<ul><li>There was broad consensus at the IMF meetings that inflation is the most-immediate threat to current and future prosperity</li><li>We will be ‚watching closely‘ US economy, inflation and rates and factoring that in as we take decisions in Canada</li><li>Whatever Sept CPI shows, economy will still be in excess demand. Labour markets are tight and inflation is too high</li><li>There was a clear resolve to restore price stability at IMF</li></ul><p>The market is pricing in a 78% chance of 50 bps from the BOC on October 26 with the remainder at 75 bps.</p>

This article was written by Adam Button at forexlive.com.

<p>It’s not a good idea to be short the yen over this weekend. USD/JPY has been up 8 days in a row and is at 38 year highs.</p>

This article was written by Adam Button at forexlive.com.

<p>The <a target=“_blank“ href=“https://www.forexlive.com/terms/n/nzd-usd/“ target=“_blank“ id=“b0d87c1a-31b1-412f-bb1e-5b210dd404a5_2″ class=“terms__main-term“>NZDUSD</a> fell to the lowest level in 2022 this week at 0.5510. That is within 44 pips of the 2020 swing low at 0.54668. The price is currently at 0.5558 about 108 pips from the 2020 low all-time low. The 2020 low is the lowest level since March 2009.</p><p>Looking at the weekly chart, the price is trading below the swing low from 2 weeks ago at 0.5564 is also below the low going back to the week of March 22 at 0.55829. Off the weekly chart the price next week and stay below 0.55829, the sellers are remain in control with the low from 2020 and is the next major downside target.</p><p>Drilling to the hourly chart below, the price low this week reached after the CPI data move down to test a lower trendline connecting recent lows. The price dipped briefly below that line but quickly bounce back to the upside. That trendline cuts across near the 0.5504 level going into the weekend (and moving lower). In next week’s trading, it would represent day interim level ahead of the 2020 low at 0.5468.</p><p>Looking at the hourly chart, the price today fell back below its 100 hour moving average at 0.55998 (call it 0.5600). That moving average will be a bias defining level along with the 200 hour moving average at 0.56397 in the new trading week. Stay below and the sellers remain in control. Move above and there is room to roam to the upside.</p><p>For the trading week- and really going back to last Friday, the price action spent most the time between 0.55346 and 0.56728. On the CPI day on Thursday, the price fell below the lower extreme. In trading today, the price briefly moved above the upper extreme. However each break was short-lived. In the new trading week getting below and staying below 0.55346 should increase the bearish bias if the price can stay below.</p>

This article was written by Greg Michalowski at forexlive.com.

<p style=““ class=“text-align-justify“>The pair is now running into a fresh test of the 200-hour moving average (blue line) at 1.1191 as we see a quick tumble in cable from 1.1250 to 1.1190 – down 1.2% on the day.</p><p style=““ class=“text-align-justify“>The drop coincides with another bout of dollar strength with EUR/USD pulled to the lows as well, down 0.5% to 0.9720, but also as we start to see reports confirming that Kwarteng has been sacked as UK finance minister. UK 30-year gilt yields are down 18 bps to 4.36% but are off earlier lows of around 4.24%.</p><p style=““ class=“text-align-justify“>There is talk in UK political circles that Kwarteng’s sacking is not going to go down well with Tory lawmakers and they might just call for Truss‘ head. The political uncertainty and instability isn’t helping with the mood, as the volatility swings continue for the pound.</p><p style=““ class=“text-align-justify“>For now though, the technicals will at least do some work. If we break below 1.1200 and the 200-hour moving average, then the near-term bias becomes more bearish and we open up a lower range for <a target=“_blank“ href=“https://www.forexlive.com/terms/g/gbp-usd/“ target=“_blank“ id=“40825c22-4786-411e-8820-6b43082274be_1″ class=“terms__main-term“>GBP/USD</a> towards the 100-hour moving average (red line) at 1.1114 at least.</p>

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

<p style=““ class=“text-align-justify“>There is no point in delaying the inevitable but I believe we will have to wait for Truss‘ speech later today to make it official. For now, BBC, Sky News, CNBC are all reporting on the matter in saying that Kwarteng has been ousted already.</p>

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

<ul><li>Appropriate to discuss QT once rates reach neutral level</li><li>The discussion and decision should happen in 2023</li><li>Rates need to enter restrictive territory</li></ul><p style=““ class=“text-align-justify“>Nothing out of the ordinary as 75 bps is the expected decision for October at least. The ECB looks likely to hike until Q1 2023 before pumping the brakes on tighter policy – at least that seems to be the case for now.</p>

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

<p style=““ class=“text-align-justify“>It is a bit of an odd one as the data is due for today alongside that of Q3. Typically, officials will also hold a briefing to speak about the numbers but there isn’t anything about that either. At the end of the day, it is China and there’s only so much one can speculate.</p><p style=““ class=“text-align-justify“>In any case, the data was estimated to show a further decline in the country’s export growth (+4.1% y/y estimate, +7.1% prior) with imports (+1.0% y/y estimate, +0.3% prior) set to remain rather tepid.</p><p style=““ class=“text-align-justify“>The timing might also be an interesting one as this release would be two days before the National Congress – which is to take place on Sunday. For some context, this is the most important meeting of the Chinese Communist Party’s five-year political cycle. The event will be one where Xi is on course for a historic third term as the country’s leader.</p>

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

<p style=““ class=“text-align-justify“>It’s a busy day for UK markets as politics take center stage as UK prime minister, Liz Truss, is set to run back on her campaign promises and announce a corporation tax increase later today. The move is being cheered by domestic bonds as gilts are rallying hard for a second successive session.</p><p style=““ class=“text-align-justify“>The pound is also able to find small pockets of relief but is now still down 0.5% against the dollar at around 1.1270. The low earlier today hit 1.1230 amid a bout of dollar strength. You can check out the price action in this post <a target=“_blank“ href=“https://www.forexlive.com/news/a-summary-of-the-pound-volatility-this-morning-20221014/“ target=“_blank“>here</a>.</p><p style=““ class=“text-align-justify“>Just keep in mind that the BOE is also set to end its support for the gilts market later today, so the timing of the fiscal U-turn is a welcome one for UK assets in general.</p><p style=““ class=“text-align-justify“>The question now for UK political circles is whether or not Kwarteng’s sacrifice will be enough to take the heat of Truss? If not, expect further volatility to continue for the pound amid the political debacle in the coming weeks/months. This is all as emerging market as it can get. 🤪</p>

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

<p>The important US CPI data, coupled with the weekly initial claims data, will be released at 8:30 AM ET. The CPI is expected to show a 0.2% rise for the month but a chunky 0.5% gain for the core reading (ex food and energy). That comes after a 0.6% rise last month. Adam previews the data <a target=“_blank“ href=“https://www.forexlive.com/news/preview-whats-expected-for-thursdays-pivotal-us-cpi-report-20221012/“ target=“_blank“>here</a>. </p><p>For a <a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/do-you-have-your-cpi-trading-playbook-ready-for-tomorrows-big-release-20221012/“ target=“_blank“>technical playbook</a>, see my video done late yesterday here. The market prices have changed overnight (the GBPUSD is racing above its 200 hour MA) but the key technical levels used to define bias, risk and targets remain in tact The claims data are expected to move up to 225K after rising to 219K last week (it reached a recent cycle low of 193K in the previous week). US jobs from the BLS came out solid on Friday with the unemployment rate moving to a multi decade equaling low of 3.5%. The nonfarm payroll rose by 265K.</p><p>Ahead of the release the GBP is the strongest of the major currencies while the CHF is the weakest. The pound is being supported as PM Truss comes under increased pressure to clawback her tax cut proposal. Bloomberg is confirming that news as I type (but the administration is now denying those ascertions – oh my), and the GBP has gotten another push to the upside and away from its 200 hour MA at 1.1186 (now a risk level as the bias tilts more to the upside for the pair). The EURUSD has moved above its 100 hour MA at 0.9716, neutralizing the bias (the pair is still below its 200 hour MA at 0.9792).</p><p>A look around the markets is showing:</p><ul><li>spot gold is trading up $6.27 or 0.37% at $1679.54</li><li>spot silver is trading up $0.23 or 1.23% at $19.24</li><li>WTI crude oil is trading at $87.52 that’s up around $0.25 on the day</li><li>Bitcoin is trading below the $19,000 level in $18,787. The low price reached $18,584 the lowest price cents September 28</li></ul><p>In the premarket for US stocks, the major indices are trading higher:</p><ul><li>Dow industrial average is up 290 points after yesterdays -28.34 point decline</li><li>S&P index is trading up 34.5 points after yesterdays -11.79 point decline</li><li>NASDAQ index is up 70 points after yesterdays -9.09 point decline</li></ul><p>The S&P and NASDAQ have been down for 6 consecutive days and closed in a negative territory for the month yesterday after the 5% plus gain over the 1st 2 trading days of the trading month. </p><p>In the European equity markets, the major indices are moving higher as well:</p><ul><li>German DAX, +1.48%</li><li>France’s CAC +0.1%</li><li>UK’s FTSE 100 +0.5%</li><li>Spain’s Ibex +1.3%</li><li>Italy’s FTSE MIB +1.7%</li></ul><p>In the US debt market, the yields are lower ahead of the data:</p><p>In the European debt market, yields are sharply lower with the UK 10 year yield down -22 basis points leading the way:</p>

This article was written by Greg Michalowski at forexlive.com.

<p style=““ class=“text-align-justify“>The market moves are starting to gain traction and so is all the talk about the possible budget U-turn. So far, there is no timing on how all of this is going to play out so that is going to set up for very nervous and volatile trading over the next few days in UK markets. Bloomberg sources are now adding that no final decision will be taken until Kwarteng returns from the US.</p><p style=““ class=“text-align-justify“>The pound is also catching a further bid in a push to near 1.1300 before easing slightly now but still up over 1.4% on the day:</p><p style=““ class=“text-align-justify“>It’s going to be a tough day in the battlefield to sort through this mess, especially with the US CPI data coming up as well.</p>

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