It has been a negative week for the major US stock indices, as rates moving higher, geopolitical tension, and dysfunction in Washington. That dynamic does not seem to be going away anytime soon.

However next week we get a slew of corporate earnings with something for everyone. A total of 4 of the „Magnificent 7“ are scheduled to be released including Microsoft, Alphabet, Meta, and Amazon.

Tesla – another of the 7 – already released this week (it was a disappointment). Nvidia and Apple will announce in the future.

In addition to the big 4, there are a number of other large cap companies scheduled for release.

Below are the major companies on the earnings calendar (* are companies who will announce before the open):

Monday:

• Phillips*
• Logitech

Tuesday:

• Coca-Cola*
• Verizon*
• GE*
• 3M*
• GM*
• Microsoft
• Alphabet
• Visa
• Texas Instruments

Wednesday:

• Boeing*
• T-Mobile*
• Hilton*
• General Dynamics*
• Meta
• IBM
• servicenow

Thursday:

• Altria*
• Southwest*
• Northrup Grumman*
• Merck*
• Amazon
• Intel
• Ford
• Chipotle

Friday:

• Exxon Mobil*
• Chevron*
• Phillips 66*
• Colgate-Palmolive*

This article was written by Greg Michalowski at www.forexlive.com.

Synopsis: Despite its historical strength and the ‚USD smile‘ framework, the USD’s recent subdued performance has left market observers questioning the continued applicability of this model. Credit Agricole delves into the factors affecting the USD’s momentum and highlights the potential paths for the currency moving forward.

Key Takeaways:

1. Synchronized G10 Rates and Yields: One of the chief factors that may have hampered the USD’s surge is the synchronized movement of most G10 rates and yields. This synchronous movement has marginally improved the USD’s relative rate appeal, making it less of a standout amidst its peers.

2. Fed’s Signal on Financial Conditions: The Federal Reserve has hinted that a combination of higher US rates, increased yields, and risk aversion could dampen the urgency for additional rate hikes. This signaling potentially curbs aggressive bullish sentiments for the USD.

3. Rising Foreign Portfolio Outflows: The US has witnessed a surge in foreign portfolio outflows from its fixed income markets. This trend is attributed to deteriorating fiscal prospects in the US coupled with diminishing FX reserves. Such outflows can act as a drag on the USD’s strength.

4. Overhang of USD Long Positions: An accumulation of long positions on the USD could be indicating market saturation, making further bullish movements harder to achieve.

5. The ‚USD Smile‘ Framework: While recent events have made market participants question the relevance of the ‚USD smile‘, Credit Agricole believes it remains a pertinent FX market model. The primary channel that could bolster the USD, under this framework, is a sudden surge in risk aversion leading to a robust inflow into US safe-haven assets.

Conclusion: While recent dynamics have posed challenges to the USD’s dominant trajectory, the ‚USD smile‘ remains a relevant tool to understand potential currency movements. The USD might find significant support if global markets witness heightened risk aversion, channeling more investments into safe-haven US assets. Investors should be vigilant of global risk sentiments to gauge future USD movements.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

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

• Inflation has come down a lot, should continue
• Economy has been resilient
• But business contacts say a slowdown is coming
• Not going to see a recession, inflation will go to 2%
• Don’t think there will be rate cuts before middle of next year
• Economy still has a lot of momentum
• Inflation will ebb slowly; Fed will need to be cautious, patient and resolute

As always is the case, you don’t really have to talk about the R-word unless there is a risk of it materialising. So, that sort of speaks for itself. But among all the major economies, it does seem like the Fed is best prepared to weather a slowdown at the moment.

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

Headlines:

• It’s all about the known unknowns right now
• USD/JPY nervy as traders test waters at 150.00
• Gold runs up towards next technical hurdle as geopolitical tensions persist
• Israel says that at any time Hezbollah shoots, they will fire back
• UK September retail sales -0.9% vs -0.2% m/m expected
• BOJ’s Ueda: Japan economy is recovering moderately
• BOJ to hold first long-term monetary policy review workshop on 4 December
• BOE’s Bailey says expects a ‚marked fall‘ in inflation next month

Markets:

• CAD leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields down 5.5 bps to 4.932%
• Gold up 0.5% to $1,982.84
• WTI crude up 1.5% to $89.71
• Bitcoin up 4.4% to $30,001

Traders are feeling sidelined for the moment awaiting further key developments in all areas, before really firming up any convictions. The bond selling hasn’t yet resulted in 5% yields in 10-year Treasuries, with flows also balanced out somewhat by uncertainty and rising tensions in the Middle East.

Stocks are pinned down for now but US futures are pointing to modest losses, although European indices are hammered down towards the end of the week.

In FX, it’s all about watching for USD/JPY at the 150.00 mark. The pair briefly clipped the figure level according to some quotes and that triggered a drop to around 149.60-70 before keeping just under 150.00 again now.

The pound also fell for a moment after a weak UK retail sales data, with GBP/USD slipping to 1.2095 before holding flattish around 1.2135 currently.

The loonie is the one leading gains on the day, helped out by higher oil prices with commodities still impacted by the Israel-Hamas conflict and worries surrounding the region.

WTI crude is up 1.5% to $89.71 while gold is also underpinned and testing the June and July highs at $1,983-87 on the day.

We’re approaching the weekend and that could explain the more cautious approach for now, after having seen a similar take last Friday already.

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

The good news on the economy continues to be
trumped by further tightening in financial conditions due to rising Treasury
yields, and the tensions in the Middle East increasing. In fact, on a
forward-looking basis, these events are likely to weigh on the economy further
down the road, which is not a good thing for the market. Yesterday, the US Jobless Claims beat
expectations once again but the Continuing Claims missed for a second time in a
row, which might be signalling that laid off people are finding it harder to
find another job fast.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite broke down and it’s now at a key support around
the 13174 level. This is where we can expect the buyers to step in with a
defined risk below the level to position for a rally into the top trendline around
the 13700 level. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 12274 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a
minor trendline adding an extra layer of confluence to the
13174 support level. This is likely to be a “break it or make it” moment for
the Nasdaq Composite as a break to the downside would open the door for much
lower prices.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that if we
were to get a bounce here, the sellers are likely to lean on the previous support now turned
resistance around the 13340 level where we can also
find the 50% Fibonacci
retracement level and the red 21 moving average. The
buyers will want to see the price breaking above that resistance zone as well
to invalidate the bearish setup and target the highs with more conviction.

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

If you’ve been glued to yours screens waiting for that USD/JPY push towards 150.00 again, it must be a real snoozer over the last 1.5 hours. Here’s the minute price action in the pair and it shows a roughly 8-10 pips range:

At this stage, it’s all about anticipating the things that will or might come next in markets. We know what those are but we don’t know what the bigger picture reaction that may be. Let’s take stock of the the key focus points right now.

1. The bond market. 10-year Treasury yields are down slightly today to 4.95% but it’s all about the trigger at 5% and if that will have broader market spillovers to follow. Or perhaps we could hit stops and see a retracement of sorts first, before revisiting that in the near future.
2. The Israel-Hamas conflict. And now we can sort of add in tensions at the Israel-Lebanon border as Hezbollah starts to interfere as well. There’s so much uncertainty breeding in the region and that is keeping commodities entertained. Gold is up alongside oil but broader markets are not too heavily impacted yet. However, there’s still the potential flight to safety before the weekend to consider.
3. USD/JPY and Tokyo intervention. According to some charts, we clipped the 150.00 mark earlier and that saw a brief drop to 149.73 (or perhaps lower on some charts) before getting bought back up. That to me reads as stops being triggered rather than any Japanese meddling but if we do catch a bid back above the figure level, could Tokyo step in again? There’s only one way to find out.

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,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts projected in 2024.
• Fed Chair Powell reaffirmed their data dependency but added that
  they will proceed carefully.
• The US CPI last week beat expectations on the
  headline figures, but the core measures came in line with forecasts and the
  market’s pricing barely changed.
• The labour market remains fairly solid as seen once again yesterday
  with the beat inJobless Claims, although continuing claims missed for a second
  time in a row.
• The US PMIs
  recently showed that the US economy remains pretty resilient.
• The University of Michigan Consumer Sentiment report last Friday missed across the
  board with the inflation expectations figures spiking back up.
• The US Retail Sales this week beat expectations by a big
  margin with positive revisions to the prior figures.
• The Fed members continue to cite elevated long-term
  yields as a reason to proceed carefully and will likely pause in November as
  well.
• Fed Chair Powell yesterday highlighted the rise in long term yields
  as well and the need to “proceed carefully”.
• The market doesn’t expect the Fed to hike anymore.

New Zealand:

• The RBNZ kept its official cash rate
  unchanged while
  stating that demand growth continues to ease and it’s expected to decline
  further with monetary conditions remaining restrictive.
• The New Zealand inflation data this week missed expectations
  supporting the RBNZ’s stance.
• The employment data surprised to the upside
  recently.
• The wage growth has also missed
  expectations and it’s something that the central banks are watching closely.
• The recent New Zealand Retail Sales beat expectations although the data
  remains deeply negative.
• The Manufacturing PMI continues to slide further into
  contraction, but the Services PMI jumped back into expansion.
• The RBNZ is expected to keep the
  cash rate steady at the next meeting as well.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the NZDUSD pair
managed to eventually break the low following the miss in the New Zealand CPI
and the strong US data. The bearish momentum continues to be weak, but the bias
remains skewed to the downside. The recent drop got a bit overstretched as
depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

NZDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a good
resistance now
around the 0.5860 level where we can find the confluence with the
trendline, the
38.2% Fibonacci retracement level
and the red 21 moving average. This is where we can expect the sellers to keep
piling in with a defined risk above the trendline to target new lows. The
buyers, on the other hand, will want to see the price breaking higher to
invalidate the bearish setup and target a rally back into the 0.60 handle.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the key levels to watch out for. From a risk management perspective,
the best spot for the sellers was the resistance around the 0.5860 level. Late
sellers may want to wait for the price to take out the low before joining the
trend but with a worse risk to reward setup. The buyers, on the other hand,
should wait for the break above the trendline before considering new longs.

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

Headlines:

• 5%.. Ready or not? Here we go..
• Dollar keeps more mixed so far on the day
• Japan’s Kanda: It will become ’noise‘ if we announce every FX intervention
• Japan’s Kanda: It is normal not to announce FX intervention immediately after it is done
• Japan’s largest labour union says aiming for 5% wage hike or more next spring
• BOJ raises economic assessment for 6 of Japan’s 9 regions in latest Sakura report
• France October business confidence 98 vs 100 prior
• Switzerland September trade balance CHF 6.32 billion vs CHF 4.05 billion prior

Markets:

• EUR leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 6.2 bps to 4.979%
• Gold up 0.2% to $1,950.77
• WTI crude down 1.0% to $87.46
• Bitcoin up 0.6% to $28,438

It was a slower session in general as markets are waiting with bated breath for 10-year Treasury yields to hit the 5% mark. It has been the case since the handover from Asia trading, with 10-year yields hovering around 4.95% to 4.97% mostly during the session.

Despite that, the dollar is failing to take much of a hint as it trades more mixed across the board. USD/JPY is still unable to muster enough power to retest the 150.00 mark again amid Tokyo intervention fears. Meanwhile, EUR/USD is actually up 0.2% to 1.0557 although the range for the day is still rather limited.

GBP/USD is down 0.2% to 1.2115 while AUD/USD is down 0.4% to 0.6310 after a softer Australian jobs report earlier today.

In other markets, stocks are also keeping more defensive with US futures slightly lower. Meanwhile, European indices are down across the board as they build on the drop from Wall Street yesterday.

Looking to commodities, gold continues to keep steady and ignore the bond market developments as it keeps around $1,950. Meanwhile, oil is tracking lower and looks to erase its weekly gains as the back and forth continues.

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

If there is one word to describe price action in the dollar this week, sideways would be the best I reckon. The greenback is trading more mixed once again today, keeping an advance against the aussie and kiwi while sitting lower against the euro and franc. Meanwhile, the pound is a touch softer while the yen is mildly higher as USD/JPY continues to consolidate below 150.00:

Apart from a hiccup here, Tokyo intervention fears is still keeping the pair down despite a surge higher in Treasury yields this week. 10-year yields are closing in on the 5% mark but still, we are in the same spot as we were at the end of last week for USD/JPY.

EUR/USD on the other hand continues to hold in between 1.0500 and 1.0600 on the week, struggling to cement any dollar strength arising from higher yields. That might be the clearest indication that if and when yields retrace – which could happen upon touching 5% – then we might see a decent unwinding in dollar longs.

For now, all eyes remain on the bond market and we’ll see if there will be any further reaction to US data later today with the weekly jobless claims and Philly Fed manufacturing index coming up.

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,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts projected in 2024.
• Fed Chair Powell reaffirmed their data dependency but added that
  they will proceed carefully.
• The US CPI last week beat expectations on the
  headline figures, but the core measures came in line with forecasts and the
  market’s pricing barely changed.
• The labour market remains fairly solid as seen once again last week
  with the beat in Jobless Claims, although continuing claims surprisingly missed.
• The US PMIs
  recently showed that the US economy remains pretty resilient.
• The University of Michigan Consumer Sentiment report last Friday missed across the
  board with the inflation expectations figures spiking back up.
• The US Retail Sales this week beat expectations by a big
  margin with positive revisions to the prior figures.
• The Fed members continue to cite elevated long-term
  yields as a reason to proceed carefully and will likely pause in November as
  well.
• The market doesn’t expect the Fed to hike anymore.

UK:

• The BoE kept interest rates unchanged at the last meeting.
• The central bank is leaning more
  towards keeping interest rates “higher for longer”, although it kept a door
  open for further tightening if inflationary pressures were to be more
  persistent.
• The latest employment report showed a slowdown in wage growth
  and some job losses in September which could point to a softening labour
  market.
• The UK CPI yesterday slightly beat expectations but given
  the softening in the labour market it’s unlikely to change the BoE’s stance.
• 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
rejected the key resistance around
the 1.2310 level where we had also the 38.2% Fibonacci retracement level
and the trendline for confluence. The
slight beat in the UK CPI hasn’t led to a rally in the pound as the market
doesn’t see it as game-changing. The bearish bias remains intact as the UK
labour market is starting to weaken while the US jobs data continues to
surprise to the upside.

GBPUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the pair broke
out of the range between the 1.2120 support and the 1.2220 resistance. This
remains a sellers’ market, so the buyers should wait for some key upside
breakout. The sellers, on the other hand, should step in at every pullback and
target a break below the previous lows.

GBPUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent breakout with the price rejecting the red 21 moving average before
making new lows. The bearish momentum looks to be strong but the sellers will
have a much better risk to reward setup if the price pulls back into the broken
support turned resistance where we can find the trendline and the red 21 moving
average for confluence. The buyers, on the other hand, will want to see the
price breaking above the trendline and the resistance to invalidate the bearish
setup and start targeting the resistance around the 1.2220 level.

Upcoming Events

Today we will get the latest US Jobless Claims
report and the market will want to see if the miss in Continuing Claims last
week was just a blip or the start of a trend. Later in the day, we will also
hear from Fed Chair Powell where the market will be focused on any hint about
the near-term policy outlook. Tomorrow, we will also see the latest UK Retail
Sales data.

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