Daily Market Report

[FOREX.com]

WTI crude oil, GBP/AUD analysis: Asian Open – 18/10/2023​

US data, yields hot​

Bond yields continued to climb on Tuesday thanks to another round of hot US data, fuelling bets of a more hawkish Fed. Yields were already climbing in Tuesday’s APAC session with the Middle East conflict in a holding pattern, meaning bonds lost the little bit of demand they garnered from last week’s safe-haven flows to send yields inadvertently higher.

US core retail sales rose 0.6% m/m in September, above the 0.2% expected and August was upgraded to 0.9% (0.6% prior). Headline retail sales rose 07%, above 0.3% expected and August was upwardly revised to 0.8% (0.3% prior). These are hardly the signs of a concerned consumer, and at the very least maintains the ‘higher for longer’ approach from the Fed, if not providing them more the reason to hike again.

Commodity-FX inflation cools​

Canada’s inflation data also came in softer than expected which removes the pressure from the BOC to hike at their next meeting. CPI deflated by -0.1% m/m and fell to 3.8% y/y (4% prior and expected). Perhaps more importantly, median and trimmed CPI also came in lower than expected – and these are the BOC’s preferred gauges.

New Zealand’s inflation numbers came in softer than expected, turning belief into conviction that the RBNZ are indeed done with tightening their cash rate. CPI rose 5.6% y/y, down from 6% prior and 5.9% expected, or 1.8% q/q compared with 2% expected and 1.1% prior. Interestingly, their sectoral factor model CPI fell from 5.8% to 5.2% - which is its fastest pace if disinflation on records going back to the early 90s.

Hawkish RBA mins support AUD/USD​

The RBA minutes were more hawkish than expected or their October statement suggested, with the central bank acknowledging that “upside risks [to inflation] were a significant concern”, which raises the odds of a hike in November.

AUD/USD managed to bounce for a second day, in line with yesterday’s bullish bias. A move to 0.6380 or even 0.6400 remains feasible, although lower timeframes may need to be referred to, for bulls to find an adequate risk-to-reward ratio, whilst looking for prices to hold above 0.6340

Mixed data form Europe​

UK employment and wages data hasn’t provided much clarity for what to expect in today’s key inflation report. Wages remains relatively high at 7.8% y/y (or 8.1% including bonus), job growth was up 1.2% yet job vacancies were -43k lower from the month prior. Today’s CPI data could be the decider as to whether the BOE hike again today.

A better-than-expected ZEW report for Germany and the eurozone allowed EUR/USD to rise to a 3-day high, and straight into trend resistance highlighted in Monday’s European Open report.

Events in focus (AEDT):​

• Public holiday
• 09:35 – RBA Gov Bullock Speaks
• 13:00 – China GDP, fixed asset investment, industrial production, retail sales, unemployment, NBS press conference
• 17:00 – UK CPI, PPI
• 20:00 – Eurozone CPI, ECB president Lagarde speaks
• 23:30 – US building permits

WTI crude oil technical analysis (4-hour chart):​

I don’t have a great deal to add to yesterday’s analysis, but we have seen the required pullback into the weekly pivot. Support was found, a swing low formed and WTI is on the cusp of confirming a bullish engulfing candle on the 4-hour chart. The bias remains bullish above yesterday’s low, bulls could consider dips towards the lows or a break above 88 for an assumed run to the 89.40 – 90 resistance zone.

GBP/AUD technical analysis (monthly chart):​

If the monthly chart is anything to go by, I am seriously wondering whether we’re about to see a large move unfold on GBP/AUD over the coming months. September’s false break above the 2021 / 2022 highs has been fully reversed with a bearish engulfing month, which also forms a 2-bar reversal and lower high. If any decline were to be of a similar magnitude to the fall in 2020, it could test or break the YTD low.

GBP/AUD technical analysis (daily chart):​

A textbook bearish trend has formed on the daily chart of GBP/AUD. Whilst prices have entered a period of consolidation and retraced against the trend, momentum is turning lower and the cross appears on the cusp of breaking own from a rising wedge, which is a bearish continuation pattern. Such patterns project a measured move to the base, which is just above the 200-day EMA and 1.88 handle. For now, we’re waiting for a break of its 100-day EMA.

View the full economic calendar
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Gold rose 10pct in 10 days, ASX 200 clings to support: Asian Open - 23/10/2023​

Market Summary:​

• Rising bond yields and concerns that the Middle East conflict will spread continued to weigh on sentiment last week, whilst a soft Tesla earnings report helped intensify the selloff on Wall Street
• All three Wall Street indices formed bearish engulfing candles, with the Nasdaq 100 leading the declines at -2.9%, the S&P 500 was down -2.3% and the Dow Jones was off by -1.6% last week. The VIX (volatility index) also rose to a 7-month high and closed just beneath 22
• The US 10-year yield came within a cat’s whisker of touching 5% for the first time in 15 years on Thursday
• Whilst yields pulled back on Friday, the 5-year through to the 30-year yield still rose between 20-30bp last week as the bond rout continued during risk-off trade
• And whilst Jerome Powell warned that the UC economy could warrant another hike, he conceded that rising bond yields could also lessen the effect of any further hikes
• Gold’s returning as a safe-haven asset have been nothing short of impressive, rising 10% in 10 days and stalling just below 2,000
• Oil prices retreated a little on Friday on news that Hamas would release two hostages, but with the risk of a ground assault very much on the radar and the potential for the conflict to escalate, oil prices are likely to at least remain supported if not rally
• The oil volatility index (OVX) rose to a 7-month high on Friday
• AUD/USD has once again done well to hold above 63c, and it seems it could be a prime candidate for a big bounce should sentiment somehow turn around for the better (as unlikely as that seems)
• But with a quit economic calendar today, it is difficult to an immediate break lower if it could not manage it during the commotion last week
• Whoever was supporting China’s equity markets appear to have left the building, with the Hang Seng and China A50 indices closing to their lowest level since November

Events in focus (AEDT):​

• Public holiday in Hong Kong and New Zealand
• 16:00 – Singapore CPI
• 23:30 – Chicago Fed National Activity
• 01:00 – Eurozone consumer confidence

ASX 200 at a glance:​

• The ASX 200 formed a bearish engulfing week and came very close to closing beneath 6900 for the fist time in 12 months
• 10 of its 11 sectors were in the red, led by the info tech and consumer discretionary sectors
• The energy sector was the only one to gain, supported by energy prices due to the Middle East conflict
• Implied volatility rose to a 7-month high on Friday to show investors expect higher volatility over the next 30-days
• Looking at the daily chart, the only thing really going for it is that the index held above the March and October lows despite the broad risk selloff last week
• The 6900 is clearly an important focal point for investors, so we I’d either be looking for a bounce from current levels to fade into (whilst prices remain below 7,000) is simply wait for a break of new cycle lows

Gold technical analysis (daily chart):​

Gold’s return as a safe-haven asset has been done is style, rising 10% in 10 days. But the fact it stalled just below the big round number of $2000 with a shooting star reversal day suggests its meteoric rise may at least be due a pause, if not a pullback.

Of course, the issue with trying to be cute with technical analysis when big macro or geopolitical drivers are behind the moves risks missed opportunities. Because if gold continues to rise, it can leave those seeking mean reversion on the sidelines. And sometimes that is just how it plays out. But at the same time, perhaps missing a move might be the better trade, as to avoid going long at highs or short at lows.

So from here on the daily timeframes, I would prefer to at least see a couple of days of consolidation or a retracement before seeking dips around support levels for an anticipated break above $2000. A break beneath 1950 assumes a deeper pullback and improved sentiment.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

EUR/USD, AUD/USD bounce on lower yields: Asian Open – 24/10/2023​

US yields pulled back from their cycle highs which saw the 10-year yield fall back below 5%. And if this tweet is correct, it was because prominent bond bear, Bill Ackman, disclosed on Twitter (sorry… X) that he had closed his short bond position.



In a short thread, Ackman cited “too much risk in the world to remain short bonds at current long-term rates” and that the “economy is slowing faster than recent data suggests”. If other bond bears follow suit, it could further weigh on yields. With large speculators at or near record level of net-short exposure to US bonds across the curve, it is perhaps wishful thinking that Ackman alone can turn this trend around – even if it screams sentiment extreme. It’s also worth nothing that he claims to have closed his shorts and has not taken a long position.



Still, yields were lower which saw the 10 and 20-year form bearish engulfing days. The US dollar index briefly touched a 20-day low but has fond support around 105.50, sending EUR/USD to its highest level since 22 September. I noted in yesterday’s COT report that price action on the weekly chart and trader positioning suggests some mean reversion is due, and that now seems to be playing out with lower yields. For now at least.



See how large traders were positioned on the futures markets last week: EUR/USD, gold, WTI crude oil analysis: Commitment of traders report (COT)

Events in focus (AEDT):​

• 09:00 – Australian flash PMIs (manufacturing and services)
• 11:30 – Japan’s flash PMIs (manufacturing and services)
• 16:00 – BOJ core CPI
• 17:00 – UK average earnings, employment change
• 17:00 – German GjK consumer sentiment
• 18:30 – German flash PMIs (manufacturing, services, composite)
• 19:00 – RBA Governor Bullock speaks
• 19:00 – Eurozone flash PMs (manufacturing, services, composite)
• 19:30 – UK flash PMIs (manufacturing, services, composite)
• 23:30 – ECB president Lagarde speaks
• 00:45 – US flash PMIs (manufacturing, services, composite)

ASX 200 at a glance:​

• The ASX 200 fell for a third day and closed at its lowest level since November
• Yet with stability seen on Wall Street indices and SPI 200 futures overnight, we may find the bleeding at least slows on the cash index today
• Whether it can muster up the strength to retrace higher seems debatable without a bullish catalyst to bolster APAC stocks today, but bears may want to be cautious around these lows

EUR/USD technical analysis (4-hour chart):​

The weekly chart of EUR/USD printed a weekly bullish pinbar at the start of October, which saw a false break of 1.05 and the January low. And that pinbar low is yet to be retested, to suggest demand around 1.05. A bullish engulfing week formed and prices have now broken above last week’s high, which further suggests a base has formed.



The question now is whether this is the beginning of a trend, or merely a 3-wave retracement (which could soon top out and revert to bearish momentum). A 100% Fibonacci projection and 1.0700 handle make a likely resistance area initially – and we could assume the correction has completed if we see bearish momentum form around such as resistance zone.



But due to the clues of the higher timeframe, my bias is for a move towards the 1.0765 resistance zone. And any dips towards 1.060 or 1.0635 could pique my bullish interest over the near-term. Of course, we’ll need to see the US dollar index break beneath 105.50 for this to play out and for yields to continue to retrace from their cycle highs.

AUD/USD technical analysis (daily chart):​

Once again, the Australian dollar (aka the battler) has held above key support levels despite broad risk-off sentiment. And it was only a few weeks ago that large speculators were net-short AUD/USD futures by a record level. And the longer it defies bears, the greater the chance there is for a corrective bounce.



AUD/USD formed a bullish engulfing candle on Monday to yet again suggest demand around 63c. Any low volatility dips within yesterday’s range could be of interest to dip buyers. And it could work out quite well if US PMI data comes in soft, alongside a stronger-than-expected inflation report for Australia on Wednesday.

View the full economic calendar


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD in focus for AU CPI, gold holds support: Asian Open – 25/10/2023​

The Nasdaq 100 led Wall Street indices higher for a second day thanks to decent earnings and upbeat forecasts. Negative sentiment was also given a reprieve as US yields above the 10-year tenor retraced for a second day, helped by comments that Bill Ackman had closed his short positions against bonds and Bill Gross was long bonds as he expected a recession by year end.

Economies continued to slow across Europe, UK, Japan and Australia according to flash PMIs. Whilst this likely helps with calls that the BOE and ECB will hold rates at their next meetings, there are growing expectations that the RBA’s next meeting could be live (for a potential hike) and that the BOJ may tweak or abandon YCC.

The US services sector avoided a contraction, with S&P Global flash PMI rising 50.9 compared to 50.1 prior and 49.8 expected, helping to lift the US dollar index from its 22-day low and form a bullish engulfing day. The 2-eay yield way also higher with Fed policy expectations.

Events in focus (AEDT):​

• CPI is expected to rise 1.1% q/q (0.8% prior) but slow to 5.3% y/y (6% prior)
• Weighted mean is expected to slow to 5% y/y (5.5% prior) yet remain flat at 1% q/q
• Trimmed mean CPI is expected to rise 1.1% q/q (0.9% prior), or 5.3% y/y (5.2% prior)

The importance of today’s Australian inflation report has only increased following last week’s relatively hawkish RBA minutes and comments from the Governor on Tuesday. Whilst Michelle Bullock said it is possible that inflation could return to target with the current cash rate, she warned that the RBA have a low tolerance for it returning to target too slowly and that the RBA will not hesitate to raise rates again if needed.



We might need to see trimmed and weighed mean CPI fall below 5% y/y to fully dispel concerns of another hike. But with trade data, producer prices and updated economic forecasts to be released ahead of next Tuesday’s meeting, it leaves plenty of opportunity to sway opinion of the RBA’s decision, which leaves the ASX and Australian dollar vulnerable to further pockets of volatility. And that’s just on the domestic front.

• 11:30 – Australian CPI (monthly and quarterly reports)
• 16:00 – Japan leading index, coincident indicator
• 19:00 – German Ifo business sentiment
• 22:00 – US building permits
• 01:00 – BOC interest rate decision

ASX 200 at a glance:​

• The ASX 200 produced a small bullish inside day, just above its 11-month lows on Tuesday
• A positive lead from Wall Street and SPI futures overnight are expected to see the cash market open higher today
• The ASX needs to break above 6904 to see it back above its 200-week EMA, likely making the 6900 area a pivotal area and initial resistance level
• The ASX will likely be influenced by today’s CPI report; a soft set of figures could diminish bets of an RBA hike and send the ASX higher, whist strong figures are likely to weigh on the domestic market

AUD/USD technical analysis (4-hour chart):​

I have previously noted that AUD/USD has done well to hold above 63c and the November low, despite negative sentiment and geopolitical tensions. And with hawkish tones from the RBA only increasing, an uptick for sentiment or, say a hot CPOI report today, could be the catalyst the Aussie needs to finally rally. Also note that the area around 0.6330 has been a pivotal level in recent days, so any pullback towards it ahead of the inflation report may appeal to bullish eyes. 0.6400 seems like a feasible minimum target, a break above which brings the 0.6440 highs into focus, near the 1-week implied volatility band.

Gold technical analysis (4-hour chart):​

Spot gold prices have remained in a strong uptrend on the 4-hour chart, and the retracement to the 1950 area has been satisfied (it is rarely fun entering longs around cycle highs, near major resistance levels). A potential bull flag is forming on the 4-hour chart, and a 3-bar reversal (morning star) pattern has formed to suggest a swing low is in place. Also note that the most recent bullish engulfing candle found support at the weekly pivot point, and prices are now retracing within its range. If confident a breakout is imminent, bulls could enter around current levels with a stop below 1960 with an initial target around 1990 or 2000. If the bull flag is successful, it projects a target around 1930.

View the full economic calendar
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD higher, ASX 200 lower as hot inflation bolsters RBA rate hike bets 25/10/2023​

Australian underlying inflation has come in hot for the September quarter, seeing the odds for a 25 basis point rate hike from the RBA in November lift to 60%, up from 25% prior to the release. The AUD/USD has moved higher as a result while the ASX 200 has reversed earlier gains, turning negative for the session.

The details​

The Australian Bureau of Statistics (ABS) reported trimmed mean inflation – the RBA’s preferred measure of underlying price pressures – jumped 1.2% in the September quarter, above the 0.9% pace forecast by the RBA and 1.1% level expected by economists. The result left the year-on-year rate at 5.2%, again higher than the 4.9% figured eyed by the RBA.

Other measures of underlying inflation also came in hot; the weighted median rose 1.3% for the quarter and 5.2% through the year.

Importantly, market based services inflation ex-volatile items rose 1.3% for the quarter and 6.2% over the year, signaling tight labour market conditions are feeding through to sticky services inflation, mirroring trends seen overseas. Headline inflation increased 1.2% for the quarter and 5.4% over the year, again above market forecasts.

Put simply, it was hot. Too hot.

Cash rate futures agree, pushing the odds of a 25 basis point hike in the RBA cash rate in November to 60%, up from 25% prior to the data. Ominously, when you look back at the history books, rarely do you see the RBA adjust the cash rate in isolation. Often when there’s one there’ll be more.

AUD, ASX 200 reaction

The market reaction to the data is largely in line with what we wrote in our preview: the AUD/USD is trading higher while the ASX 200 has fallen.

For the AUD/USD having broken the downtrend running from the start of August, it’s now tangoing with the 50-day MA, a level it’s struggled to overcome of late. It’s also broken horizontal resistance at .6365, suggesting it may now act as support. A break of the 50-day may see the pair push back towards resistance located above .6500.

For the ASX 200, early enthusiasm has fizzled with the index now lower for the session, seemingly destined for a possible test of support located at 6830. There’s not much support beyond this level before 6400, so watch for a potential break. On the upside, resistance is found at 6884 and again at 6996.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY on volatility watch after probing 150: Asian Open – 26/10/2023​

Market Summary:​

• The Nasdaq 100 suffered its worst day of the year after disappointing cloud sales from Google’s parent company Alphabet outweighed positive earnings from Microsoft and IBM. The Nasdaq fell -2.5% to its lowest level since December.
• Meta Platforms (META) earnings beat Q3 expectations after the bell to send the stock ~4% higher, although it made little impact to Nasdaq futures.
• The US dollar was the strongest major on Wednesday as US yields continued to rise after snapping a 3-day retracement from their multi-year cycle highs. The US dollar index rose for a second day to 4-day high and EUR/USD closed beneath 1.06 ahead of today’s ECB meeting.
• Australia’s hotter-than-expected CPI report has seen banks upwardly revise their forecasts for the RBA to hike by 25bp in November and December, which would take the cash rate from 4.1% to 4.6%. RBA cash rate futures now imply an 80% chance of a 25bp hike by December.
• AUD was the strongest currency in Asia on Wednesday and reached out initial 64c target, yet rising yields, a stronger US dollar and risk-off sentiment saw the Aussie fall nearly 1c and formed a prominent bearish engulfing day.
• USD/JPY broke above 150 just ahead of the New York close – a level which triggered a -280-pip selloff when crossed just three weeks ago. Prices have since puled back but it remains a clear level to watch for bouts of volatility.
• The Bank of Canada held interest rates at 5% but, whilst they acknowledged that price pressures and inflation is coming down, progress is slow. CPI is expected to remain around 3.5% before returning to target in 2025. The 1-month OIS now trades beneath the official cash rates to imply no immediate expectation of
• ECB President Lagarde ‘broke her silence’ during the ECB’s quiet period, by saying on TV “we are not done yet, we need to get inflation bac to 2% in the medium term”. It is customary that ECB members do not comment on policy seven days leading into a monetary policy decision, yet they will announce their decision later today (Thursday). Whether that means they’re not done with hiking or simply keeping rates higher for longer remains to be seen.
• Oil prices were higher on Wednesday on reports that Israel are preparing to invade Gaza. WTI crude oil recouped around a third of the prior three-day losses and closed above $85.50
• China’s equity markets failed to hold on to earlier gains made on the announcement that Xi Jinping had announced a rare budget revision to support the economy. Once again, investors seemed underwhelmed with the level of support.

Events in focus (AEDT):​

• 09:00 – RBA governor Bullock and assistant governor Kent speak
• 11:30 – Australian trade data
• 13:30 – Singapore unemployment rate
• 16:00 – Singapore industrial production
• 23:15 – ECB interest rate decision, monetary policy statement
• 23:30 – US GDP preliminary, PCE prices, consumer spending, jobless claims
• 23:30 – Canada average earnings
• 23:45 – ECB press conference
• 01:15 – ECB president Lagarde speaks

ASX 200 at a glance:​

• The ASX 200 did well to hold above Monday’s low on Wednesday, following strong inflation numbers and renewed bets of RBA hikes
• The ASX printed a (slightly) bearish outside day, with prominent higher and lower wicks and its small body forming a doji at the lows
• SPI 200 futures were just -0.26% lower, which is not too bad considering the weak lead from Wall Street
• Sentiment across the APAC region might be key for the ASX today
• Whilst the ASX did well to hold above its week-to-date low, if we see China’s equity markets track Wall Street lower then perhaps we may see a test of break of this week’s low on the ASX
• 6900 remains a key area of resistance for bears to defend and bulls to conquer

USD/JPY technical analysis (daily chart):​

There has been very little to update on the daily chart for USD/JPY in recent days, given daily ranges have been on the miniscule size whilst prices remained anchored just beneath 150. However, we saw prices briefly trade above the key level of 150 around 20-minutes ahead of the New York close before pulling back.

Remembering that this was the key level which triggered a 286-pip selloff when it was last crossed three weeks ago – and quickly followed by calls that the BOJ had intervened – it clearly remains a level of interest.

However, if the BOJ did intervene earlier this month, why has it not occurred this time around? The BOJ have neither confirmed nor denied any such action, which is unlike their 2022 intervention when they quickly confirmed it. And the supposed 2023 intervention was around half what we saw in terms of volatility compared to 2022. For these reasons, I’m leaning towards the potential that some large funds dumped their holdings a few weeks ago.

But that is not to mean we do not see some volatility today as traders get to their desks. And there are two basic approaches here; traders continue to probe and push the market to see how far they can go above 150 (which might result in actual intervention) or attempt to offload their positions and send it lower anyway.

And whilst 1-day implied volatility provides no immediate clues for volatility, the 1-week IV has blown out as it captures next week’s BOJ meeting. In a nutshell, trade with caution around these levels, if you must trade at all.

View the full economic calendar

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD defies bears a breakout once again: Asian Open – 27/10/2023​

Market Summary:​

• The US economy grew much faster than expected in the third quarter with consumer spending doing much of the heavy lifting. Spending rose 4% q/q to lift GDP to 4.9%, compared with 4.3% expected and 2.1% prior.
• The US dollar rose to a 14-day high, although failed to hold on to gain to close effectively flat with a small shooting star candle
• The Euro also softened as the ECB delivered a dovish pause after 10 consecutive hikes, although the meeting left little room for any surprises
• Wall Street indices continued to slide in Thursday and reach their lowest levels since May following more disappointing earnings from mega cap stocks.
• The S&P 500 is on the bring of a technical ‘correction’, as it has nearly fallen 10% from its highest close to current close. If anything, these arbitrary umbers to define such moves could provide a level of support – as I have noticed a tendency for markets to rally when it hits the -20% technical ‘bear market’.
• Although that hasn’t exactly worked for the Nasdaq 100 which entered a technical correction on Thursday, now down -10.9% from its July high. But with us heading into the weekend, I am wondering if the selling recedes as bears book profits.
• Price action on oil remains choppy with WTI crude reversing all of Wednesday’s gains before once again finding support around the April high, on easing concerns over the Middle East conflict
• Gold continues to remain supported on safe-haven flows and saw its highest close since May. However, it remains in a choppy phase between the key levels of 1950 to 2000, so a tricky one to trade on the daily timeframe and likely best left for intraday setups
• USD/JPY has remained above 150 yet without any signs of intervention from the BOJ. Yet volatility is high and its intended direction remains unclear.
• RBA governor Bullock lowered expectations of an RBA hike from 65% to 47% during her speech on Thursday, where she said the central bank has not yet decided on its decision and is still assessing whether this week’s inflation figures deviate too far away from their own forecasts

Events in focus (AEDT):​

• 10:30 – Tokyo CPI
• 11:30 – Australian PPI
• 12:30 – Chinese industrial production
• 23:30 – US PCE inflation
• 01:15 – Lagarde speaks

ASX 200 at a glance:​

• The ASX 200 fell to a fresh YTD low on Thursday as it got caught up in the negative sentiment in yesterday’s APAC session (US futures were also falling after the cash market close)
• However, SPI 200 futures were little changed overnight so the cash market is not expected to track Wall Street lower and gap down
• Whether it can recover into the weekend is once again down to sentiment in Asia
• But if yesterday is anything to go by, we could see Asian equities move back into the red today and follow Wall Street’s lead
• With no obvious swing lows to refer to, 7050 and 7000 are potential support levels

AUD/USD technical analysis (daily chart):​

Once again AUD/USD refuses to simply roll over and die, reminding us again why it is called ‘the battler’. Whilst we saw AUD fall to a fresh YTD low, it perfectly respected the November low and saw a daily close just above 63c. Given the lower daily wick, I’d prefer to seek dips towards the 63c area for a cheeky long and seek to exit somewhere around 0.6350.

As this is counter to the trend, I’m not looking for any extended rallies here – but give its reluctance to roll over, the path of least resistance may be higher for a few cheeky pips. There is no glamour in trading like this, but support is supporting.

View the full economic calendar

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

FOMC, BOJ and BOE on tap: The Week Ahead – 27/10/2023​

The Week Ahead: FOMC, BOJ and BOE on tap​

This week we saw USD/JPY break above 150 and the US 10-year yield probe 5% - two key levels traders have been watching with bated breath. And whilst equity markets have not had the best week in a while, Armageddon is yet to be unleashed. Still, that’s not to say things are rosy, because the longer yields remain high the worse it could get for sentiment (and there are no immediate signs that yields have reached ‘the’ top). We have a busy calendar with what would usually be ‘red flag’ days, including central bank meetings with the FOMC, BOJ and BOE. There’s a reasonable chance we’ll see no action across all three, but the bigger response for global markets could be if the BOJ widen or abandon their yield curve control (YCC).

The week that was:​

• A mix of below-par earnings, higher yields and concerns over the Middle East conflict sent Wall Street to 5-month lows by Thursday’s close
• China’s equity markets failed to embrace the rare budget revision from Xi Jinping, which prompted a mediocre 1-day rally from near 2-year lows
• Notorious bond bears Bill Ackman disclosed on Twitter that he had closed his short position, and ‘Bond King’ Bill Gross said he was now bullish on bonds and expected a US recession by the year end, sending yields lower from their cycle highs
• Yet any signs of a recession is yet to show up in the official figures, with US Q3 GDP being upwardly revised to a 7-quarter high of 4.3% q/q (4.1% expected, 4.1% prior)
• Flash PMIs were particularly disappointing for Europe which helped send the DAX for to a 7-mohth low, and is on track for its third consecutive bearish month (with October being the most bearish of the three)
• The ECB held their interest rate after 10 consecutive hikes, and it looks like they may be done (at least for now)
• Hot inflation figures for Australia saw money markets price in a 25bp hike in November and local banks revise forecasts for two back-to-back hikes. Yet subsequent comments from new governor Bullock leaves a question mar, with Bullock saying that the RBA had not yet decided on whether to hike and that they were still considering whether CPI was a “material” change to their outlook
• USD/JPY broke above the infamous 150 level – an apparent threshold that could lead to intervention from the BOJ. Whilst volatility certainly picked up and price action became messy, it remains above the key level at the time of writing with no apparent signs of currency intervention
• Gold retained its lure as a safe-haven asset, although having risen 10% in 10 days last week and meeting resistance near $2000, the yellow metal remain contained within a choppy range between $1950 - $2000

The week ahead (calendar):​

The week ahead (key events and themes):​

• FOMC meeting and press conference
• BOJ interest rate decision, quarterly outlook report
• China’s ‘official’ PMIs
• Bank of England rate decision
• ISM PMIs for the US
• Nonfarm payroll
• Bonds!

FOMC meeting and press conference​

With Fed fund futures (FFF) implying a 99.91% chance of a hold, I’m inclined to say it is a done deal. Several Fed members were quick to point to the uncertainties that the Middle East conflict could bring to monetary policy, with some saying that the rise of bond yields could even do policy for them (to prevent them from hiking rates further). So if there is anything to clean from the statement or subsequent press conference, it is whether there’s any juice in the tightening tank further down the track.

The FFF curve suggests January as the most probably meeting for a hike, which is just 26%. This may not be the most lively of Fed meetings in a while.

Market to watch: EUR/USD, USD/JPY, WTI Crude Oil, Gold, S&P 500, Nasdaq 100, Dow Jones

BOJ interest rate decision, quarterly outlook report​

This is arguable a bigger event than the FOMC meeting, assuming any policy action occurs at all. The global bond rout has not sparred Japan’s JGBs from the selloff, which has forced Japan’s yields much higher and faster than the BOJ likely want. And whilst the BOJ continue to confirm unannounced bond-buying activity to support the market, it is not enough to contain yields. And that has seen a renewed round of calls for the BOJ to tweak or abandon yield curve control (YCC).

Will this happen next week? Maybe. Although possibly not, as the BOJ have the tendency to ignore the consensus and do what they want, when they want when they want, and not be goaded into action by market forces. And there’s also a chance that the BOJ may change policy outside of a scheduled meeting than, for the sake of surprising market. Either way, Japanese yen and Nikkei traders really should keep next week’s meeting on their radar.

Of if they do eventually abandon YCC all together, it would allows JGB yields to surge and close the gap with global yields and make Japan’s assets and currency more attractive. This could send USD/JPY markedly lower, and make headlines of 150 USD/JPY seem like a long forgotten dream

Market to watch: USD/JPY, AUD/JPY, GBP/JPY, EUR/JPY, Nikkei 225

Bank of England rate decision​

A Reuters poll shows that 83% of economists expect the BOE to hold interest rates at 5.25%. And recent data likely backs up that view, with flash PMIs suggesting the economy is continuing to slow, job growth printing a negative figure for a second month. Of course, the obvious fly in the ointment is that inflation remains high. This likely keeps the hawkish tone to their statement, but my assumption is we’ll have another 5-4 vote in favour of a hold.

Market to watch: GBP/USD, GBP/JPY, EUR/GBP, FTSE 100

US data: ISMs, PMIs, Nonfarm payroll​

Whilst this is usually considered ‘red news’ data in terms of potential volatility, we’d likely need to see them throw some surprisingly poor numbers for them to materially impact markets given the strength of Q3 growth and the employment sector overall. Regardless, these are numbers all traders have on their radar. The ISM manufacturing and service PMIs provide a forward look at what Q4 growth could bring, so any weakness here weighs on expectations for growth headlined into the new year. The S&P global PMIs are the final revisions, which tend not to be heavily revised.

Nonfarm payrolls remains punchy as ever, with 336k job added in September. And recent ADP payroll figures have actually moved the opposite direction to NFP, making it a less useful tool to predict nonfarm job growth than usual (its track record hasn’t been great overall, to be fair). So unless we see some dire numbers from PMIs or employment, the Fed will be forced to stick to their ‘higher for longer’ narrative.

Market to watch: EUR/USD, USD/JPY, WTI Crude Oil, Gold, S&P 500, Nasdaq 100, Dow Jones

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY back below 150, Gold bugs reclaim $2000: Asian Open – 30/10/2023​

Market Summary:​

• Wall Street indices are on track for their third bearish month, with the S&P 500 falling to a 5-month low on Friday ahead of a busy week of economic events, including an FOMC meeting and nonfarm payrolls report.
• Rising bond yields, disappointing earnings and the Middle East conflict continue to weigh on sentiment. Israel began their ground assault of Gaza over the weekend and warned of a long war.
• Gold closed above $2000 for the first time in five months on Friday as it continues to attract safe-haven flows.
• USD/JPY closed below 150 on Friday and formed a bearish engulfing day as the yen attracted safe-haven flows. A report from the Nikkei newspaper over the weekend also suggested that tomorrow’s BOJ meeting could be live, with reports it will discuss the potential for the central bank to widen or abandon its YCC band
• Australian producer prices rose 1.8% q/q in Q3, according to the ABS (Australian Bureau of Statistics), which now sees the RBA cash rate futures implying a 47% chance of a 25bp rate hike next week. This follows on from a much hotter-than-expected inflation report.
• AUD/USD managed to close above 63c once again during a week of choppy trade. Whilst there’s no apparent appetite to buy the Aussie, it has done well to not break lower and continues to burn bearish fingers with false breakouts.
• WTI crude oil remains choppy on the daily chart but continues to hold above the January and April highs, suggesting demand around the 83.50 area

​

Events in focus (AEDT):​

• 11:30 – Australian retail sales
• 17:30 – German State CPI
• 19:00 – Spanish CPI
• 20:00 – German State CPI
• 20:30 – BOE consumer credit
• 21:00 – European Sentiment Indicator, CPI expectations, selling price expectations
• 00:00 – German CPI

ASX 200 at a glance:​

• The ASX 200 closed beneath its 200-week EMA for the first time this year.
• 9 of its 11 sectors closed lower for the week, with real estate and info tech leading the declines
• Lower SPI futures and a weak lead from Wall Street suggests the ASX 200 cash market will open below 6800 today
• 6700 is the next major support level for bear to target, and 6800 / 6830 make likely resistance levels

USD/JPY technical analysis (daily chart):​

Safe-haven demand for the Japanese yen saw USD/JPY trade below 150 on Friday and form a bearish engulfing candle. This follows on from a single day above 150 – a level considered by many as a threshold for BOJ intervention. However, it does not appear that the rise through 150 was volatile enough to warrant any BOJ action, and market forces have done the work for the central bank. All eyes are now on tomorrow’s BOJ meeting where weekend reports from the Nikkei newspaper suggest they are due to discuss their YCC policy, which leaves the potential for a live meeting and a lower USD/JPY is the central bank allows yields to climb higher.

Gold technical analysis (daily chart):​

Gold closed to its highest level in five months on Friday, with a strong bullish candle closing firmly above $2000. Gold consolidated for a few days before posting its bullish close, and with little in the way of obvious resistance levels and the metal clearly in demand, it could simply be a case of seeking round numbers such as $2050 to target whilst prices remain above the prior swing low ~1953. Low volatility pullbacks with Friday’s range could improve the reward to risk ratio. Whereas a surprise resolution in the Middle East conflict could send gold sharply lower.

View the full economic calendar
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY implied volatility spikes ahead of BOJ: Asian Open – 31/10/2023​

Market Summary:​

• Israel has continued to face pressure to reduce its bombardment of Gaza to help with hostage negotiations, which saw oil fall 3% and erase all of its gains made during the 4-week Middle East conflict. WTI crude oil is on track for its most bearish month in five and a bearish engulfing month.
• Gold also pulled back from its cycle high and now trades just below $2000, although it has not pulled back to a degree which immediately threatens its bullish structure. Gold is on track for its most bullish month this year and for a bullish engulfing month.
• The US dollar was the weakest forex major which saw the USD index as it lost some of its safe-haven appeal and the surge in bond yields pause for breath
• USD/JPY fell for a second day following a weekend report from the Nikkei newspaper that the BOJ may discuss tweaking its YCC band. This has led to speculation that the central bank will either widen or abandon its YCC band al together and allow yields to trade freely, which has the potential to strengthen the yen and send USD/JPY much lower.
• EUR/USD rose to a 4-day high thanks to the weaker dollar and despite the fact German inflation softened, further backing up expectations that the ECB are done with hiking interest rates
• The central bank are set to announce their monetary policy decision today at 13:30 AEST / 02:30 GMT
• RBA cash rate futures now imply a 52% chance of the central bank hiking by 25bp next week following stronger-than-expected retail sales yesterday. Retail trade rose 0.9% m/m in September according to the ABS, with department store and household goods retailing rising 1.7% and 1.5% respectively.
• AUD/USD rose for a third day and was the strongest forex major on Monday. I noted last week that is continues to defy bears with a sustainable break below 63c and the November low provided support, which is why I prefer dips above that support level for near-term rallies.
• The S&P 500 rose for the 17th Monday in a row. Whilst this has proven to be a false move in recent weeks, perhaps it stands a better chance of a recovery is Middle East tensions continue to recede. However, bears Nasdaq bears may be tempted to fade into moves up to the 14,600 resistance area.

Events in focus (AEDT):​

• 10:30 – Japan unemployment, jobs/applications ratio
• 10:50 – Japan industrial production, retail sales
• 11:30 – New Zealand business confidence (ANZ)
• 11:30 – Australian housing credit
• 12:30 – China PMIs (manufacturing, services, composite – NBS)
• 13:30 – BOJ interest rate decision, quarterly outlook report
• 16:00 – Japan household confidence, housing starts
• 16:00 – Singapore business expectations
• 21:00 – Europe CPI

ASX 200 at a glance:​

• The ASX 200 is on track for its third bearish month, which could be its first such bearish sequence since June 2022
• Real estate investment trusts, information technology and healthcare have been the worst performing sectors so far in October (-7.4%, -6.8% and -6.4% respectively) and the only sector to rise is utilities with a 1.4% gain
• The ASX 200 also started the week by getting out of the wrong side of bed, falling to a fresh YTD low beneath 6800 and forming a bearish engulfing day
• However, SPI 200 futures rose 0.4% on Monday which should see the ASX 200 cash index gap higher at the open and perhaps challenge 6800 resistance

USD/JPY technical analysis (daily chart):​

USD/JPY remains within an established uptrend on the daily chart, although prices are retracing from their highs and a multi-month bearish divergence has formed with the RSI (14). 1-day implied volatility has blown out ahead of today’s BOJ meeting, with its 100-pip implied move coming in at 292% of its 20-day average and the 5-day implied volatility sitting at 179 pips. However, with expectations of BOJ action now rising whilst USD/JPY falls, it leaves the potential for a spike higher should the BOJ defiantly refuse to adjust their policy – and this would not be out of character for a central bank which prefer to surprise markets. Still, with the central bank seemingly leaking their intent to the press, we should be on guard for a policy change and the potential for a lower USD/JPY.

USD/JPY technical analysis (1-hour chart):​

A bullish divergence has formed on the RSI (14) on USD/JPY’s 1-hour chart. Given it has found support around 149 and the tendency for Asia to retrace against the US session, then perhaps we’ll see a mild corrective bounce heading into the BOJ announcement. If so, the resistance zone around 149.40 may provide an area of interest for bears to consider fading into. Note that the lower 1-day implied volatility level is just above 148 and prior cycle lows.

View the full economic calendar
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.