• Euro falls to fresh lows on the day
• Eurozone September preliminary CPI +1.8% vs +1.8% y/y expected
• UK September final manufacturing PMI 51.5 vs. 51.5 prelim
• ECB’s Rehn: The scale is tipping towards a rate cut in October
• US, China reportedly set to hold talks on trade and economic ties
• ECB’s Rehn: Direction of monetary policy is clear
• Eurozone September final manufacturing PMI 45.0 vs 44.8 prelim
• Germany September final manufacturing PMI 40.6 vs 40.3 prelim
• France September final manufacturing PMI 44.6 vs 44.0 prelim
• Italy September manufacturing PMI 48.3 vs. 49.0 expected
• Japan prime minister Ishiba unveils new Cabinet members
• Switzerland September manufacturing PMI 49.9 vs 48.0 expected
• Spain September manufacturing PMI 53.0 vs 50.2 expected
• European equities a little mixed at the open today
• Deutsche see ECB cutting rates in October with potential for a 50 bps move in December
• What are the main events for today?
• Eurostoxx futures +0.2% in early European trading
• FX option expiries for 1 October 10am New York cut
• Japan top FX diplomat says yen shorts that had been built up until July have been unwound
• Eurozone inflation in focus in the session ahead
• The dollar long con
• Close but no cigar again for EUR/USD buyers

Markets:

• USD leads, NZD lags on the day
• European equities higher;
  S&P 500 futures down 0.07%
• US 10-year yields down 4 bps to
  3.741%
• Gold
  up 0.52% to $2,647
• WTI
  crude down 0.70% to $67.71
• Bitcoin
  up 0.69% to $63,747

We had a
relatively quiet session in terms of fresh data releases. The main highlight was the
Eurozone Flash CPI report, and the data came out in line with estimates. The
market has already fully priced in a back-to-back 25 bps cut in October and that’s
also something ECB members recently have been touting to.

In the
markets, the US Dollar added to the gains following Fed Chair Powell’s comments
yesterday with EUR/USD being the most notable mover. Another
notable mover this morning has been crude oil as it sold off to a new weekly
low before erasing almost the entire drop. There was no catalyst for the
move though.

The focus
will now switch to the US data in the American session with the US ISM Manufacturing
PMI being the main highlight. We will also get the Canadian PMI and the US Job
Openings data.

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

The USD got a bit of a
boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40%.

The focus remains on the
economic data. If we start to see an improvement, then Treasury yields will likely
rise and drive USDCHF higher. Conversely, if the data weakens significantly,
the market will start to worry about a recession and take USDCHF lower.

For the CHF, the SNB last week cut rates by 25 bps bringing the policy rate
to 1.00%. The central bank mentioned that it’s prepared to intervene in
currency markets as necessary and the new inflation forecasts were revised
significantly lower signalling more rate cuts to follow.

USDCHF
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCHF remains stuck in the range between the 0.8555 resistance and the 0.8400 support. The market
participants will likely keep on playing the range by buying at support and
selling at resistance until we get a breakout.

USDCHF Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action. There’s not much to add here as
we will need to wait for a major catalyst or a breakout to see a more sustained
trend. The US ISM Manufacturing PMI and the US NFP this week will likely be
key.

USDCHF Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish
momentum on this timeframe. The buyers will likely keep on leaning on the trendline
to position for further upside, while the sellers will want to see the price
breaking lower to pile in for a drop back into the support. The red lines
define the average daily range for today.

Upcoming
Catalysts

Today we get the US ISM Manufacturing PMI and the US Job Openings data.
Tomorrow, we have the US ADP report. On Thursday, we get the Swiss CPI, the US
Jobless Claims and the US ISM Services PMI. Finally, on Friday, we conclude the
week with the US NFP report.

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

The pressure is back on the euro now as traders are rebuffing expectations for a rate cut by the ECB in October. That comes after Rehn was out saying that the scale is tipping towards that now, at least in his view. It’s the first sign of any ECB policymaker confirming the recent shift in market pricing.

EUR/USD is down and while that also is in part due to the dollar keeping steadier, the euro is not finding much cheer elsewhere. EUR/JPY is down 0.3% to 159.40 levels and EUR/CHF down 0.2% to 0.9393. Both are also trading to fresh session lows currently.

In the case of EUR/USD, there are large option expiries at 1.1100 that could anchor price action a little.

But from a technical perspective, the downside momentum is starting to build. The minor support around 1.1121-25 has given way and now the key 4-hourly moving averages are starting to crack as well as seen above.

For now, the euro side of the equation has cast its vote. It’s now down to the dollar side of the equation to follow that up later.

When Wall Street enters, we’ll have the US ISM manufacturing PMI and JOLTS job openings to work through.

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

The US Dollar got a bit of
a boost yesterday as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40%.

Moreover, overnight the BoJ Summary of Opinions showed that the proponents for rate
hikes were more inclined to wait and monitor the developments in the overseas
economies and markets.

This week is a big one as
we get the US ISM Manufacturing PMI today and the US NFP report on Friday.
Positive data will likely see the pair drifting higher on rising Treasury
yields, while weak figures should keep the bearish momentum going.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY rallied back to the trendline and it’s now consolidating as we
await the key US data. The buyers will likely pile in around these levels to
position for a rally into the 150.00 handle, while the sellers will want to see
the price falling back below the trendline to keep pushing towards new lows.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a resistance
zone around the 145.50 level where the price got rejected from several times in
the past weeks. This is where the sellers are stepping in with a defined risk
above the resistance to position for a drop into the 140.00 handle. The buyers,
on the other hand, will want to see the price breaking higher to position for a
rally into the 150.00 handle.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the rejection from the resistance zone as the sellers are
trying to build some momentum to the downside. The US ISM Manufacturing PMI
today will be a key report as strong data will likely trigger a rally, while
weak figures should increase the bearish momentum. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US ISM Manufacturing PMI and the US Job Openings data.
Tomorrow, we have the US ADP report. On Thursday, we get the latest US Jobless
Claims figures and the US ISM Services PMI. Finally, on Friday, we conclude the
week with the US NFP report.

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

• Prior +2.2%
• Core CPI +2.7% vs +2.7% y/y expected
• Prior +2.8%

The readings are as expected with headline annual inflation ticking below 2% for the first time since 2021. That said, core annual inflation only eased ever so slightly to 2.7%. So, that’s still the bigger focus with services inflation continuing to sit higher mostly. But all of this just rebuffs market expectations for an ECB rate cut in October. And Rehn’s comments earlier are also supportive of that.

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

Last week, the PBoC announced lots of easing measures ranging from short to long term interest rates cuts. Copper
rallied strongly as China makes up for more than 50% of copper demand. Things
are starting to look better for the market as we have also the Fed cutting
rates into a resilient economy.

Central bank
easing generally leads the manufacturing cycle, so we can expect global growth
to pick up. All these reasons should be bullish for the market and support
prices in the next months (barring a recession).

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that copper rallied all the way up to the 4.70 level following the Chinese
easing measures. This is where we can expect the sellers to step in with a
defined risk above the level to position for a pullback into the 4.32 level.
The buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into the cycle high.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have an upward trendline
defining the current bullish momentum. The price is dipping below the trendline
as the momentum lost a bit of steam, but the sellers will need to break below
the most recent higher low at 4.58 to gain more conviction for new lows. The buyers,
on the other hand, will likely buy the dip around these levels to position for
a break above the 4.70 level.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the loss of momentum although the bullish structure remains
intact. The next big event will be the US ISM Manufacturing PMI tomorrow. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today we have Fed Chair Powell speaking. Tomorrow, we get the US ISM
Manufacturing PMI and the US Job Openings data. On Wednesday, we have the US
ADP report. On Thursday, we get the latest US Jobless Claims figures and the US
ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP
report.

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

The euro is sitting higher on the day, with EUR/USD seen up 0.3% to clip the 1.1200 mark. Even EUR/CHF is also driven higher, up 0.6%T to 0.9445 currently. But circling back to EUR/USD, the pair is once again testing key daily resistance at the figure level as buyers are hoping for a breakthrough this time.

Traders might be looking for an ECB rate cut next month but that isn’t stopping the upside momentum in the pair, since bouncing off the 1.1000 level earlier this month.

For now, the 1.1200 level is still offering key resistance for the pair. That before the July 2023 high at 1.1275 potentially comes into play next.

The tricky part about reading into price action today is that it is comin amid month-end and quarter-end trading. I’d be more comfortable any any technical breaks if it did not coincide with this period, which tends to include some form of shenanigans every now and then.

The dollar itself is trading more mixed on the day. It is higher against the yen and franc but lower against the euro, pound, and antipodeans. That’s not really making for much clarity in the price action today.

In other markets, US futures are still flattish while European indices are down. There isn’t much of a cheer in broader equities despite Chinese indices rallying hard once again to close the day over 8% higher. In the bond market, yields are higher across the board and that is keeping a more mixed mood so far in European morning trade.

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

• Prior +1.1%
• HICP +0.8% vs +1.0% y/y expected
• Prior +1.2%

Slight delay in the release by the source. This matches up with the softer headline figures from France and Spain last week. Then again, Italian headline inflation has been on the lower side for a while now. Nonetheless, it still reaffirms the latest calls for the ECB to cut rates in October.

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

In the latter part
of last week, crude oil sold off without a clear catalyst. Some people have
been citing the FT piece
about Saudi Arabia being ready to abandon the $100 target but as Amena Bakr,
senior research analyst at Energy Intelligence said, there was never a target
and such a high price wouldn’t even make sense since it would just hurt demand.

Some others have
been citing the planned increase in production from December as the output hike
planned for October has been delayed, but then again this has been known for quite
some time.

The rally in crude
oil stalled since the last US
S&P Global Manufacturing PMI where the index fell further in
contraction. We got a brief rally following the news of China going big on the
easing measures, but we couldn’t break above a key resistance level.

I suspect some of the
weakness might be due to defensive positioning into the US ISM Manufacturing
PMI tomorrow which is going to be a key release for the market. Central bank
easing generally leads the manufacturing cycle, so we can expect global growth
to pick up.

All these reasons should be
bullish for the market and support prices in the next months but it’s not yet
clear in the data and might not be reflected for a couple of months. Watch the
new orders index as it’s a proxy for demand and should be the first to respond
to a change in conditions.

As a reminder, the
positioning in crude oil is at record lows and the sentiment is very bearish.
These factors can generally offer great contrarian opportunities when we get to
an inflection point in the fundamentals.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil got smacked back down from the key 71.67 resistance. The buyers couldn’t sustain a
breakout and eventually the sellers prevailed erasing most of the rally from
the lows.

If the price falls further,
the buyers will likely step in around the 63-65 support zone to position for a
rally into the 90 handle. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the 50 handle next.

Crude Oil Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price fell below the 68.50 support in the latter part of last week
but eventually managed to erase the losses and rise back above it. The buyers
will likely step in around these levels to position for a rally back into the
71.67 resistance, while the sellers will look for a drop back below the support
zone to position for a fall into the 63-65 support.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have been printing a series of higher highs and higher lows on this
timeframe as the bullish momentum picked up.

We have a minor upward trendline
defining the current momentum where the buyers will likely keep on leaning onto
to position for new highs. The sellers, on the other hand, will want to see the
price breaking lower to position for new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have Fed Chair Powell speaking. Tomorrow, we get the US ISM
Manufacturing PMI and the US Job Openings data. On Wednesday, we have the US
ADP report. On Thursday, we get the latest US Jobless Claims figures and the US
ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP
report.

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

• Prior 61.99k; revised to 62.50k
• Net consumer credit £1.3 billion vs £1.4 billion expected
• Prior £1.2 billion

Mortgage approvals rose in August, moving up to its highest level since August 2022 – largely driven by a surge in purchase activity. On net, individuals borrowed £2.9 billion of mortgage debt in August, compared to £2.8 billion in July.

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