the US Dollar.

On the CAD side, the latest
soft Canadian CPI raised the probabilities for a 50
bps cut at the upcoming meeting as BoC’s Macklem hinted to a possibility of
delivering larger cuts in case growth and inflation were to weaken more than
expected. The market sees a 58% probability for such a move.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD probed above the key resistance around the 1.36 handle but
eventually got smacked back down. The sellers increase the bearish bets yesterday
as we got a breakout on the lower timeframes from a two-week long range.

The target should now be
the 1.34 handle. The buyers, on the other hand, will likely step in around the
1.34 handle to position for a rally back into the 1.36 resistance.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see the breakout of the two-week long range yesterday and the increase in the
bearish momentum. If we get a pullback, the sellers will likely lean on the trendline
to position for the continuation of the downtrend. The buyers, on the other
hand, will want to see the price breaking higher to pile in for a rally into
the 1.36 resistance.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a strong resistance zone around the 1.3550 level where we can
find the confluence
of the previous swing low level, the 61.8% Fibonacci
retracement level and the trendline.

The sellers will likely pile
in there to position for more downside, while the buyers will look for a break
to the upside to target a rally into the 1.36 handle. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Consumer Confidence report. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the Canadian
GDP and the US PCE.

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

Here’s a recap on the month of major central bank policy decisions so far:

• Bank of Canada interest rate decision: Rates lowered by 25 basis points
• ECB cuts deposit rate by 25 bps in September monetary policy decision, as expected
• Federal Reserve September interest rate decision: 50 basis point cut
• BOE leaves bank rate unchanged at 5.00%, as expected
• Bank of Japan leaves rates unchanged, as widely expected
• RBA leaves cash rate unchanged at 4.35%, as expected

That leaves us with the SNB left later in the week. And I would say it will be one of the more interesting decisions besides the Fed in September.

The „expectation“ is for the Swiss central bank to cut rates by 25 bps, bringing the key policy rate to 1.00%. This was their previous decision in June.

However, since then, they have made a bit of a pivot to comment on their dislike towards a stronger franc. In terms of USD/CHF, the pair is keeping near the lows for the year and just off key daily support around 0.8400 recently. But sure, it’s the dollar equation playing a role as well. But what about the more watched EUR/CHF?

The pair briefly touched its lowest point in August under 0.9250 before bouncing back up to 0.9450 levels currently. But still, the danger is not over and if the SNB really wants to prevent another return to deflation, this is a key risk to be mindful of. There is no time to be complacent.

In that lieu, they might just spring a surprise on market players this week as such. After all, the SNB does have the propensity to do that as seen in the past.

If so, how much will that catch markets off guard?

Well, the OIS pricing shows traders attaching ~51% odds of a 25 bps rate cut this week. The remaining ~49% odds are with a 50 bps rate cut. So, it wouldn’t be the most surprising decision if the SNB does go big this week.

That said, there’s only so much more that traders are seeing the SNB will do. Looking out to June next year, traders are pricing in just ~71 bps of rate cuts and that includes what’s priced in for this week.

In any case, the SNB has a bit of a balancing act to do as things stand. They want a weaker franc and traders are already pricing in the potential for them to surprise. But at the same time, going big this week leaves less buffer room for them to cushion further blows to the economy moving forward.

And that certainly sets us up for one of the more interesting decisions we have in wrapping up the month.

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

Tonight, the PBoC announced lots of easing measures ranging from short to long term interest rates. This
was the catalyst for the copper rally. Things are looking better and better for
the market as we’ve also got a 50 bps cut from the Fed last week.

Central bank easing
generally leads the manufacturing cycle, so we can expect global growth to pick
up. All these reasons should be bullish for the market and support prices in
the next months.

Moreover, as a reminder, the
positioning in crude oil is at record lows and the sentiment is very bearish. These
factors can generally offer great contrarian opportunities.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil is struggling to break above the key 71.67 resistance. The buyers will need the price to
break above the resistance to start targeting the major trendline around the 76 handle. The sellers,
on the other hand, will likely step in again with a defined risk above the
resistance to position for a drop into the 65 handle.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we created a range between the 68.50 support and the 71.67 resistance.
The bias remains skewed to the upside but until we get a breakout, the market participants
will likely keep on playing the range.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the choppy price action as the market continues to test the resistance.
There’s not much else to add here as traders will wait for a breakout on either
side to get things going. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Consumer Confidence report. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the US
PCE.

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

• Euro pressured lower as traders step up ECB rate cut odds for October
• France September flash services PMI 48.3 vs 52.5 expected
• Germany September flash manufacturing PMI 40.3 vs 42.4 expected
• Eurozone September flash services PMI 50.5 vs 52.1 expected
• UK September flash services PMI 52.8 vs 53.5 expected
• UK September CBI trends total orders -35 vs -21 expected
• Weekly update on interest rate expectations
• Fed’s Kashkari: 50 bps rate cut was the right decision

Markets:

• AUD leads, EUR lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields up 2.3 bps to 3.750%
• Gold flat at $2,622.69
• WTI crude up 0.4% to $71.31
• Bitcoin down 0.1% to $63,489

The focus of the session was on PMI releases in Europe and it did trigger a modest reaction in markets.

Coming into today, traders were pricing in ~61% odds of an ECB rate cut for October but stepped that up to ~80% now. That of course coming after poor PMI prints in both France and Germany, which also highlighted a softening of price pressures.

EUR/USD fell from 1.1145 to a low of 1.1083 before recovering some ground back to 1.1120 now, still down 0.4% on the day.

That comes as euro area bond yields fall with market players stepping up calls for the ECB to cut rates next month.

US futures also briefly slid into negative territory from the data releases but are now holding marginally higher on the day. European equities remain more mixed in general.

Looking to other major currencies, GBP/USD did fall alongside the euro to 1.3250 before recovering back some ground to 1.3315 now – near flat on the day. Meanwhile, USD/JPY is seeing an up and down day with the pair trading up to 144.45 in early Asia trading before being down by 0.3% now to 143.50.

The dollar is trading more mixed but only marginally lower at the balance, if not for the euro’s plunge. This comes as Treasuries are not offering all too much to start the new week. 2-year yields are still pressured near the 2023 low near 3.55%, seen currently at 3.57%. Then, we have 10-year yields sitting higher closer to 3.75% on the day.

It’s now over to the US session where we will also be getting the US PMI data. So, let’s see how that plays into the post-Fed picture.

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

• It reflects progress on inflation, softening of labour market
• Sees year-end rate at 4.4% and end of 2025 rate at 3.4%; same as median of Fed policymakers
• Balance of risks have shifted towards risk of further labour market softening
• Too soon to declare victory on inflation but disinflation process is on track
• Policy remains tight, though uncertain on how tight that may be
• Fed rate path will depend on totality of incoming data
• Signals on economic strength has been ‚confusing‘, with consumer spending surprisingly resilient
• Little evidence that recessionary forces are building or that inflation could surprise to the upside

As you would expect, they will be out to vindicate themselves in moving by 50 bps last week. Traders are now seeing ~51% odds of another 50 bps rate cut in November. But after having caved to market pricing last week, it will be a bit hypocritical for the Fed to suddenly try and talk that down – for now at least.

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

This is just a bit of a heads up as the economic calendar on Thursday will be highlighted by a speech from Fed chair Powell. He will be delivering the opening remarks at the 10th annual US Treasury Market Conference. However, his remarks will be ones that are pre-recorded. And based on the agenda, is only scheduled for 5 minutes.

There will be a host of other Fed policymakers involved with the conference though, so there’s that. But as for Powell, it is more than likely that we won’t be getting any significant policy comments given the above backdrop.

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

• Prior -22

UK factory order book balance fell to the lowest since November 2023 as export demand is also seen falling at the fastest pace since December 2020, according to CBI. The export order book balance plunged to a reading of -44, down from -22 in August, highlighting continued woes in the manufacturing sector.

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