<ul><li>Prior -1.7%</li><li>Market index 200.1 vs 201.1 prior</li><li>Purchase index 160.5 vs 160.4 prior</li><li>Refinance index 386.7 vs 394.7 prior</li><li>30-year mortgage rate 7.06% vs 7.16% prior</li></ul><p style=““ class=“text-align-justify“>Another week, another slump in mortgage activity as high rates continue to weigh heavily on housing market conditions. The index is already at its weakest since 1997 and the Fed could inflict further pain on the market should it stick to its hawkish resolve today.</p>

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

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/10-year-treasury-yields-retreat-back-below-4-20221101/“>10-year Treasury yields retreat back below 4%</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-slides-further-amid-strong-bid-in-bonds-20221101/“>Dollar slides further amid strong bid in bonds</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/rbas-lowe-need-to-strike-a-balance-between-doing-too-much-and-too-little-20221101/“>RBA’s Lowe: Need to strike a balance between doing too much and too little</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-lagarde-we-will-have-further-rate-increases-in-the-future-20221101/“>ECB’s Lagarde: We will have further rate increases in the future</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japans-suzuki-further-sharp-yen-weakening-is-unfavourable-with-inflation-being-an-issue-20221101/“>Japan’s Suzuki: Further sharp yen weakening is unfavourable with inflation being an issue</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-september-import-prices-09-vs-06-mm-expected-20221101/“>Germany September import prices -0.9% vs +0.6% m/m expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-october-nationwide-house-prices-09-vs-00-mm-prior-20221101/“>UK October Nationwide house prices -0.9% vs 0.0% m/m prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-october-final-manufacturing-pmi-462-vs-458-prelim-20221101/“>UK October final manufacturing PMI 46.2 vs 45.8 prelim</a></li></ul><p>Markets:</p><ul><li>NZD leads, USD lags on the day</li><li>European equities higher; S&P 500 futures up 0.9%</li><li>US 10-year yields down 13.8 bps to 3.938%</li><li>Gold up 1.3% to $1,653.51</li><li>WTI crude up 1.3% to $87.66</li><li>Bitcoin up 0.5% to $20,525</li></ul><p style=““ class=“text-align-justify“>There was a rumour floating about in Asia trading suggesting that China is looking to take steps to assess a potential move away from its zero-Covid policy. The setting up of a so-called ‚re-opening committee‘ was enough to produce a surging rally in Chinese equities and the positive momentum spilled over into European trading as well.</p><p style=““ class=“text-align-justify“>US futures ticked higher and that set up a buoyant open in Europe, which continued throughout. The mood is also helped by a bid in bonds with Treasury yields slumping heavily during the session, with 10-year yields down back below 4% today.</p><p style=““ class=“text-align-justify“>As such, the dollar was offered with the yen among the strong gainers. USD/JPY fell from 148.40 to 147.00 during the session while EUR/USD advanced from 0.9900 to 0.9947 with large option expiries nearby the top.</p><p style=““ class=“text-align-justify“>The dollar also slumped against the commodity currencies with USD/CAD dipping by 0.6% to 1.3535 and AUD/USD erasing its post-RBA retreat, moving up from 0.6410 to 0.6450 levels.</p><p style=““ class=“text-align-justify“>It is shaping up to be a choppy start to proceedings this week and putting aside the headline from China above, the main focus will be on the Fed tomorrow. That will shape up how things will go for much of the remainder of this year as well.</p>

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

<p style=““ class=“text-align-justify“>The dollar is trading to the lows for the day with USD/JPY now close to clipping 147.00, down over 1% at the moment:</p><p style=““ class=“text-align-justify“>There’s a lot at stake this week when it comes to the Fed. The price action today suggests that broader markets are not settled or that traders and investors think something big is coming. Think along the lines of a Fed pivot. That’s the most important narrative that needs to be sorted out as we look towards the FOMC meeting tomorrow.</p><p style=““ class=“text-align-justify“>Sure, the rumour about China setting up steps to re-open is also a big step in the right direction but until there is any real truth to that, the Fed will remain the major focus point this week.</p><p style=““ class=“text-align-justify“>If there is any crack in the resolve by the Fed tomorrow, it’s not that they risk a misstep in the battle against inflation. It is more so that they risk credibility and that is something markets will look to punish. Any slight softening in their messaging will no doubt result in a whopping rally for risk trades.</p><p style=““ class=“text-align-justify“>For the dollar? That might be what signals a top.</p>

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

<p style=““ class=“text-align-justify“>It’s a risk-on day and these days that tends to translate to a softer USD/JPY as <a target=“_blank“ href=“https://www.forexlive.com/news/10-year-treasury-yields-retreat-back-below-4-20221101/“ target=“_blank“>bonds are also bid</a> alongside equities in trading today. Not to mention that the dollar has been more favoured as a safety currency this year, so any risk-positive momentum is likely to lead to a fall in USD/JPY such is the one today.</p><p style=““ class=“text-align-justify“>The pair is down 0.8% to 147.47 and closing in on its 100-hour moving average (red line) next at 147.24. A drop below that will see sellers regain near-term control with a keen emphasis to try and take a run at 145.00 to gather further momentum.</p><p style=““ class=“text-align-justify“>For now, Japan officials can take comfort in the recent price action – in the sense that we are not seeing buyers overstep to take a run at the 150.00 level again since two weeks ago.</p><p style=““ class=“text-align-justify“>But more importantly I would say, is that one should be paying attention to some subtle shifts in communique from Japan as of late. The BOJ did it on Friday <a target=“_blank“ href=“https://www.forexlive.com/centralbank/boj-announces-it-leaves-monetary-policy-unchanged-20221028/“ target=“_blank“>here</a> and we also got remarks from finance minister Suzuki earlier today <a target=“_blank“ href=“https://www.forexlive.com/news/japans-suzuki-further-sharp-yen-weakening-is-unfavourable-with-inflation-being-an-issue-20221101/“ target=“_blank“>here</a>. I would say it is premature to say that this is the turning point in the BOJ pivot argument but I am open to the idea that perhaps domestic authorities are starting to accept that this is the only option to really arrest any further yen decline.</p><p style=““ class=“text-align-justify“>Besides, with the rest of the world having to deal with rampaging <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_1″ class=“terms__main-term“>inflation</a>, is it too far-fetched to believe that some of that will eventually seep into the Japanese economy?</p>

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

<ul><li>Prior 48.4</li></ul><p style=““ class=“text-align-justify“>A slight revision higher but it still marks a modest contraction of the manufacturing sector in the UK as output, new orders and new export business all decline. That comes despite input cost and selling price inflation easing slightly on the month. S&P Global notes that:</p><p style=““ class=“text-align-justify“>“UK manufacturing production suffered a further decline at the start of the fourth quarter, with the sector buffeted by weak demand, high inflation, supply-chain constraints and heightened political and economic uncertainties. New work intakes fell at the quickest pace since May 2020 as demand in domestic and export markets weakened. While the downturn has lessened the pressure on prices, the weak pound and high energy prices mean elevated cost <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_3″ class=“terms__main-term“>inflation</a> remains a prime concern for manufacturers. </p><p style=““ class=“text-align-justify“>“The darkening situation also knocked business optimism down to a two-and-a-half year low, as concerns about the weak demand outlook, recession, inflationary pressure and sustained uncertainty hit confidence. The labour market picture has also deteriorated, with companies cutting jobs for the first time in almost two years while still struggling to recruit and retain appropriate staff. On current form manufacturing is in no position to help prevent the broader UK economy from sliding into recession.“</p>

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

<p style=““ class=“text-align-justify“>It’s essentially a risk-on day as equities are surging, with European indices up over 1% and S&P 500 futures up 27 points, or 0.7%, at the moment. Bonds are also strongly bid (which these days is a positive development for risk) with 10-year Treasury yields falling back to 3.98%, down 9.5 bps on the day:</p><p style=““ class=“text-align-justify“>This is putting the dollar in the pressure cooker as the greenback is feeling the heat in trading today. USD/JPY is down about 100 pips to 147.70 with the dollar lagging across the board.</p>

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

<p>Vitol’s CEO says significantly lower demand for oil products; we’ll see demand destruction for more months; „absolutely“ seeing signs of oil demand destruction </p><p>Also says China is unlikely to see demand rebound until H2 2023.</p><p><a target=“_blank“ href=“https://newsquawk.com/headlines/list#:~:text=Vitol%27s%20CEO%20says,until%20H2%202023.“ target=“_blank“ rel=“nofollow“>Link to Newsquawk’s report </a></p>

This article was written by Ryan Paisey at forexlive.com.

<p>The Kremlin has repeated the lines used at the weekend, but for those that missed them the first time around..</p><p>UKRAINIAN ACTIONS HAVE UNDERMINED THE DEAL</p><p>GRAIN DEAL IN THAT CASE IS RISKY AND NOT GUARANTEED</p><p>BLACK SEA GRAIN DEAL IS HARDLY FEASIBLE GIVEN THAT RUSSIA CAN’T GUARANTEE SAFETY OF SHIPPING</p><p>—–</p><p>KREMLIN, ASKED UNDER WHAT CIRCUMSTANCES IT MIGHT REJOIN GRAIN DEAL, DECLINES TO COMMENT</p>

This article was written by Ryan Paisey at forexlive.com.

<p><a target=“_blank“ href=“https://twitter.com/PriapusIQ/status/1587039925588967424?s=20&t=l1Fz4SLtX_ctZavjGmIsiQ“ target=“_blank“ rel=“nofollow“>Reuters Reports</a> – German households are paying more than 2-1/2 times as much for an average annual gas contract from their supplier than a year ago although wholesale prices are reflecting lower consumption and more diversified supply, data showed on Monday.Energy prices portal Check24 said the average gas price in October for a typical household consuming 20,000 kilowatt hours (kWh) stood at 3,726 euros ($3,702.15). A year ago – before Russia’s invasion of Ukraine and the resulting disruption to gas supplies – such a contract could have been secured at 1,365 euros.</p>

This article was written by Ryan Paisey at forexlive.com.

<p> Oil prices will find support from OPEC+ output cuts and sanctions on Russia for the rest of the year and into the early part of 2023, a Reuters poll showed on Monday, but a recession could limit further gains.A survey of 42 economists and analysts forecast benchmark Brent crude would average $101.10 a barrel this year, and $95.74 in 2023, up from estimates of $100.45 and $93.70 respectively in September.U.S. crude forecasts were raised slightly to $96.23 a barrel in 2022 and $90.39 next year, from the $95.73 and $88.70 consensus last month.However, on a quarterly basis, the Brent forecasts indicated a gradual trend downward next year, with the second quarter consensus at $96.38 a barrel versus $98.01 in the first, and a further dip to $94.70 in the third quarter.</p><p><a target=“_blank“ href=“https://twitter.com/PriapusIQ/status/1587037552267116544?s=20&t=XULIaVMKG6QwUzA_39ssHg“ target=“_blank“ rel=“nofollow“>Full Reuters Report</a></p><p><a target=“_blank“ href=“https://www.forexlive.com/terms/c/crude-oil/“ target=“_blank“ id=“e1f1b115-23d2-48c8-98c8-24024dada457_1″ class=“terms__main-term“>Crude Oil</a></p>

This article was written by Ryan Paisey at forexlive.com.