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.
Canada:
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.
Nasdaq Composite Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Nasdaq Composite
eventually rallied strongly from the trendline and the
38.2% Fibonacci retracement level
following the strong NFP report. The buyers might now be in control and the
target should be the downward trendline around the 13800 level. The sellers, on
the other hand, will need the rally to fail completely and the price to get
back below the 13174 support to
increase the bearish momentum and take the Nasdaq Composite to new lows.
Nasdaq Composite Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely that
the Nasdaq Composite broke out of the consolidation around the support zone as
the price breached the resistance defined by the 38.2% Fibonacci retracement
level. The buyers are likely to pile in with more conviction now targeting the
13800 level.
Nasdaq Composite Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we
had a divergence with
the MACD right
into the strong support zone which is generally a sign of weakening momentum
often followed by pullbacks or reversals. The Nasdaq Composite might open lower
today following the events over the weekend, but the buyers should take that as
a dip-buying opportunity and pile in around the resistance turned
support with a defined risk below the most recent swing low.
The sellers, on the other hand, will want to see the price breaking lower to
start positioning for further downside and break of the most recent low.
Upcoming
Events
This week we have some important inflation reports. On
Wednesday, we will get the US PPI data and later in the day the FOMC Meeting
Minutes. On Thursday, it will be the time for the main release of the week,
that is the US CPI report, and at the same time we will see the latest Jobless
Claims figures. Finally, on Friday we will get the University of Michigan
Consumer Sentiment report.
This article was written by FL Contributors at www.forexlive.com.
Dow Jones Technical
Analysis – Daily Timeframe
On the daily chart, we can see that the Dow Jones
rallied last Friday following the strong NFP report before pulling back a bit
into the close. The buyers might now be eyeing the resistance around
the 34000 level where we can find the confluence with the
trendline, the
61.8% Fibonacci retracement level
and the red 21 moving average. That
will be a strong level where the sellers will be leaning on to position for
another selloff into new lows.
Dow Jones Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price
broke out of the downward trendline and the minor resistance around the 33258
defined by the 38.2% Fibonacci retracement level. We might see this resistance
becoming support now with the buyers leaning on it to position for another
rally into the 34000 resistance.
Dow Jones Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the divergence with
the MACD was
signalling a loss of bearish momentum which is often followed by pullbacks or
reversals. The break of the trendline should point to a reversal and the target
should be the 34000 resistance. The support zone around the 32258 level will be
key now as a bounce should point to further upside, while a break lower is
likely to give back control to the sellers and lead to another drop into the
32600 level.
Upcoming Events
This week we have some important inflation reports. On
Wednesday, we will get the US PPI data and later in the day the FOMC Meeting
Minutes. On Thursday, it will be the time for the main release of the week,
that is the US CPI report, and at the same time we will see the latest Jobless
Claims figures. Finally, on Friday we will get the University of Michigan
Consumer Sentiment report.
This article was written by FL Contributors at www.forexlive.com.
It’s all about the risk-off vibes for now amid the kneejerk reaction to the events over the weekend, in which we saw a surprise attack by Hamas on Israel. That is keeping equities on the defensive while the dollar is bid in European morning trade so far.
But just be wary that while European bond yields are lower amid safety flows, Treasuries are not open for trading today. And that is a major caveat to take note of, considering how the US bond market has been leading the rest of the market over the last three weeks or so.
Wall Street will still be open to trade stocks but it’s hard to read too much into the moves today until we get bond traders back in. For now, there is the broader element of risk aversion but once the fear is faded, we’ll get back to the regular scheduled programming soon enough. And I reckon it could only take a day or two since we do have the US CPI data coming up later in the week.
This article was written by Justin Low at www.forexlive.com.
This weekend, Hamas
launched a massive attack against Israel
which draws parallels between October 2023 and October 1973. The implications
for global markets are still uncertain, but the Oil market is the first one
that comes to mind. Javier Blas published a nice article
on Bloomberg where he highlights the likely implications and how the situation
can turn uglier.
Wednesday
The US PPI Y/Y is expected to match the
prior reading at 1.6%, while the M/M reading is seen at 0.3% vs. 0.7% prior.
The Core PPI Y/Y is expected at 2.3% vs. 2.2% prior, while the M/M figure is
seen at 0.2% vs. 0.2% prior. This report might not be that much marker moving
as the market is more likely to focus on the CPI report the following day.
The FOMC Meeting Minutes generally cause
some reaction in the markets, but the moves are usually faded soon after as the
contents are three-weeks old and mostly known. As
a reminder, the Fed left the FFR at
5.25-5.50% as expected with growth and inflation projections revised higher and
the unemployment rate revised lower. The Dot Plot showed that the FOMC still
expects another 25 bps hike by the end of the year but “surprisingly” sees only
50 bps of rate cuts in 2024, where previously it was 100 bps.
Thursday
The ECB Monetary Policy Meeting Accounts,
similar to the FOMC Minutes, are released roughly four weeks after the ECB
Policy Decision and they generally aren’t market moving. As
a reminder, the ECB hiked interest
rates by 25 bps at the last meeting with the market seeing a 50/50 chance back
then of either a hike or a pause. In the statement, the ECB added that it
“judges that rates have reached levels that, maintained for a sufficiently long
duration, will make a substantial contribution to the timely return of
inflation to the target”. This is basically them saying that they are done
with the tightening cycle, which is also what the ECB members have been
signalling in their speeches following the monetary policy meeting.
The US CPI Y/Y is expected at 3.6% vs.
3.7% prior, while the M/M reading is seen at 0.3% vs. 0.6% prior. The Core CPI
Y/Y is expected at 4.1% vs. 4.3% prior, while the M/M figures is seen at 0.3%
vs. 0.3% prior. Given the overall strong economic data and the beat in the NFP
report last Friday, a hot CPI report might force the Fed to proceed with a 25
bps hike at the November meeting.
The US Jobless Claims keep on beating
expectations week after week as the US labour market remains solid. This week
the consensus sees Initial Claims at 210K vs. 207K prior with no consensus at
the moment for Continuing Claims, although the prior reading was 1664K.
Friday
The
Chinese CPI Y/Y is expected at 0.2% vs. 0.1% prior, while the M/M reading is
seen at 0.3% vs. 0.3% prior. The PPI Y/Y is expected to remain in negative
territory at -2.4% vs. -3.0% prior. The Chinese inflation rate slipped into
deflation in July before returning in positive territory the next month as
officials kept on rolling out easing measures to prop up their ailing economy.
The
University of Michigan Consumer Sentiment is expected to tick lower to 67.4 vs.
68.1 prior. Consumer sentiment has been rising since October of last year as
consumers’ finances improved due to lower inflation and higher wages. More
recently, higher energy prices weighed on the sentiment, but the good news is
that inflation expectations haven’t gone up as one would have expected.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
„I emphasize for now, because all of that can change, and the Middle East region is quieter today than it has been in two decades,“ he said.
It’s not anymore.
Hamas launched a massive attack against Israel from Gaza, far more than anything in decades. The images are horrific from what was an incredibly-coordinated attack that was somehow completely missed by Israeli intelligence. It’s still far from clear what was done and the fallout but Israel’s declaration of war against Hamas wasn’t hyperbole; officials from Israel promised to leave Gaza in ruins.
Efraim Halevy, the former head of Mossad, Israel’s Intelligence Service, told CNN:
“The number of missiles they have launched within less than 24 hours is
over 3,000. This is beyond imagination from our point of view, and we
didn’t know they had this quantity of missiles, and we certainly didn’t
expect that they would be as effective as they were today.“
Fingers are being pointed in every direction, particularly at Iran and it comes just as the US was trying to broker a defense pact with Saudi Arabia. Given what’s likely to be a long and brutal response against Hamas, it will now be difficult for Saudi Arabia to recognize Israel as part of that deal.
In general, Israel-Palestine conflicts don’t move global markets but the scope of this is now so large and has so much potential to spread beyond Gaza that markets are sure to take notice on Monday and that likely means a bid in safe haven assets like gold and Treasuries; along with commodities that could be affected like oil. Also expect a bid in the US dollar.
This article was written by Adam Button at www.forexlive.com.
The WSJ’s Summer Said reports that Saudi Arabia has told the White House it would be willing to boost oil production early next year if crude prices are high. That would be part of a deal where Saudi Arabia would recognize Israel and get a defense pact with Washington.
There were rumors of a Saudi deal earlier in the week and that was cited as one of the reasons for the drop in oil prices.
The deal would include US support for a Saudi civilian nuclear program, and US approval for sophisticated weapons sales to Saudis.
The WSJ report said the US hopes to broker a deal in the next six months and that Israel, Saudi Arabia and the US have agreed on the broad contours of a deal. The deal may need Congressional approval and the US emphasized to Saudi Arabia that it would need to repair its image in the US, presumably by pumping more oil.
This will make for an interesting open to the oil market in the new week. The conditional part of the agreement that ‚if oil prices are high‘ is doing a lot of work in this report because ‚high‘ is certainly a matter of opinion. I’m certain Saudi Arabia doesn’t consider the $84.58 closing price of Brent on Friday as ‚high‘. So is that threshold $100? Or $120? Saudi Arabia also needs to balance its relationship with OPEC and Russia while funding its mega-projects.
There could be an element of ’sell the rumor, buy the fact‘ on this report. Also note that it was the same reporter who touted a rift between Saudi Arabia and the UAE earlier this year, saying „Emirati officials say the U.A.E. is having an internal debate about leaving OPEC“. There’s been no evidence since to substantiate that but it was part of a narrative that sank oil prices to $65 from $80 at the time. Finally, Summer Said also reported in November 2022 that OPEC was considering a production hike at the December 4, 2022 meeting, just after cutting by 2 million barrels per day. Saudi energy minister Prince Abdulaziz bin Salman denied the reports and said a production cut was possible instead but production was ultimately left unchanged.
This article was written by Adam Button at www.forexlive.com.