A bit of a whipsaw in the Japanese yen on old news 0 (0)

From my broker, USD/JPY caught a whipsaw lower to 148.72 before reversing that move to steady around 149.40 levels again now. The reaction is to the headlines here. It’s a bit of a sensitive one but it just confirms what we already should know heading into the BOJ policy meeting later this month. From last week:

It looks like this is more to do with the algos being sensitive near the 150.00 mark more than anything else.

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

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BOJ reportedly mulls raising price outlook for the current fiscal year 0 (0)

The report says that the price outlook for the fiscal year 2023 is being considered to be revised higher to closer to 3%. Meanwhile, the Japanese central bank is said to discuss raising the price outlook for the fiscal year 2024 to 2% or above but to keep the outlook for the fiscal year 2025 at around 1.6%.

The yen is catching a bit of whipsaw on the headlines but this isn’t anything new. It just confirms the story from last week here: BOJ mulls raising FY 2023/24 core CPI target to ~3% from 2.5% forecast in July – report

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

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ForexLive European FX news wrap: A light retrace of the Friday moves for gold and yields 0 (0)

Headlines:

Markets:

  • NZD leads, CHF lags on the day
  • European equities a little higher; S&P 500 futures up 0.3%
  • US 10-year yields up 7.3 bps to 4.701%
  • Gold down 0.8% to $1,915.09
  • WTI crude up 0.1% to $87.82
  • Bitcoin up 2.8% to $27,737

There wasn’t much in terms of major headlines in European trading today as the Israel-Hamas conflict continues to rage on. But the fears surrounding it are abating slightly, as the two big movers were gold and Treasuries as both were offered during the session.

Gold fell down by over 1% at one point to $1,908 but is now keeping lower still by roughly 0.8% to $1,915 on the day. Meanwhile, 10-year Treasury yields slowly advanced from 4.67% to 4.70% now after an opening gap higher amid some unwinding of the flight to safety from Friday.

That being said, there were not any much bigger retracements elsewhere with US futures hanging on to tentative gains after a bit of back and forth during the session. Then, we have oil which remains flattish as traders are still sorting out the outlook after US president Biden warned that any Israeli occupation of Gaza would be a ‚big mistake‘.

As for major currencies, the dollar is seeing a mild retreat but nothing to really shout about. EUR/USD is up 0.2% to 1.0530 while USD/JPY is flattish at 149.55, so there isn’t much for traders to really get excited about.

The big mover is the kiwi with NZD/USD up 0.6% to 0.5920 and held gains throughout after the opening gap higher, following the NZ election results here.

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

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Nasdaq Composite Technical Analysis – Will this support hold? 5 (1)

Last Friday, the market sold off as the University of Michigan Consumer
Sentiment
report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war
. This could lead to a relief rally and the technical levels can help in
identifying the likely entry and exit points.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite last Friday fell into the upward trendline where we
have also the confluence with the
red 21 moving average. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for another rally into the major downward trendline
around the 13800 level.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more closely the support zone
around the 13370 level where we have further confluence from the red 21 moving
average, the 50% Fibonacci retracement level
and the previous resistance turned support. This is
a very good level for the buyers to position for a rally. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will likely pile
in even more aggressively to extend the drop into the lows and target a
complete breakdown.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that more
conservative buyers might want to wait for the price to break above the counter-trendline
to join the rally into the major downward trendline, while the sellers could
use it to target the break below the 13370 support with a better risk to reward
setup.

Upcoming
Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.

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

Go to Forexlive

MT Tower Elevates the Metaverse Experience – Listed on MEXC Exchange 0 (0)

MT
Tower is
poised to transform the influencer and social media landscape into a vibrant
and immersive wonderland. With a commitment to cutting-edge innovation, MT
Tower aims to deliver an unparalleled experience that captivates and delights.

A New
Era of Engagement

MT
Tower, or Meta Tower, isn’t just any run-of-the-mill metaverse platform; it’s a
lifestyle and gaming sensation. At its core, it’s all about redefining how
influencers connect with their audiences and how social media comes to life in
this immersive digital universe.

Authenticity
Unleashed

MT
Tower’s unique feature that sets it apart from the rest is its unwavering
dedication to authenticity. Unlike other metaverse platforms that rely solely
on avatars and artificial environments, MT Tower introduces the groundbreaking
concept of „Real-World Bridges.“ It’s like teleporting to real-world
locations that have been scanned, and for influencers, this opens doors to a
world of exciting possibilities. Influencers can now take their followers on a
journey that feels more genuine and relatable than ever before.

Creating
Unique Experiences

In MT
Tower, influencers become the ultimate creators. Influencers are given a blank
canvas to craft experiences that go beyond traditional social media boundaries.
The platform’s immersive nature lets Influencers host events, interact with
fans, and create unique virtual spaces for their audiences. For example, a
concert on the peak of a digital mountain or a Q&A session in a
meticulously replicated historic landmark. MT Tower empowers influencers to
bring their creative visions to life like never before.

Empowering
Creators and Influencers

In the
ever-evolving metaverse, Gen Z and creators are all about self-expression.
Traditional social media platforms often limit avatar customization options,
stifling creators‘ authenticity online. MT Tower addresses this issue by
offering a dedicated space for creators to design, showcase, and trade virtual
assets. This not only empowers influencers to create avatars that truly reflect
their identities but also provides a unique avenue for content creation that
resonates deeply with their audiences.

Privacy
and Security

As
influencers and users venture through the metaverse, concerns about privacy and
security take center stage. MT Tower has taken a proactive approach to address
these concerns, ensuring influencers can confidently engage with their
followers. With the perfect blend of immersive experiences and robust privacy
measures, MT Tower is setting the gold standard for secure interactions in the
metaverse.

Governance
and Inclusivity

Navigating
the intricate metaverse landscape requires effective governance, given its
decentralized structures and diverse participants. MT Tower is committed to
establishing fair and transparent rules, providing a stable environment for
influencers to thrive. Furthermore, the platform prioritizes inclusivity,
ensuring that everyone can participate, regardless of their background or
resources. This commitment broadens the reach of influencers and fosters
diverse and engaged audiences.

The MT
Token

MT Tower
isn’t just about influencers and creators; The MT token, the heartbeat of this
metaverse, is gearing up to make a splash as it gets listed on prestigious
cryptocurrency exchanges, including Kanga.Exchange and MEXC. MT token will be
listed on the MEXC exchange on October 18th. This exciting development opens up
new avenues for influencers and users to explore the metaverse’s economic
potential, further expanding their presence and opportunities.

Xsolla – Metaverse contractor

Another
exciting news is that Xsolla is all set to be the contractor for the entire MT
Tower metaverse. The contract has been signed, and the parties have marked the
first beta release for April 2024. What’s even more thrilling is that Xsolla
and MT Tower are inviting 50 lucky beta testers as they eagerly seek feedback
from their community. It’s all about inclusivity and innovation, and MT Tower
looks forward with anticipation to the future.

In
addition, an audit of the MT token has been conducted by Solidproof, and the
team is currently in the process of undergoing a Know Your Customer (KYC)
procedure.

About MT
Tower media

MetaTower (https://metatower.com/)
was founded in 2021 in response to the growing interest and demand in the
metaverse, the upcoming changes in the influencer space as well as the growing
need for new sales channels for e-commerce. The company is co-founded by
individuals with many years of experience in the blockchain space, who have
worked on numerous crypto projects, are associated with cryptocurrency media
and have extensive experience in financial markets. The company MetaTower is
registered in Estonia.

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

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Tentative gains for US futures for now 0 (0)

There’s not much going on so far in European morning trade apart from a slight retracement to the Friday moves in gold and bond yields. Major currencies are not much changed while oil is also flattish, with stocks hanging on to tentative gains for now. S&P 500 futures are up 0.2% while European indices are mostly little changed.

The price action so far on the session has been rather sideways and that speaks to the lack of conviction upon the return from the weekend.

As much as tensions surrounding the Israel-Hamas conflict aren’t getting much worse, there’s still much uncertainty in the region at the moment. And that is likely keeping traders on edge for now.

We’ll have to see what Wall Street makes of this later today but as mentioned earlier, the longer we go without any major escalation in the developments in the Middle East, that is every minute that markets will start to breathe a bit easier to step out of the shelter since Friday i.e. adding confidence to the unwinding of the risk-off flows.

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

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Dow Jones Technical Analysis – Key resistance in sight 0 (0)

Last Friday, the market fell as the University of Michigan Consumer
Sentiment
report saw a big miss across the board with the inflation expectations
figures spiking back up. This might be a signal that the consumers are indeed
weakening, and it could be a bad omen for the broad market. Moreover, we got
some defensive positioning into the weekend as there were some expectations
that Israel could start a ground offensive in Gaza and that could have led Iran
to join Hamas with uglier scenarios becoming likely from that point onwards.

The actual events fell short of expectations as we
haven’t got a ground operation and, although we got mixed signals, it seems
like Iran is not intentioned to join
this war
“provided that Israel does not dare to attack Iran”. This could lead to
a relief rally and the technical levels can help in identifying the likely
entry and exit points.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones
found resistance around
the red 21 moving average and the
previous swing level. The buyers should still be targeting the resistance
around the 34000 level where we have a much stronger confluence from the
previous swing low level, the 61.8% Fibonacci retracement level
and the major trendline. In
fact, if the price continues higher, we can expect the sellers to pile in even
more aggressively around the resistance to position for another selloff into
the lows with a better risk to reward setup.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the buyers are
stepping in around the 33500 level as they have the confluence from the 38.2%
Fibonacci retracement level and the red 21 moving average. If the price breaks
lower, the bullish setup would be invalidated, and the sellers will start to
pile in to target the 32597 support.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the support zone around the 33500 level and the rangebound price action
as the battle between buyers and sellers is starting to heat up. Watch what
happens around this level as a bounce should translate into another rally into
the resistance zone, while a break lower is likely to trigger a selloff into
the 32597 support.

Upcoming Events

This week is a bit empty on the data front. Tomorrow we
will get the US Retail Sales data and it will be interesting to see if the
worse consumers’ sentiment translated into weaker spending. On Thursday, we
will see another US Jobless Claims report where the market will want to see if
the miss in Continuing Claims last week was just a blip or something is
starting to deteriorate in the labour market. On the same day we will also hear
from Fed Chair Powell with the market being attentive to any type of signal on
the upcoming rate decision.

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

Go to Forexlive

Weekly Market Outlook (16-20 October) 0 (0)

UPCOMING EVENTS:

  • Monday: Japan
    Industrial Production, NZ CPI, PBoC MLF.
  • Tuesday: RBA
    Meeting Minutes, UK Jobs report, German ZEW, Canada CPI, US Retail Sales,
    US Manufacturing Production, US NAHB Housing Market Index.
  • Wednesday: China
    GDP, China Industrial Production, China Retail Sales, China Unemployment
    Rate, UK CPI and PPI, US Housing Starts and Building Permits.
  • Thursday:
    Australia Jobs report, US Jobless Claims, Fed Chair Powell speaks.
  • Friday: Japan
    CPI, PBoC LPR, UK Retail Sales, Canada Retail Sales.

Monday

The New Zealand CPI Y/Y is expected to
tick lower to 5.9% vs. 6.0% prior, while the Q/Q figure is seen at 2.0% vs.
1.1% prior. The elevated inflation rate is mainly due to the sharp rise in fuel
prices. Unless we get a big upside surprise, the RBNZ is unlikely to respond
with another rate hike as it has stated that it’s ready to look through the
short-term “noise”.

The PBoC is likely to keep the MLF and LPR
rates unchanged on Monday and Friday respectively as the economic outlook has
started to improve a little as seen with the latest PMI
figures
. On the other hand, the inflation
figures
last week disappointed, which might
give them space to go for another rate cut, although the monthly reading has
been positive for the last 3 months.

Tuesday

The UK employment change is expected at
-195K vs. -207K prior and the unemployment rate to remain unchanged at 4.3%.
The average earnings excluding bonus are seen at 7.8% vs. 7.8% prior, while the
average earnings including bonus are expected at 8.3% vs. 8.5% prior. The
BoE has paused at the last meeting and, as Governor
Bailey has stated recently
,
“future decisions are going to be tight”,
so strong readings might lead to another rate hike at the upcoming meeting,
especially if the inflation data surprises to the upside later in the week.

The Canadian CPI Y/Y is expected at 4.0%
vs. 4.0% prior, while the M/M figure is seen at 0.1% vs. 0.4% prior. There’s no
consensus at the moment for the Core measures, although those are the ones
that the BoC will look at to decide what to do at the next week’s meeting. As
a reminder, underlying inflation has been surprising to the upside and that’s
what is likely
to trigger another rate hike

from the BoC if this week’s figures remain elevated.

The US Retail Sales M/M are expected to
rise 0.3% vs. 0.6% prior, while the Core measure is seen at 0.2% vs. 0.6%
prior. Watch out for the Control Group, which is seen as the best gauge of
consumer spending. This report is unlikely to change anything for the Fed as
the central bank is expected to keep rates unchanged at the November decision
as well.

Wednesday

The UK CPI Y/Y is expected at 6.5% vs.
6.7% prior, while the M/M figure is seen at 0.4% vs. 0.3% prior. The Core CPI
Y/Y is expected at 6.0% vs. 6.2% prior, while there’s no consensus at the
moment for the monthly rate. The BoE is likely to look through an upside
surprise in the inflation data if the labour market report shows weakness.
On the other hand, if both the reports show strength, then we are likely to see
another rate hike at the upcoming meeting.

Thursday

The US Jobless Claims have been showing
strength for several weeks. Last
week
though, we got a miss in Continuing
Claims, which measures ongoing unemployment benefits and can be viewed as an
indicator of how easily workers can find another job after getting unemployed. It
could be something or it could be nothing, but it’s certainly worth to keep an
eye on. This week the consensus sees Initial Claims at 213K vs. 209K prior,
while there’s no consensus on Continuing Claims at the time of writing.

Friday

The Japanese Core CPI Y/Y is expected at
2.7% vs. 3.1% prior, while there’s no consensus at the moment for the Core-Core
figure and the Headline CPI, which were previously 4.3% and 3.2% respectively.
The Tokyo CPI, which is seen as a leading indicator for national CPI,
disappointed recently and, although the BoJ
is going to revise its inflation forecasts higher
,
they are unlikely to normalise their monetary policy unless they see
sustained wage growth or big upside surprises in the inflation data.

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

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IMF: Yen’s recent declines are driven by fundamentals, criteria not met for intervention 0 (0)

Alongside the surge in USD/JPY Japanese authorities have insisted, over and over again, that the rate should trade in a stable fashion ‚driven by fundamentals‘. And over and over again the market has insisted that a 500+ or so bp differential between US and Japanese rates are a solid fundamental.

The IMF have weighed in, an official speaking on Saturday saying:

  • „On the yen, our sense is that the exchange rate is driven pretty much by fundamentals. As long as interest rate differentials remain, the yen will continue to face pressure“

Adding that the IMF assesses intervention in the FX market to be justified only when there is a severe dysfunction in the market, a heightening of financial stability risks, or a de-anchoring of inflation expectations:

  • „I don’t think any of the three considerations exist right now“

The IMF is, of course, correct. The concern now is that once these folks recognise it maybe the trend is nearing completion.

But not before a more determined crack at taking the rate above 150 next week I’d suggest:

Join ForexLive on Monday and the market response to this.

ps.

This
chart is from our charting app, which is free and can
be found at this link

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

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Newsquawk Week Ahead: US retail sales, China activity data, PBoC, NZ, UK and Canada CPI 0 (0)

Week Ahead 16-20th October

  • Sat: New Zealand General Election
  • Mon: New Zealand CPI (Q3), PBoC MLF
  • Tue: RBA Minutes, German ZEW Survey (Oct), US Retail Sales (Sep), Canadian CPI (Sep)
  • Wed: Chinese GDP (Q3), Chinese Industrial Output (Sep) and Retail Sales (Sep), UK Inflation (Sep), EZ Final HICP (Sep)
  • Thu: BoK Announcement, Bank of Indonesia Announcement, Japanese Trade Balance (Sep), Australian Jobs Report (Sep), US Philly Fed (Oct), Canadian PPI (Sep)
  • Fri: EU-US High-level Meeting; PBoC LPR, Japanese CPI (Sep), UK Retail Sales (Sep), Canadian Retail Sales (Aug)

NOTE: Previews are listed in day order

New Zealand General Election (Sat): New Zealand will hold its general election on Saturday 14th October 2023 and polls suggest a change of government with voters electing 120 members to the House of Representatives under New Zealand’s mixed-member proportional voting system whereby 72 members will be elected from single-member electorates and 48 from closed party lists, while 61 seats are needed for an outright majority. The two main parties vying for control of the 54th Parliament and form the next government include the incumbent Labour Party led by PM Hipkins which currently has 62 seats and won an outright majority in the House at the last election in 2020 under former PM Ardern and was the first time a party achieved a majority under the MMP system since its introduction in 1996. The main opposition is the National Party, led by Christopher Luxon and currently has 34 seats, but are clearly leading across opinion polls. Nonetheless, neither of the main parties are expected to achieve a majority, so the next government will likely be formed through a coalition involving the smaller parties, with the Green Party and Te Pāti Māori which currently hold 9 and 2 seats, respectively, traditionally supportive of Labour, while right-wing ACT currently has 10 seats and is seen to be on track with the National Party to win 59 seats as part of a right coalition. This likely puts the next government in the hands of the New Zealand First Party which is projected to return to parliament after it was ousted in the 2020 election due to a failure to achieve the minimum 5% needed for parliamentary representation, while party leader and effective ‘kingmaker’ Winston Peters, is all too familiar with this responsibility after having supported both the Labour Party and National Party in past governments.

New Zealand CPI (Mon): YY CPI for Q3 is seen cooling a touch to 5.9% from 6.0%, while the QQ metric is expected to tick higher to 2.0% from 1.1%. The RBNZ, via forecasts released in August, see the Q3 YY rate at 6.0% and the QQ at 2.1%. “The September quarter saw a sharp rise in fuel prices and other transport costs, as well as a large increase in local body rates and the annual increase in tobacco taxes. That’s only partially offset by the softening in food prices in recent months”, suggest the analysts at Westpac, as the bank pencils in a QQ metric of 1.9% and a YY forecast of 5.8%. The desk acknowledges that its forecasts are softer than the RBNZ’s projections, as it reflects “a lower forecast for tradable prices. Even so, core inflation and non-tradable inflation are expected to remain red hot.”

PBoC MLF (Mon)/LPR (Fri): The PBoC is likely to maintain its 1-Year MLF rate and benchmark Loan Prime Rates next week with the 1-Year MLF Rate at 2.50%, 1-Year LPR at 3.45% and 5-Year LPR at 4.20%. As a reminder, the PBoC kept its MLF and benchmark lending rates unchanged last month, which was as expected after having just cut its key short-term rates in August by between 10bps-15bps, although it did announce a cut in the RRR last month which was seen to release over CNY 500bln of liquidity and help stabilise the Yuan. Furthermore, the PBoC said it will maintain the basic stability of the exchange rate, firmly support the sustainability of the real economy and promote the economy to achieve effective qualitative improvement and reasonable quantitative growth. The latest data releases have pointed to a lack of urgency for an immediate policy tweak as Industrial Profits returned to growth and PMI figures were mixed in which the official Manufacturing and Non-Manufacturing PMIs topped forecasts, but Caixin PMIs disappointed, while inflation data was softer-than-expected and trade figures mixed with exports remaining in contraction territory.

RBA Minutes (Tue): The RBA will release the minutes from the October 3rd meeting when the central bank kept the Cash Rate Target at 4.10%, as widely expected, while it also stuck to its familiar rhetoric in which it reiterated that some further tightening of monetary policy may be required and that the Board remains resolute in its determination to return inflation to target. Furthermore, it stated that returning inflation to target within a reasonable timeframe remains the Board’s priority and recent data is consistent with inflation returning to the desired 2–3% range over the forecast period, while it also stated that inflation in Australia has passed its peak, but is still too high and will remain so for some time yet, as well as noting significant uncertainties around the outlook. This was new Governor Bullock’s inaugural meeting at the helm, while the language from the central bank was pretty much a carbon copy of the comments during Lowe’s leadership and further bolstered the view of policy continuity.

US Retail Sales (Tue): US retail sales are expected to rise 0.2% M/M in September, cooling from the 0.6% pace in August; the core measure is seen rising 0.1% M/M, and also slowing from 0.6% previously. In its monthly consumer checkpoint analysis, Bank of America’s analysts note that consumer spending has been fairly flat over the last two months. Its data shows total card spending +0.2% M/M, reversing the 0.2% decline in card spending reported in August. It said that total card spending per household was +0.7% Y/Y in September (vs +0.4% in August), according to its internal data. „The labour market is key for the consumer,“ it wrote, „while there has been a relative deterioration in labour conditions at the higher end of the market, most of that underperformance may now be in the past.“ But BofA adds that wages and salaries of higher-income households are still growing at slower rates than other income cohorts. Analysts will monitor the data to see how consumer trends are holding up in the face of a slowing economy. Ahead, Adobe’s online shopping forecast for the holiday season (period that runs from November 1st through the end of this year) predicts that US online holiday sales will rise 4.8% Y/Y and hit USD 221.8bln. It said mobile shopping is set to overtake desktop for the first time, as consumers get increasingly comfortable transacting on smaller screens, and discounts were expected to hit record highs, while ‚Buy Now, Pay Later‘ usage is set to drive a record USD 17bln in online spending as consumers look for flexible ways to manage their budgets.

Canadian CPI (Tue): In the minutes from the September policy meeting, BoC officials were concerned about ongoing and broad-based inflation pressures, with some components rising well above pre-pandemic averages. They noted that shelter costs and high oil prices were contributing to inflation. The minutes said that the outlook for inflation suggests that it will rise in the short-term, due to higher oil and gasoline prices, but gradually ease afterward. The BoC will closely monitor whether momentum in underlying inflation is decreasing, particularly focusing on core inflation, which has remained sticky, and will also consider the balance between economic supply and demand in determining future inflation. Canadian bank RBC says its base-case does not assume further interest rate hikes from the BoC this year, noting that there is still another monthly inflation report and the closely watched Business Outlook Survey to be released before the central bank’s next confab, though adds that the BoC has been clear that it won’t hesitate to respond with more hikes if necessary to cool labour markets and bring inflation down.

Chinese GDP (Wed) / Industrial Output and Retail Sales (Wed): Analysts expect Chinese Q3 GDP to print at 4.4% YY (prev. 6.3% in Q2) and with the QQ rate forecast at 1.0% (prev. 0.8%). The Retail Sales metric for September is seen at 4.5% (prev. 4.6% in August) and Industrial Output at 4.3% (prev 4.5% in August), according to Reuters. A recent piece by the CCP’s mouthpiece, Securities Daily (citing industry experts), suggested the YY metric may be above 4% whilst recently announced stimuli make their way through the economy, “the economy ‘opened low but moved high’ in the third quarter”, Securities Times said. “Judging from high-frequency indicators in September, the current positive factors for economic recovery are increasing, and economic growth is expected to remain steady throughout the quarter.” On the rest of the activity data, the piece says “Industrial production is expected to continue to accelerate month-on-month in September. However, due to the higher base in the same period last year, the year-on-year growth rate is expected to rebound slightly to around 4.7%.” On the retail sales front, Securities Daily says “continued rapid rebound in service consumption this year, and this trend continued in the third quarter.” Looking ahead to Q4, the CCP mouthpiece says Q4 economic growth is expected to improve across the board – “with consumption recovery momentum continuing to strengthen, investment growth rising from a decline, and the dragging effect of external demand on economic growth also easing. In addition, as measures to stabilize the property market continue to be stepped up, the real estate market is expected to stabilize and rebound in the fourth quarter, and its impact on consumption and investment confidence will be weakened.”

UK Inflation (Wed): Expectations are for headline Y/Y CPI in September to fall to 6.5% from 6.7%, with no consensus available for the other metrics at the time of writing. The prior report acted as a decisive factor in the MPC’s decision to stand pat on rates in September after the release saw declines in headline, core and services CPI, with the latter coming in at 6.8% and well below-the BoE forecast of 7.2%; note, the majority of the fall in services CPI was attributed to airfares and package holidays. For the upcoming release, analysts at Investec are of the view that “despite the push higher in fuel prices over the month, we still expect that inflation continued its downward trend in September”. The desk adds that upside pressures could come from education and transport, however, it expects that “these were outweighed by easing price pressures in other areas, such as cooling food price inflation as well as clothing prices”. From a policy perspective, similar to the labour market report, it is hard to see the data having much bearing on pricing for the November meeting which points towards the BoE standing pat on rates once again. That said, if the release is particularly out of line, it could have some impact on expectations for rate cuts in 2024, however, given the difficulties in near-term forecasting throughout the current hiking cycle, it is unlikely that market participants will have too much conviction in cementing calls for next year.

BoK Announcement (Thu): The Bank of Korea is likely to maintain its 7-Day Repo Rate at the current level of 3.50% where it has been since January this year and with the central bank expected to refrain from any rate changes for the rest of the year. As a reminder, the BoK was unanimous in its decision to keep rates unchanged at the last meeting in August, although six out of the seven Board members wanted to keep the door open for one more rate hike, while the BoK said it would maintain a restrictive policy stance for a considerable period of time and Governor Rhee stated it is too early to talk about a rate cut, but did not want to rule out the possibility of an ease this year and acknowledged that interest rates are at the upper end of the neutral range, or higher. Furthermore, the central bank noted high uncertainties, including Chinese economic growth and US monetary policy, while it was stated that the increase in household debt over the last couple of months was faster than expected and they may consider macro policy to tackle the issue, but not for now. Since that meeting, there hasn’t been anything to suggest a change in the status quo and the central bank’s senior Deputy Governor recently stated that there is no need to tighten monetary policy further for now, while inflation data accelerated in September with CPI YY at 3.7% vs. Exp. 3.4% (Prev. 3.4%), although this is unlikely to force the BoK to act as it had anticipated an increase before stabilising from October onwards towards 3% by year-end.

Japanese Trade Balance (Thu): The Trade Balance for September is expected to show a narrower deficit of JPY 425mln vs the August deficit of JPY 938mln. Exports are seen growing 3.1% YY (prev. -0.8%), while imports are seen contracting 12.9% YY (prev. -17.8%). Analysts at CapEco believe the deficit will continue to flatline around JPY 600bln. The desk, citing trading partners alongside prelim figures, posits that imports fell at a slower pace in September. “Given that import prices increased by less on the month, we suspect import volumes also rose slightly”, say CapEco.

Australian Jobs Report (Thu): There are currently no forecasts for the Aussie jobs report. Analysts at Westpac see the employment change at 20k (prev. 64.9k), while the desk sees the unemployment rate steady at 3.7%. The analysts suggest “The choppy profile over the last two months again looks to be partly a reflection of shifting seasonalities around school holidays.” The desk also posits that “ Businesses have demonstrated a remarkable ability to absorb the migration-driven surge in labour supply, although this dynamic will be tested as the broader economy continues to slow… The labour market has moved past its tightest point but is not yet slackening to a material degree.” Westpac anticipates that the labour market will remain tight into the end of the year “before a more material degree of slackening emerges in 2024.”

EU-US Summit (Fri): European Commission President von der Leyen and European Council President Michel will meet President Biden on October 20th at the White House. Topics on the agenda, according to the joint statement, include Russia-Ukraine, clean energy, digital infrastructure, AI, and the leaders will “review joint activities to strengthen economic resilience and to address related challenges.” Away from the official release, sources suggested one area of focus will be the steel sector. A senior EU official cited by newswires suggested steel tariffs are among the issues to resolve, with Bloomberg later reporting the two sides are seeking an interim deal on steel to avoid the return of Trump-era tariffs. Furthermore, from a geopolitical angle, the EU is reportedly planning an anti-subsidy probe into Chinese steelmakers at a summit with the US on October 20th, according to the FT citing sources. An EU official clarified to Reuters that the probe was not limited to China. “A joint statement due at the end of the summit is expected to say the European Union will use its trade defence instruments to assess the market situation for steel, but not mention China. This would lead to investigations by the European Commission”, according to the diplomat. Aside from the steel issue, desks also suggest keeping an eye on commentary surrounding Europe’s opposition to the US Inflation Reduction Act.

Japanese CPI (Fri): The Core YY rate is seen cooling to 2.7% from 3.1%. There is no forecast for the headline YY or super-core YY, which were previously 3.2% and 4.3% respectively. Using the Tokyo CPI (released a couple of weeks ago) as a proxy, the metric ticked down to 2.8% from 2.9% in the month following a sharp decline in August, led by declines in utility tariffs and manufactured goods inflation. Analysts at CapEco forecast a similar cooling in the coming release. The desk also highlights that the pickup in services inflation reversed in the last month, however, inflation is moderating less quickly than the Bank of Japan anticipated, which will lead to the need to revise inflation forecasts in their meeting later this month (30th-31st). In fitting with that view, Kyodo sources from October 10th suggested the BoJ is reportedly mulling raising its FY23/24 core CPI forecast to near 3% from 2.5% forecast in July. CapEco sees the YY headline at 3.1%, core at 2.8% and supercore at 4.1%.

UK Retail Sales (Fri): In terms of recent consumption indicators, BRC Y/Y retail sales rose 2.8% in September (prev. 4.3%), with the consultancy noting “Sales growth in September slowed as the high cost of living continues to bear down on households. Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs”. Elsewhere, the Barclaycard consumer spending release noted “It was nice to see consumers return to the high-street and make the most of the warm weather in early September. However, with the festive period approaching, consumers are balancing their budgets to prepare for this expensive period”. For the upcoming release, Oxford Economics notes “…we think there was a further pickup in sales in September. Food sales have been particularly soft of late and look ripe for further catch-up, while there’s scope for recoveries in non-store and fuel sales after chunky m/m falls in August”.

This article originally appeared on Newsquawk.

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

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