• More confident that inflation trajectory might lead us to 2% target
• If rates are maintained for a sufficiently long period, we could get there
• Market has understood very well our communication
• Growth risks skewed to the downside
• It is premature to discuss rate cuts

They are trying to sell the story they are right in pausing on rate hikes but I guess time will tell. We’ll see how confident they can still try to be if the economy takes a worse turn in the months ahead.

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

• Prior -6.0%
• Market index 179.3 vs 178.2 prior
• Purchase index 137.5 vs 136.6 prior
• Refinance index 385.8 vs 384.6 prior
• 30-year mortgage rate 7.67% vs 7.53% prior

After a sharp drop in mortgage applications in the week before, there is a mild bounce back in activity with both purchases and refinancing ticking a touch higher. The drop in rates this week will be welcome, after another 14 bps rise in the average rate of the most popular US home loan last week.

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

The recent breakout of the
symmetrical triangle led to a fall into the key support around the 3.54 level.
The causes are the tighter monetary conditions that are leading to a slowdown
in global growth. Moreover, in the past weeks we also had some risk aversion
due to falling equity prices and rising global yields and US Dollar. More
recently, Copper bounced as Chinese data started to show some improvement as
the PMIs improved amid easing measures from Chinese
officials. Yesterday, we got another news that China is considering new stimulus to meet the growth target, which
should further support Copper prices.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that after the
breakout of the symmetrical triangle, Copper
fell to the key support around
the 3.54 level where it bounced as the buyers stepped in with a defined risk
below the level to position for a rally. The symmetrical triangle might now
turn into a descending triangle, so the 3.54 support and the top major trendline will be
key levels to watch from now on.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that Copper bounced
on the 3.54 support and rallied into the 3.68 level before pulling back into
the 61.8% Fibonacci retracement level
and resuming the rally. The market structure on this timeframe is bullish as
the price has printed a new higher high and the moving averages have
crossed to the upside. The first target for the buyers should be the minor
downward trendline around the 3.74 level where the sellers are likely to step
in to target a selloff into the 3.54 support.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
had a divergence with
the MACD right
into the key support which is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, we got a reversal, and the
buyers are now in control. On a more short-term basis, we might see the buyers
leaning on the recent swing low around the 3.64 level where we have the confluence with
the red 21 moving average. More conservative buyers might want to wait for the
price to take out the recent high before joining the rally. The sellers, on the
other hand, will want to see the price breaking below the recent swing low to target
another drop into the 3.54 support.

Upcoming Events

This week the market is likely to focus on the US CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report. Copper is
likely to react more to elevated Core CPI figures as they might lead to more
Fed tightening or ugly Jobless Claims data as that might signal a recession on
the horizon.

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

10-year Treasury yields are down to 4.707% now after returning from the long weekend, down notably from 4.782% at the end of Friday. That being said, they are much higher than the opening gap lower of 4.636% earlier today. We already saw how stocks brushed aside the Middle East conflict yesterday, will we see the same for the bond market later in the day?

That’s certainly something to watch out for and that could hurt risk sentiment, despite the strong rebound we are seeing in stocks since late yesterday. My gut feel tells me that investors are likely to keep any optimism in check, so perhaps we might not get roaring gains especially since the US CPI data is coming up on Thursday. But if bonds are going to topple over, it could see selling flows spill over to broader markets as well in the session(s) ahead.

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
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market remains
  fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The market doesn’t expect the Fed to hike anymore.

Australia:

• The
  RBA kept interest rates unchanged as expected as they are seeing inflation
  returning to target with the current level of interest rates.
• The
  latest monthly CPI showed that core inflation is
  slowing.
• The
  labour market is weakening as we got a big miss
  in July and the bulk of jobs added in August were part time.
• The
  Australian Manufacturing PMI fell further into contraction while
  the Services PMI jumped back into expansion.
• The
  market expects the RBA to hold rates steady at the next meeting as well.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the AUDUSD pair
was diverging with the
MACD right
when it was trying to break out of the range. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, the
pair failed to sustain the breakout and bounced back into the range. The buyers
might now have enough conviction to target the top of the range around the 0.65
handle.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
action within the range is a real mess with frequent spikes and erratic
movements. From a risk management perspective, the buyers would be better off
to wait for the price to pull back into the lower bound of the regression
channel around the 0.6380 level where they will also have the confluence with the
red 21 moving average. The
sellers, on the other hand, will want to see the price breaking below the support zone
around the 0.6370 level to position again for new lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup with the 61.8% Fibonacci
retracement level adding further confluence to the
support around the 0.6380 level. As previously mentioned, the sellers will want
to see the price breaking below the lower bound of the channel to invalidate
the bullish setup and position for another selloff into new lows.

Upcoming Events

This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report.

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

• Prior 91.3

This marks 21 months in a row now that the index has come in below the 49-year average of 98. Of note, 23% of business owners continue to report that inflation remains their single biggest problem in operating their business – similar to last month. The full report can be found here.

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

• OPEC+ action helped to reduce oil market volatility
• Will have a pavilion at COP28 to showcase how OPEC members are dealing with emissions
• Hopes that all voices will be at the table at COP28

Just some token remarks there by Al Ghais. He’s trying to sound reassuring on China but really, no one can say with relative comfort that there are issues over there that can be easily brushed aside for now.

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
  as the economy showed much stronger resilience than expected and the Dot Plot
  showed that the majority of members still expects another rate hike by the end
  of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully.
• The latest US Core PCE
  came
  in line with expectations with disinflation continuing steady.
• The labour market remains
  fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The market doesn’t expect the Fed to hike anymore.

Canada:

• The BoC left interest rates at 5.00% as expected but remains prepared to
  raise rates further if needed.
• BoC Governor Macklem delivered a hawkish speech which points to another rate hike
  if the data remains strong into the next policy meeting.
• The Canadian underlying inflation
  data has been beating expectations month after month with another beat across the board recently.
• On the labour market side, the recent
  report beat expectations and showed another uptick in wage growth, which is something that Governor
  Macklem said the BoC is watching carefully.
• The market doesn’t expect the BoC to
  hike at the upcoming meeting with odds hovering around 40%, but the central
  bank is not afraid to deliver surprising decisions.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCAD pair
recently broke above a key resistance level
around 1.3668, but sold off soon after helped by a strong Canadian jobs report
that raised the chances of another rate hike from the BoC on October 25. We can
notice also that the last leg higher diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see the price falling into the trendline before
finding strong buyers.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that as soon as the
price broke through the strong support around the 1.3660 level, the bearish
momentum intensified as more sellers piled in to target the upward trendline
around the 1.35 handle. We have another support zone around the 1.3550 level
where we can find the previous swing level and the 61.8% Fibonacci retracement level
for confluence. That’s
where we can expect the buyers to step in with a defined risk below the zone to
target a new high.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor downward trendline that coupled with the red 21 moving average is
likely to act as resistance for the current downtrend. In fact, we can expect
the sellers to lean on the trendline with a defined risk above it to position
for a drop into the 1.35 handle. The buyers, on the other hand, will want to
see the price breaking above the trendline to pile in and target a new high.

Upcoming Events

This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report.

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

It’s been a quiet one to start the new week and with it being a partial holiday in the US, that should also make for a slower session later on. The big news so far is still the surprise attacks by Hamas on Israel, leading to plenty of uncertainty in the Middle East at the moment. The latest is Israel calling for Chevron to shut down natural gas production at its Tamar platform amid safety concerns. The conflict is leading to plenty of anxiety all around for now.

S&P 500 futures are still down 0.6% and not much changed since the opening gap lower today. Meanwhile, European indices are keeping in the red but not much worse than their opening losses as well.

In FX, the dollar and yen continue to stay more bid with EUR/USD down 0.5% to 1.0530 and AUD/USD down 0.3% to 0.6360 currently.

It seems like markets are just waiting for this to quickly pass and get back to the usual business order before we get to the US CPI data later in the week.

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

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