Forex News Timeline

Monday, October 2, 2023

EUR/USD resumes the downside to start the last quarter of the year. Economists at Société Générale analyze the pair’s outlook outlook. Seasonality bea

EUR/USD resumes the downside to start the last quarter of the year. Economists at Société Générale analyze the pair’s outlook outlook.  Seasonality bearish in October US ISM services and payrolls data may decide whether new lows below 1.05 are inevitable in October, or whether the rebound above 1.06 has legs.  Demand for Dollar liquidity for year-end purposes typically weighs on EUR/USD in early Q4. Euro inflation below forecast in September cements ECB pause in October/December. See – EUR/USD: The 1.0490/1.0500 area could easily be retested this week – ING  

It will likely be appropriate to raise the policy rate further and hold it at restrictive levels for some time, Federal Reserve Governor Michelle Bowm

It will likely be appropriate to raise the policy rate further and hold it at restrictive levels for some time, Federal Reserve Governor Michelle Bowman said on Monday, as reported by Reuters. Key takeaways "Inflation remains too high." "Seeing risk that high energy prices could reverse some of the recent progress on lowering inflation." "Frequency and scope of recent data revisions complicates task of projecting how economy will evolve." "Expecting progress on inflation to be slow given the current level of monetary policy restraint." "Willing to support rate increase at a future meeting if data indicates progress on inflation has stalled or is too slow to return to it to 2% in a timely way." "Regulators seem to be engaging in heavy-handed supervision of banks, should consider if approach is appropriate." Market reaction The US Dollar Index showed no immediate reaction to these comments and was last seen rising 0.55% on the day at 106.75.

Silver price (XAG/USD) faces an immense sell-off as the United States Institute of Supply Management (ISM) reported a higher-than-anticipated Manufact

Silver price dives perpendicularly to near $21.50 amid strength in the US Dollar.The US Dollar eyes more upside as the US Manufacturing PMI outperformed expectations but remained below the 50.0 threshold.Silver price delivers a breakdown of the Head and Shoulder pattern, which results in a vertical sell-off.Silver price (XAG/USD) faces an immense sell-off as the United States Institute of Supply Management (ISM) reported a higher-than-anticipated Manufacturing PMI for September. The economic data landed at 49.0, much higher than estimates and the former release of 47.7 and 47.6 respectively. In spite of upbeat factory activities, the Manufacturing PMI remained below the 50.0 threshold for the 10th time in a row. The New Orders Index for the US factory also outperformed expectations and jumped to 49.2 from the August reading of 46.8. The US Dollar Index (DXY) recovered its entire gains, and jumped to near 106.80, as the market mood dampened after weak Caixin Manufacturing PMI data for September. China’s factory activities missed estimates by a wide margin but managed to remain above the 50.0 threshold. The economic data landed at 50.6 lower than estimates and the August reading of 51.2 and 51.0 respectively. The US Dollar is expected to remain volatile ahead of the speech from Federal Reserve (Fed) chair Jerome Powell. Investors anticipate a hawkish interest rate guidance as the United States economy is resilient. The US economy is outperforming other developed economies due to upbeat labor market conditions, robust consumer spending, and strong wage growth. Silver technical analysis Silver price deliver a breakdown of the Head and Shoulder chart pattern on a daily scale, which results in a vertical sell-off. The white metal breaks sharply below the neckline of the aforementioned chart pattern plotted from June 23 low at $22.11. The declining 20-day Exponential Moving Average (EMA) at around $23.00 indicates that the short-term trend has turned bearish. The Relative Strength Index (RSI) (14) slips into the bearish range of 20.00-40.00, which warrants more downside. Silver daily chart  

The Reserve Bank of Australia (RBA) will announce its next Interest Rate Decision on Tuesday, September 3 at 03:30 GMT and as we get closer to the rel

The Reserve Bank of Australia (RBA) will announce its next Interest Rate Decision on Tuesday, October 3 at 03:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of 10 major banks regarding the upcoming central bank's decision. The RBA is expected to keep rates steady at 4.10%. This will be new Governor Bullock’s first meeting. At the last meeting, the bank kept rates steady at 4.10% but warned that further tightening may be required. Standard Chartered We expect the RBA to keep rates on hold at 4.10% for a fourth consecutive meeting. On balance, we keep our call for one more 25 bps hike in November. ANZ We expect another hawkish pause. The post-meeting statement will likely note the labour market is still tight but easing and that inflation remains too high. We suspect higher petrol prices and the associated upside risks to consumers’ inflation expectations will also rate a mention. TDS Michele Bullock presides over her first RBA meeting as Governor and we don't expect her to rock the boat, leaving the cash rate on hold. This board meeting presents her first chance to make changes to the Statement. If there are changes or a re-wording of the Statement we are not expecting radical shifts, but expect the Statement to reiterate further tightening may be required. While the Bank did acknowledge that ‘the process of returning inflation to target could be uneven’, we will look for any clues that the run-up in oil prices is impacting the Bank's inflation forecasts and inflation expectations prompting a hike by year-end. RBA should offer AUD some tailwinds.  Westpac We expect the RBA will leave the cash rate unchanged at 4.10% – for the fourth consecutive month. The RBA’s next policy move will likely be in the second half of 2024, where we expect inflation will be approaching the top of the target range and there will be clear evidence of a weakening economy – in our view, warranting a shift towards rate cuts beginning in Q3. ING The latest CPI figure for August stands at 5.2% YoY, the first increase since April and still way above the RBA’s target of 2-3%. However, it should not be too much of a concern as the rise in inflation was largely due to base effects and soaring oil prices. While we believe that the latest inflation figures bolster the case for the central bank to further increase rates at some point, we don’t think that it will choose this meeting to tighten. UOB We continue to believe that the RBA will keep policy unchanged, although we are penciling in a chance that it will hike one last time this year, taking the cash rate target to a peak of 4.35%. In terms of timing, this is likely to occur at the 7 Nov meeting, following the release of the 3Q23 CPI on 25 Oct. Another factor that could prompt the RBA to hike once more is the risk that wages in the third quarter could spike higher after a large mandated increase in the minimum and award wages. Citi The new Governor Michele Bullock’s first Monetary Policy Board Meeting is unlikely to deliver a change in the cash rate. The data since the September meeting has broadly been in line with expectations, although the Q2 National Accounts once again showed rising unit labor costs and falling productivity growth. Instead, the Board is likely to want to wait until the final quarterly CPI reading at the end of October before changing its forecast. But there could be hawkish risks to the Statement given the Fed’s hawkish signaling and higher oil prices potentially leading to a pick-up in inflation expectations, while services inflation remains sticky. Wells Fargo While economic data have been somewhat firmer over the past month, we don't believe the data have been firm enough to prompt a policy adjustment as yet, and we expect the RBA to keep its policy rate at 4.10%.  

The Pound moves lower after the meek attempt to turn the tide last Thursday and Friday into month-end. Economists at Société Générale analyze GBP/USD

The Pound moves lower after the meek attempt to turn the tide last Thursday and Friday into month-end. Economists at Société Générale analyze GBP/USD outlook.  CFTC longs collapse to 6.9% of OI last week from 17.6% Cable faces a battle to stay above 1.20 in October unless US bond yields stage a dramatic U-turn. Hedge funds slashed sterling long positions to 6.9% last week from 17.6% of OI before the BoE. The decline by almost 11ppt is the largest since November 2021 when GBP/USD dropped two big figures from 1.36 to 1.34. EUR/GBP pegged back below 0.87, in reach of 200-DMA at 0.8710.  

United States ISM Manufacturing PMI above forecasts (47.7) in September: Actual (49)

United States ISM Manufacturing New Orders Index: 49.2 (September) vs 46.8

EUR/USD leaves behind a two-day recovery and shifts its attention to the downside and the 1.0500 neighbourhood on Monday. If bears remain in control,

EUR/USD resumes the downside and retargets the 1.0500 zone.The September low at 1.0490 comes next for EUR-bears.EUR/USD leaves behind a two-day recovery and shifts its attention to the downside and the 1.0500 neighbourhood on Monday. If bears remain in control, another visit to the September low of 1.0488 (September 27) should start emerging on the horizon just ahead of the 2023 low of 1.0481 (January 6). Meanwhile, further losses remain on the table as long as the pair navigates the area below the key 200-day SMA, today at 1.0826. EUR/USD daily chart  

United States Construction Spending (MoM) meets forecasts (0.5%) in August

United States ISM Manufacturing Employment Index registered at 51.2 above expectations (48.3) in September

United States ISM Manufacturing Prices Paid registered at 43.8, below expectations (48.6) in September

Economists at HSBC expect the CAD to strengthen further against the USD over the near term. CAD could capitalise on high Oil prices We see the CAD str

Economists at HSBC expect the CAD to strengthen further against the USD over the near term. CAD could capitalise on high Oil prices We see the CAD strengthening further against the USD in the run-up to the 25 October Bank of Canada (BoC) meeting. The dominance of US-Canada rate differentials, driven by higher US rates, can explain why the CAD did not capitalise on the Oil price surge in August. However, if rate differentials become less of a dominant factor for USD/CAD, the determination of Organization of the Petroleum Exporting Countries (OPEC) and its allies (known as ‘OPEC+’) to support Oil prices could see the CAD strengthening over the next few weeks.

DXY’s upside momentum gathers extra pace and trades at shouting distance from the area of 2023 peaks around 106.70 at the beginning of the week. In th

DXY adds to Friday’s gains and approaches 106.70.Next on the upside comes the yearly high past 106.80.DXY’s upside momentum gathers extra pace and trades at shouting distance from the area of 2023 peaks around 106.70 at the beginning of the week. In the meantime, extra gains appear likely in the dollar for the time being. Once the index clears the YTD high of 106.83 (September 27), it could encourage bulls to challenge the weekly top at 107.19 (November 30, 2022) prior to another weekly peak at 107.99 (November 21 2022). In the meantime, while above the key 200-day SMA, today at 103.10, the outlook for the index is expected to remain constructive. DXY daily chart  

EUR/JPY comes under some mild downside pressure and reverses two consecutive sessions of gains on Monday. In the meantime, the cross remains stuck wit

EUR/JPY reverses some of the recent weakness.Immediately to the upside aligns the monthly high of 158.65.EUR/JPY comes under some mild downside pressure and reverses two consecutive sessions of gains on Monday. In the meantime, the cross remains stuck within the consolidative range and the breakout of it exposes a visit to the so far monthly high of 158.65 (September 13) prior to the 2023 top at 159.76 (August 30), which precedes the key round level at 160.00. So far, the longer term positive outlook for the cross appears favoured while above the 200-day SMA, today at 149.57. EUR/JPY daily chart  

United States S&P Global Manufacturing PMI came in at 49.8, above expectations (48.9) in September

The business activity in Canada's manufacturing sector continued to contract in September, with the S&P Global Manufacturing PMI declining to 47.5 fro

Manufacturing sector's economic activity continued to contract in September.USD/CAD continues to edge higher toward 1.3650 after the data.The business activity in Canada's manufacturing sector continued to contract in September, with the S&P Global Manufacturing PMI declining to 47.5 from 48 in August. Commenting on the survey's findings, "in line with the global industrial downturn, the Canadian manufacturing sector continued to experience lacklustre performance during September,"  said Paul Smith, Economics Director at S&P Global Market Intelligence. "Output and new orders both fell to steeper degrees amid evidence of slow market demand. Price levels remain a problem for many clients, especially as Canadian manufacturers continued to hike their charges to a solid degree." Market reaction USD/CAD continued to edge higher after this data and the pair was last seen gaining 0.45% on the day at 1.3637.

USD is a touch firmer, alongside higher UST yields. Economists at OCBC Bank analyze Greenback’s outlook. Potential for USD bull exhaustion after 11 co

USD is a touch firmer, alongside higher UST yields. Economists at OCBC Bank analyze Greenback’s outlook. Potential for USD bull exhaustion after 11 consecutive weeks of rise Same old story of rates potentially going higher for longer, relative US growth resilience and hawkish Fed are factors that continue to underpin support for the USD, until US data starts to show more material signs of softening.  Last Friday's price action somewhat nullified the potential corrective pullback that markets were looking for. Nevertheless, we continue to keep in view the potential for USD bull exhaustion after 11 consecutive weeks of rise. Support at 106, 105.40 (21-DMA). If these levels break, the next support is at 104.10 (38.2% fibo retracement of Jul low to Sep high). Resistance at 106.90 (2023 high), 107.20 levels.   

The AUD/USD pair extended downside to near the round-level support of 0.6400 in the early New York session. The Aussie asset faces selling pressure as

AUD/USD drops to near 0.6400 as Caixin Manufacturing PMI remains weaker than anticipated.The US Dollar Index extends its recovery to near 106.60 as the market mood remains downbeat.AUD/USD trades in a 0.6363-0.6522 range from the past one-and-a-half months.The AUD/USD pair extended downside to near the round-level support of 0.6400 in the early New York session. The Aussie asset faces selling pressure as Caixin Manufacturing PMI remained weaker than anticipated. Caixin Manufacturing PMI for September failed to match expectations but managed to remain above the 50.0 threshold. A figure below the 50.0 threshold is considered a contraction in economic activities. The economic data landed at 50.6 lower than estimates and the August reading of 51.2 and 51.0 respectively. The US Dollar Index (DXY) extends its recovery to near 106.60 as the market mood remains downbeat after China’s weak factory activity data. Meanwhile, investors await the speech from Federal Reserve (Fed) chair Jerome Powell. Fed Powell would provide cues about the likely monetary policy action in November. AUD/USD trades in a 0.6363-0.6522 range from the past one-and-a-half months. The Aussie asset is declining towards the lower portion of the consolidation. The 200-period Exponential Moving Average (EMA) at 0.6450 is considered a barricade for the Australian Dollar bulls. The Relative Strength Index (RSI) (14) skids into the bearish range of 20.00-40.000, which warrants more downside. A fresh downside would appear if the Aussie asset will drop below August 17 low around 0.6360. This would expose the asset to the round-level support of 0.6300 followed by 03 November 2022 low at 0.6272. In an alternate scenario, a decisive break above August 15 high around 0.6522 will drive the asset to August 9 high at 0.6571. Breach of the latter will drive the asset towards August 10 high at 0.6616. AUD/USD four-hour chart  

Canada S&P Global Manufacturing PMI fell from previous 48 to 47.5 in September

The New Zealand Dollar has been one of the best performing G10 currencies in September. Economists at MUFG Bank analyze Kiwi’s outlook ahead of RBNZ’s

The New Zealand Dollar has been one of the best performing G10 currencies in September. Economists at MUFG Bank analyze Kiwi’s outlook ahead of RBNZ’s Monetary Policy Review. RBNZ to provide a more hawkish signal We believe there is room for the NZD to strengthen further in the week ahead.  The RBNZ is expected to adopt a more hawkish policy stance in response to the unexpected resilience of the New Zealand economy. See: NZD/USD has reasonable poise heading into this week’s RBNZ – ANZ  

USD/JPY is trading at a marginal new high near 149.80. Economists at Rabobank analyze the pair’s outlook. Intervention a matter of when USD/JPY cross

USD/JPY is trading at a marginal new high near 149.80. Economists at Rabobank analyze the pair’s outlook. Intervention a matter of when USD/JPY cross 150 While fears of FX intervention will be adding to psychological resistance at the USD/JPY 150 level, USD strength suggests upside risks remain in the currency pair near-term.  While we can not rule out a little further normalisation in BoJ policy in the coming months, the scope and pace are almost certainly set to remain cautious. Given our view that broad-based USD strength will sustain into 2024, we see risk that USD/JPY could hold above 145 on a six-month view barring any major surprise from the BoJ.  

Brazil S&P Global Manufacturing PMI down to 49 in September from previous 50.1

The USD/CAD pair moves vertically to near the round-level resistance of 1.3600 in the late European session. The Loonie asset strengthens as the US Do

USD/CAD climbs to near 1.3600 as the US Dollar resumes its upside journey.Investors await the Fed Powell’s speech and US Manufacturing PMI data.Global slowdown risks elevated further as Caixin Manufacturing PMI failed to match expectations. The USD/CAD pair moves vertically to near the round-level resistance of 1.3600 in the late European session. The Loonie asset strengthens as the US Dollar concludes its correction and resumes its upside journey to near fresh 11-month high around 106.80. S&P500 futures added some losses in the London session, portraying further strengthening of the risk-off theme. US equities are expected to remain cautious despite US government managing to ditch a government shutdown in a last-minute deal. The agreement between the US House and Senate approved a funding bill until November 17. Meanwhile, investors await the speech from Federal Reserve (Fed) chair Jerome Powell, which will shape expectations about the interest rate outlook. As per the CME Fedwatch tool, investors price in that interest rates will remain steady at 5.25%-5.50% at the November monetary policy. Meanwhile, chances for interest rates remaining unchanged at 5.25%-5.50% until the end of 2023 dropped to 56%. Apart from that, the focus will be on the US Institute of Supply Management (ISM) Manufacturing PMI, which will be published at 14:00 GMT. The US factory activities are expected to remain below the 50.0 threshold as US firms are operating at a lower capacity due to a deteriorating demand environment. The economic data is seen nominally by 10 basis points (bps) to 47.7. The US Dollar Index (DXY) climbs above 106.50 after concluding the correcting move as the market mood remains downbeat. The global slowdown risks elevated further as Caixin Manufacturing's PMI failed to match expectations. On the Canadian Dollar front, investors await the employment data for September, which will be released later this week. The economic data will shape upcoming monetary policy meetings.  

USD regains momentum in quiet trade. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes the Grenback’s outlook. Gains in the US Dollar Index l

USD regains momentum in quiet trade. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes the Grenback’s outlook.  Gains in the US Dollar Index look hugely overextended A 12th successive net weekly gain for the DXY – which positive price action so far this week suggests is possible – looks hugely overextended to me still, however. There is a lot of US data ahead this week, including today’s ISM Manufacturing data. USD gains will be vulnerable to weaker-than-expected economic outcomes. See: DXY to stay bid in the 106-107 range this week – ING  

Extra gains in USD/IDR seems favoured in the short-term horizon, argues Markets Strategist Quek Ser Leang UOB Group. Key Quotes Last week, we held the

Extra gains in USD/IDR seems favoured in the short-term horizon, argues Markets Strategist Quek Ser Leang UOB Group. Key Quotes Last week, we held the view that USD/IDR “could test 15,425 before the risk of a deeper pullback increases.” However, USD/IDR soared to a high of 15,540 before ending the week on a strong note at 15,450. Strong upward momentum suggests USD/IDR is likely to continue to rise this week towards 15,550, potentially testing the major resistance at 15,600. Support is at 15,450, followed by 15,400. 

South Africa Total New Vehicle Sales declined to 46.021 in September from previous 45679

GBP/USD slips back after late week rebound stalls. Economists at Scotiabank analyze the pair's outlook. Bearish momentum is strong The GBP recovery on

GBP/USD slips back after late week rebound stalls. Economists at Scotiabank analyze the pair's outlook.  Bearish momentum is strong The GBP recovery on Thursday stalled badly on Friday and a weak close to the session left a bearish look on the short-term chart. Losses are extending again today. The GBP looks oversold but bearish momentum is strong and a retest of the 1.20/1.21 area looks likely. Resistance is 1.2220/1.2230. See – EUR/GBP: A 0.8600-0.8700 range may be the story for the majority of October – ING  

USD/CAD moves sharply back to the 1.36 area. Economists at Scotiabank analyze the pair's outlook. Support aligns at 1.3520/1.3525 Solid USD gains on F

USD/CAD moves sharply back to the 1.36 area. Economists at Scotiabank analyze the pair's outlook.  Support aligns at 1.3520/1.3525 Solid USD gains on Friday put a bullish spin on the short and medium-term charts and drew a line under the developing downside pressures that had looked to be developing around funds through last week. Gains extending through the upper 1.35s today suggest a return to the early September high near 1.37 is a realistic risk in the short run. Support is seen at 1.3520/1.3525.  

Chile IMACEC came in at -0.9%, below expectations (0.1%) in August

The US Dollar (USD) did not get much time to enjoy the party over its eleventh straight week of gains. Last week was a close call as the US Dollar Ind

Traders quickly lose the risk-on sentiment from early Monday with US government shutdown avoided over the weekend.Focal point this week will be right at the end with US Nonfarm Payrolls on Friday.  US Dollar Index’s 11th consecutive weekly gain followed by Monday continuing its trend. The US Dollar (USD) did not get much time to enjoy the party over its eleventh straight week of gains. Last week was a close call  as the US Dollar Index (DXY) was able to lock in its gains only in the last few trading hours. Although the US government shutdown might be solved for now, with the US Congress pushing the budget showdown to November, the can has merely been kicked down the road for roughly six weeks. On the data front, the current stance of the US Federal Reserve got confirmed yet again with the Personal Consumption Expenditures (PCE) index. Although headline PCE saw energy adding to inflation, the Core numbers pointed to further abating inflation. The question for this Monday will be how the Purchasing Managers Indices (PMI) will behave, as a further decline into contraction might start to hurt. Daily digest: US Dollar faces chunky weekA packed economic calendar starts the week off with the S&P Global Manufacturing Purchase Managers Index for September at 13:45 GMT. The number should remain steady, though still in contraction, near 48.9. At 14:00 GMT the Institute of Supply Management (ISM) is due to print its monthly numbers for September: Employment is expected to drop from 48.5 to 48.3. New Orders hit 46.8, though no forecast is available this time. The Purchasing Managers Index (PMI) is expected to stay in contraction from 47.6 to 47.7. The Prices Paid element is expected to tick up a bit from 48.4 to 48.6. Markets are expecting to hear from Federal Reserve Chairman Jerome Powell and Patrick Harker from the Philadelphia Fed near 15:00 GMT. The US Treasury is scheduled to auction a 3-month and 6-month bill at 15:00 and 15:30 GMT. More Fed speakers round up this eventful Monday with John Williams from New York at 17:30 GMT and Loretta Mester from Cleveland at 23:30 GMT.  Equities are slightly in the red in Japan with both the Topix and the Nikkei 225 dropping, less than 0.50%. European equities are ticking up, and US Futures are pointing to a firm green opening later this Monday. The CME Group FedWatch Tool shows that markets are pricing in a 69.2 % chance that the Federal Reserve will keep interest rates unchanged at its meeting in November. The sudden drop from the previous 81.7% comes with the print in PCE where a few elements saw inflation ticking up again.  The benchmark 10-year US Treasury yield is lower at 4.60%, a bit in the middle of the range from last week between 4.50% and 4.68%. US Dollar Index technical analysis: Gearing up for volatilityThe US Dollar Index booked its eleventh straight weekly gain on Friday. There isn’t much reason for champagne and festivities though as it was a very close call with the Greenback starting to wobble on its pedestal. With a chunky batch of data set to come out this week, including the US jobs report on Friday as cherry on the cake, the DXY might see its rally come to an end.  The US Dollar Index opened around 106.21, though the overheated Relative Strength Index (RSI) is acting up again and heads back into an overbought regime. Traders that want to hit a new 52-week high need to be aware that a lot of road needs to be covered toward 114.78. Rather look for 107.19, the high of November 30, 2022,  as the next profit target on the upside.  On the downside, the recent resistance at 105.88 should be seen as first support. Still, that barrier has just been broken to the upside, so it isn’t likely to be strong. Instead, look for 105.12 to do the trick and keep the DXY above 105.00.   US Dollar FAQs What is the US Dollar? The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away. How do the decisions of the Federal Reserve impact the US Dollar? The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback. What is Quantitative Easing and how does it influence the US Dollar? In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar. What is Quantitative Tightening and how does it influence the US Dollar? Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

EUR/USD starts Q4 on the defensive. Economists at Scotiabank analyze the pair's outlook. Support 1.0490/1.0500, Resistance 1.0600/1.0610 Developing EU

EUR/USD starts Q4 on the defensive.  Economists at Scotiabank analyze the pair's outlook.  Support 1.0490/1.0500, Resistance 1.0600/1.0610 Developing EUR gains through the latter part of last week stalled Friday and the soft close on the week effectively drew a line under the minor EUR recovery.  The trend remains the market’s friend for now and weak trend momentum – while signaling the EUR is potentially oversold here – remains a dead weight on the EUR’s attempts to recover.  Support is 1.0490/1.0500. Resistance is 1.0600/1.0610.  

Oil prices are recovering from the firm decline registered on Thursday and Friday. Crude briefly touched $94 before selling off nearly 4.5%. Energy mi

Oil (WTI) heads higher on Monday, halting the sell-off at the end of last week.The US Dollar is flat and under a bit of pressure from a risk-on market mood.The door is open towards $94 with more headlines underway in the wake of the Adipec meeting.Oil prices are recovering from the firm decline registered on Thursday and Friday. Crude briefly touched $94 before selling off nearly 4.5%. Energy ministers and the Oil industry are gathering for the biggest energy conference in the Middle East, which could become a key catalyst for Oil prices throughout the week. The US Dollar (USD) did not get much time to enjoy the party over its eleventh straight week of gains. It was a close call last week, with the US Dollar Index (DXY) locking in gains in the last few trading hours. The US government shutdown might be solved for now, but the US Congress pushed the budget showdown to November, kicking the can down the road for roughly six weeks as in mid-November the US Treasury will once again run out of funds. Crude Oil (WTI) trades at $90.26 per barrel, and Brent Oil trades at $92.17 per barrel at the time of writing. Oil news and market moversThe annual Adipec summit is to take place in Abu Dhabi this week, with all important ministers and Oil producers in the Middle-East joining.  In the wake of the start of the Adipec Summit, the United Arab Emirates (UAE) energy minister  Suhail al Mazrouei said that OPEC+ has the right policy in place to deal with current market conditions. The crude Oil pipeline running from the Kurdistan region in Iraq to the Mediterranean coast of Turkey will resume operations this week, Turkish Energy Minister Alparslan Bayraktar said. Eni, the Italian energy company, and its CEO Claudio Descalzi said in a Bloomberg interview that more OPEC+ production cuts are highly unlikely and that the worst is over. Oil Technical Analysis: $94 emerges as nearby targetOil prices are recovering after the firm price decline  recorded on Thursday and Friday. The fact that the sell-off gets halted that quickly means that traders and market participants are still buying the dip. This should see Crude  pushing back up to $94 soon.  On the upside, the double top from October and November of last year at $93.12 remains the level to beat. Although it got breached on Thursday, the level never got a daily close above it. Should $93.12 be taken out, look for $97.11, the high of August 2022. On the downside, a new floor is formed near $88 with the high of September 5 and 11 underpinning the current price action. Proof of this already exists with the dip of September 13 and September 21, which reversed ahead of $88. Should $88 break , the peak of August 10 needs to be enough to catch the dip near $84.20. 
US WTI Crude (Daily Chart)   WTI Oil FAQs What is WTI Oil? WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media. What factors drive the price of WTI Oil? Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa. How does inventory data impact the price of WTI Oil The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency. How does OPEC influence the price of WTI Oil? OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

The Mexican Peso weakened significantly last week. Economists at Société Générale analyze USD/MXN outlook. A large downside is not envisaged USD/MXN s

The Mexican Peso weakened significantly last week. Economists at  Société Générale analyze USD/MXN outlook. A large downside is not envisaged USD/MXN staged the expected rebound after carving out higher trough near 17.00 in September. It has faced interim hurdle near 200-DMA and the trend line drawn since July 2022 at 17.85/18.00. A large downside is not envisaged; recent pivot low at 17.00 is key support.  A move beyond 17.85/18.00 could result in an extended up move towards 18.25 and 18.60, the 76.4% retracement from March.  

Further upside appears on the cards for USD/MYR in the near term, notes Markets Strategist Quek Ser Leang UOB Group. Key Quotes Our view for USD/MYR t

Further upside appears on the cards for USD/MYR in the near term, notes Markets Strategist Quek Ser Leang UOB Group. Key Quotes Our view for USD/MYR to trade in a range last week was incorrect. Instead of trading in arrange, USD/MYR rose to a high of 7.7060. Upward momentum is improving, and this week, USD/MYR is likely to rise further to 4.7150. A break of this level is not ruled out, but at this stage, it is premature to expect USD/MYR to rise to last year’s peak at 4.7470. Support is at 4.6820; if USD/MYR breaks below 4.6730, it would mean that it is not rising further. 

Why has the Euro been so weak for so long? Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, analyzes the shared currency outlook.

Why has the Euro been so weak for so long? Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, analyzes the shared currency outlook. Europeans are getting poorer on a permanent basis Permanent EUR undervaluation means that we Europeans are getting poorer on a permanent basis. Sometimes that can become quite obvious, for example when American employees working remotely and pensioners buy up the property market in Spanish holiday resorts. However, even disregarding such obvious effects EUR undervaluation means: we give away our export goods at cheap prices and pay over the odds for our imports.  I am not sure whether this factor was sufficiently considered in the cost-benefit analysis of those who were responsible for QE and regulation.  

The AUD/JPY pair faces selling pressure after a pullback move to near 96.00 in the European session. The risk barometer found offers as investors shif

AUD/JPY falls back from 96.00 as investors remain cautious ahead of RBA policy.The RBA is expected to maintain a neutral stance on interest rates along with hawkish guidance.Caixin Manufacturing PMI missed estimates but remained below the 50.0 threshold in September.The AUD/JPY pair faces selling pressure after a pullback move to near 96.00 in the European session. The risk barometer found offers as investors shift focus to the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday. According to a Reuters poll, the RBA is expected to keep interest rates unchanged at 4.10% but one more interest rate hike is expected by the year-end. An interest rate hike of 25 basis points (bps) is expected in the remainder of 2023 as wages are expected to spike further after a large mandated increase in the minimum and award wages. Meanwhile, the monthly Consumer Price Index (CPI) in Australia accelerated to 5.2% in August from a 4.9% reading from July due to a rise in energy prices. The impact of the rise in gasoline prices is seen as limited for consumer inflation but inflation above 5% would not be a cakewalk for RBA policymakers. The Australian Dollar struggles for a firm footing as Caixin Manufacturing PMI for September missed estimates by a wide margin but managed to remain above the 50.0 threshold, released on the weekend. The economic data landed at 50.6 lower than estimates and the August reading of 51.2 and 51.0 respectively despite supportive measures from expansionary monetary policy by the People’s Bank of China (PBoC). The Australian Dollar, being a proxy for China’s economic growth, faces pressure against the Japanese Yen. On the Japanese Yen front, risks of a stealth intervention by the Bank of Japan (BoJ) have elevated as Japan’s Chief Cabinet Secretary Hirokazu Matsuno reiterated on Monday, that he was “closely watching FX moves with a high sense of urgency.” He added that it is “important for currencies to move in a stable manner reflecting fundamentals.”  

USD has corrected weaker and could extend further over the very short-term, economists at MUFG Bank report. Scope for Dollar strength to remerge This

USD has corrected weaker and could extend further over the very short-term, economists at MUFG Bank report. Scope for Dollar strength to remerge This USD weakness could extend further over the short-term but we remain sceptical about this being a sustained turnaround. The move looks technical and month-end flows could be influencing price action.  Yields remain supportive for the Dollar and the ‘higher for longer”’ narrative will only be questioned once the US data turns weaker. See: USD unlikely to soften by more than 0.5% despite US shutdown averted – TDS  

Gold price (XAU/USD) continues its losing spell despite the fact that Friday’s soft core Personal Consumption Expenditures (PCE) inflation vanishes od

Gold price refreshes six-month low near $1,840.00 as US Treasury yields extend upside.A soft US core PCE report has trimmed consumer inflation expectations.Fed’s Williams sees interest rates near their peak as the labor market imbalance declines.Gold price (XAU/USD) continues its losing spell despite the fact that Friday’s soft core Personal Consumption Expenditures (PCE) inflation vanishes odds of a hawkish interest rate decision from the Federal Reserve (Fed) in the November monetary policy meeting. The precious metal struggles for a firm footing as Treasury yields continue their bullish run as the Fed is expected to stick to the ‘higher for longer’ stance in interest rates. The US Dollar struggles to recapture the 11-month high near 106.80 as investors turn cautious ahead of the US Institute for Supply Management (ISM) Manufacturing PMI data for September, which will be published at 14:00 GMT. US factory activity has been contracting for the last 10 months and a continuation in the contracting spell is widely anticipated. Daily Digest Market Movers: Gold price extends downside despite soft US PCE report Gold price continues a five-day losing spell to near $1,840.00 in the context of ‘higher for longer’ interest rates by the Federal Reserve to tame the so-called ‘last leg’ of inflation. The precious metal also faces pressure from higher US Treasury yields, which have jumped to near 4.63% as Fed policymakers still favor more interest rates to ensure price stability. New York Fed Bank President John C. Williams said on the weekend that the Fed is at or near peak levels of interest rates. Williams sees signs of inflation pressures waning and labor market imbalance diminishing. The yellow metal failed to find bids on Friday despite a soft PCE report, which is majorly used by the Fed for policy decision-making. Monthly Core PCE grew at a nominal pace of 0.1%, slower than expectations and the former pace of 0.2%. The annual core PCE data decelerated to 3.9% as expected against July's reading of 4.3%. The headline PCE expanded at a higher pace of 0.4% against July's reading of 0.2% but slower than expectations of 0.5%. On an annual basis, PCE inflation accelerated to 3.5% as expected due to rising energy prices. A soft core PCE inflation report has decreased the chances of one more interest rate hike from the Fed before the year ends. As per the CME Group Fedwatch tool, investors price in that interest rates will remain steady at 5.25%-5.50% at the November monetary policy. Meanwhile, chances for interest rates remaining unchanged at 5.25%-5.50% until the end of 2023 dropped to 56%. A slowdown in consumer spending on core goods has eased consumer inflation expectations, making Fed policymakers comfortable in holding interest rates. On a broader note, the US economy is resilient due to a stable labor demand, upbeat wage growth, and robust retail demand, which would keep hopes for a rebound in inflation intact and Gold price on the back foot. While the US economy is performing well on grounds of the labor market and retail demand, the country’s manufacturing sector is still struggling, according to PMI data.. As per the estimates, the US Manufacturing PMI is seen improving to 47.7 from August’s reading of 47.6, below the 50.0 threshold which signals a contraction in activity. This would be the 11th month of contraction in a row. The market mood improves as the US government manages to ditch a government shutdown in a last-minute deal. The agreement between the US House and Senate approved a funding bill until November 17. China’s new home prices rose slightly after declining for four months as home-builders ramped up property selling, capitalizing on supportive measures from China’s government and expansionary monetary policy by the People’s Bank of China (PBoC). Improved market sentiment is restricting recovery in the US Dollar index (DXY). The USD Index aims to stabilize above the 106.00 resistance as global slowdown fears persist. Technical Analysis: Gold price eyes more downside to near $1,800 Gold price weakens after a bearish crossover by the 20-day and 200-day Exponential Moving Averages (EMAs). The precious metal sticks to the fresh six-month low near $1,840.00 and is expected to extend its downside journey towards the crucial support at $1,800.00. Momentum oscillators shift into a bearish trajectory, warranting more downside. Fed FAQs What does the Federal Reserve do, how does it impact the US Dollar? Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback. How often does the Fed hold monetary policy meetings? The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis. What is Quantitative Easing (QE) and how does it impact USD? In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar. What is Quantitative Tightening (QT) and how does it impact the US Dollar? Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Economists at ING analyze EUR/GBP outlook. Bank of England survey to help cement expectations for a November pause EUR/GBP is settling into a 0.8600-0

Economists at ING analyze EUR/GBP outlook. Bank of England survey to help cement expectations for a November pause EUR/GBP is settling into a 0.8600-0.8700 range and that may be the story for the majority of October.  There are only a few inputs ahead of the next BoE meeting on November 2nd, where we look for unchanged rates at 5.25%. One such input is Thursday's release of the BoE Decision Maker Panel survey, which we think will show a further easing in price pressures. This could prove mildly Sterling negative in that the market is still pricing 18 bps of further BoE tightening over the coming months.  

In the opinion of Markets Strategist Quek Ser Leang UOB Group, USD/THB could still advance further and surpass the 37.00 hurdle in the near term. Key

In the opinion of Markets Strategist Quek Ser Leang UOB Group, USD/THB could still advance further and surpass the 37.00 hurdle in the near term. Key Quotes We highlighted last Monday (25 Sep, spot at 36.03) that “While further USD/THB is not ruled out at a later stage, this week, USD/THB is more likely to consolidate in a range of 35.68/36.35.” Instead of consolidating, USD/THB continues to strengthen, as it rose to a high of 36.835 before ending the week on a strong note at 36.63 (+0.52%). The rapid rise over the past few weeks is severely overbought. However, the advance is not showing any sign of easing yet. This week, USD/THB could rise to 37.05 before the risk of a pullback increases. The next major resistance at 37.50 is unlikely to come into view. In order to maintain the momentum, USD/THB must stay above 36.30 (minor support is at 36.50). 

The GBP/JPY pair falls back after the S&P Global reported a nominal improvement in the United Kingdom’s Manufacturing PMI for September. The economic

GBP/JPY approaches 184.00 as the risk-aversion theme eases.UK’s Manufacturing PMI remains below the 50.0 threshold for the 14th time in a row.GBP/JPY trades in a Rising Channel pattern in which each pullback is considered a buying opportunity.The GBP/JPY pair falls back after the S&P Global reported a nominal improvement in the United Kingdom’s Manufacturing PMI for September. The economic data landed at 44.3, marginally higher than expectations and the former release of 44.2. The Manufacturing PMI remains below the 50.0 threshold for the 14th time in a row as firms continue to operate at lower capacity due to a deteriorating demand environment. Investors await the UK Finance Minister Jeremy Hunt’s speech at the annual Conservative Party conference. Jeremy Hunt is expected to raise minimum pay wages at least by 11 pounds to ease households’ burden against stubborn inflation. GBP/JPY trades in a Rising Channel chart pattern on a four-hour chart in which each pullback is considered a buying opportunity by the market participants. The cross rebounds from below 181.00 and climbs above the 20-period Exponential Moving Average (EMA), which trades around 182.20. The Relative Strength Index (RSI) (14) aims to shift into the bullish range of 60.00-80.00. If the RSI (14) manages to do so, a bullish impulse will get triggered. A recovery move above September 19 high at 183.50 would drive the asset toward September 5 high at 185.75, followed by August 22 high at 186.77. On the flip side, a breakdown below September 21 low at 180.82 would drag the asset further toward July 20 low at 179.74 and July 26 low at 176.32. GBP/JPY four-hour chart  

Economists at MUFG Bank analyze EUR outlook after sharply weaker Eurozone inflation data released last week. Weaker inflation data will reinforce expe

Economists at MUFG Bank analyze EUR outlook after sharply weaker Eurozone inflation data released last week. Weaker inflation data will reinforce expectations for no further hikes from the ECB The weakening growth outlook for China has been one factor that has weighed on the Euro over the summer alongside weak growth in Europe and the paring back of ECB rate hike expectations. The release of the latest CPI reports at the end of last week revealed that headline and core inflation both fell sharply to 4.3% and 4.5% respectively in September. The weaker inflation data will reinforce expectations for no further hikes from the ECB and cast doubt on whether the September hike was necessary with the Eurozone economy currently so weak as well. It leaves the Euro vulnerable to further weakness in the near-term.   

EUR/GBP continues to move on the upward path for the third successive day, trading higher around 0.8670 during the European trading hours on Monday. T

EUR/GBP continues to gain due to the positive sentiment surrounding the BoE to manage the impact of higher interest rates.Investors seek further cues on the ECB’s stance on addressing economic challenges.Eurozone’s PMI and Unemployment Rate remained unchanged.UK S&P Global/CIPS Manufacturing PMI for September surpassed the expected reading in September.EUR/GBP continues to move on the upward path for the third successive day, trading higher around 0.8670 during the European trading hours on Monday. This upward movement is supported by investor expectations of an improvement in the United Kingdom's (UK) ability to navigate the consequences of higher interest rates set by the Bank of England (BoE). The BoE, after raising rates to 5.25%, has temporarily halted its policy-tightening measures to protect the economy from further slowdown. The anticipation of the UK's learning curve in managing the impact of elevated interest rates is contributing to the positive momentum in the EUR/GBP pair. Anticipate heightened volatility in the Pound Sterling (GBP) as UK Finance Minister Jeremy Hunt is expected to announce an increase in the minimum wage while dismissing tax cuts at the annual Conservative Party conference. UK S&P Global/CIPS Manufacturing PMI for September improved to 44.3 from the previous 44.2, which was expected to remain consistent. On the Euro side, speculation prevails in the market about a potential stalemate in policy changes at the European Central Bank (ECB). This is despite inflation levels exceeding the bank's objective and increasing concerns about the possibility of a recession. Traders and investors are closely monitoring any indications or statements from the ECB for insights into the central bank's stance on addressing current economic challenges. Germany’s HCOB Manufacturing PMI reduced to 39.6 from the previous reading of 39.8, which was expected to remain unchanged in September. The Eurozone’s PMI and Unemployment Rate remained unchanged at 43.4 and 6.4% respectively, as anticipated. The upcoming week promises a series of speeches from European Central Bank (ECB) officials, with particular attention likely focused on President Christine Lagarde's address at a monetary policy conference scheduled for Wednesday.  

European Monetary Union Unemployment Rate in line with forecasts (6.4%) in August

Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group note that further downside looks likely once USD/CNH breaches the 7

Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group note that further downside looks likely once USD/CNH breaches the 7.2800 level. Key Quotes 24-hour view: Our view from last Friday was that USD “could decline towards 7.2800, but it is unlikely to break below this major support level.” Our view was not wrong, as USD dropped to a low of 7.2812 before rebounding. The rebound has room to extend, but it is unlikely to break the strong resistance level at 7.3200. Support is at 7.2950, followed by 7.2850.  Next 1-3 weeks: Last Friday (29 Sep, spot at 7.2975), we highlighted that “downward momentum is beginning to build.” We added, USD “has to break and stay below 7.2800 before a sustained decline is likely.” USD then dropped to a low of 7.2812 before rebounding. We continue to hold the same view for now. If USD breaks above 7.3200 (no change in ‘strong resistance’ level), it would mean that USD is likely to continue to trade in a range. 

The NZD/USD pair lacks any firm intraday direction on Monday and seesaws between tepid gains/minor losses through the first half of the European sessi

NZD/USD struggles to gain traction and is influenced by a combination of diverging factors.The risk-on impulse caps gains for the safe-haven USD and benefits the risk-sensitive Kiwi.Bets for one more rate hike by the Fed in 2023 act as a tailwind for the buck and keep a lid.The NZD/USD pair lacks any firm intraday direction on Monday and seesaws between tepid gains/minor losses through the first half of the European session. Spot prices currently trade below the 0.6000 psychological mark, though remain well within the striking distance of a nearly two-month high touched on Friday. A generally positive tone around the equity markets is seen undermining the US Dollar's (USD) relative safe-haven status and benefitting the risk-sensitive Kiwi. The official Chinese PMIs released over the weekend showed that business activity in the manufacturing sector recorded growth for the first time in six months and the services sector remained in expansion territory during September. This, along with the passage of a stopgap funding bill to avert a US government shutdown, overshadows a slight disappointment from the private Chinese PMI prints and boosts investors' confidence. That said, a fresh leg up in the US Treasury bond yields, bolstered by the prospects for further policy tightening by the Federal Reserve (Fed), acts as a tailwind for the Greenback and caps the upside for the NZD/USD pair. Investors seem convinced that the US central bank will stick to its hawkish stance and have been pricing in the possibility of one more lift-off by the year-end. Even the US PCE Price Index data released on Friday, which indicated that the underlying inflation moderated in August, did little to change the market view that the Fed will keep rates interest higher for longer. The aforementioned mixed fundamental backdrops hold back traders from placing aggressive directional bets around the NZD/USD pair and leading to subdued ragen-bound price action on the first day of a new week/month/quarter. Market participants now look to the release of the US ISM Manufacturing PMI, which, along with the US bond yields and the broader risk sentiment, might drive the USD demand. Apart from this, scheduled speeches by influential FOMC members, including Fed Chair Jerome Powell, should produce short-term trading opportunities around the NZD/USD pair. Technical levels to watch  

United Kingdom S&P Global/CIPS Manufacturing PMI came in at 44.3, above expectations (44.2) in September

USD/CHF continues to move on the downward pathway, trading lower around 0.9120 during the early European trading hours on Monday. The pair experiences

USD/CHF weakens ahead of Switzerland’s Consumer Price Index on Tuesday.Market expects Swiss CPI to grow at 1.8% against the previous figures of 1.6%.Fed’s hawkish stance on interest rates trajectory strengthens the US Dollar (USD).Higher US Treasury yields contribute support to underpin the Greenback.USD/CHF continues to move on the downward pathway, trading lower around 0.9120 during the early European trading hours on Monday. The pair experiences downward pressure due to upbeat economic data from Switzerland. Swiss Real Retail Sales (YoY) data revealed a less decline in Swiss consumer demand for August. The report showed a contraction of 1.8% as expected compared to the previous 2.5% decline. The Swiss Consumer Price Index (CPI) data is scheduled to be released on Tuesday, which is expected to grow at 1.8% against the previous figures of 1.6%. This event can potentially influence market dynamics and impact the movements in the Swiss Franc. Additionally, over the weekend, Chinese Manufacturing PMI data showed improvement into positive territory, which could impact the strength of the Greenback. This development might have provided support for the Swiss Franc (CHF) as it is considered the safe-haven currency. China’s NBS Manufacturing PMI for August grew to 50.2 from the previous 49.7 figures, exceeding the 50.0 expected. Additionally, the Non-Manufacturing PMI rose to 51.7 from the 51.0 previous reading, surpassing the market consensus of 51.5. However, the Fed is expected to attempt another 25 basis points (bps) rate hike through the end of the year. Additionally, the market is factoring in the likelihood of higher interest rates for a prolonged period, which could provide support to underpin the US Dollar (USD). The US Dollar Index (DXY) holds ground at around 106.20 at the time of writing. The US Dollar (USD) strengthened after the release of moderate economic data on Friday. The US Michigan Consumer Sentiment Index for September improved to 68.1 from the previous figure of 67.7, beating expectations for no change. The US Core Personal Consumption Expenditures (PCE) - Price Index (YoY) for August rose as estimated, reaching 3.9%, but showed a slight easing from the previous reading of 4.3%. Core PCE (MoM) recorded a softer reading of 0.1% against the market consensus for it to remain consistent at the 0.2% prior. Moreover, the positive performance of US Treasury Yields provides further support for the USD. The yield on the 10-year US Treasury bond stands at 4.61% at the moment, marking a 0.96% increase. After the Friday session, bills were successfully passed in the US to prevent a government shutdown, securing funding until November 17. This positive development has led to a renewed upward trajectory for the US Dollar Index (DXY). The avoidance of a government shutdown typically contributes to stability in financial markets, and the resumption of the DXY's upward movement suggests increased confidence in the US dollar among investors. Traders will likely pay close attention to the upcoming US ISM Manufacturing PMI for September ahead of a speech by Fed Chair Jerome Powell on Monday.  

Last week's late bounce in EUR/USD looks to have petered out above 1.06. Economists at ING analyze the pair’s outlook. EUR/USD to stay lower for a lit

Last week's late bounce in EUR/USD looks to have petered out above 1.06. Economists at ING analyze the pair’s outlook. EUR/USD to stay lower for a little longer EUR/USD is set to stay lower for a little longer, meaning that the 1.0490/1.0500 area could easily be retested this week. Expect the calendar to confirm another set of soft PMIs for Europe in September and focus to switch to whether the European Central Bank (ECB) needs to deliver one final rate hike after all. There are plenty of ECB speakers this week, and the highlight will probably be President Christine Lagarde speaking at a monetary policy conference on Wednesday.   

Italy Unemployment below forecasts (7.7%) in August: Actual (7.3%)

Greece S&P Global Manufacturing PMI: 50.3 (September) vs previous 52.9

European Monetary Union HCOB Manufacturing PMI in line with expectations (43.4) in September

Germany HCOB Manufacturing PMI registered at 39.6, below expectations (39.8) in September

France HCOB Manufacturing PMI registered at 44.2 above expectations (43.6) in September

At the 11th hour, Congress managed to avert a US government shutdown. The shutdown was not expected to be a major market driver. Economists at TD Secu

At the 11th hour, Congress managed to avert a US government shutdown. The shutdown was not expected to be a major market driver. Economists at TD Securities expect a short-term pullback in USD. How will markets react? In a surprise turn of events, Congress managed to avert a US government shutdown by passing a 45-day Continuing Resolution that shifts the funding deadline to November 17. Given the shutdown was almost universally expected to happen, and have only minimal impacts on any data, we would expect only limited initial reactions on Monday.  We would expect 10Y Treasury yields to move 3-5 bps higher due to decreased uncertainty and the USD to weaken by around 0.3%. The status quo remains biased for rates and the USD higher until data weakens and investors get comfortable taking on duration risk. Beyond the knee-jerk relief, delaying the shutdown risks increasing the hawkish reaction to any upside data surprises.  

Italy HCOB Manufacturing PMI above forecasts (45.6) in September: Actual (46.8)

The Pound Sterling (GBP) has resumed its upside journey after a mild correction from its weekly high as investors expect an improvement in the United

Pound Sterling finds bids near 1.2180 and is expected to recapture the weekly high.Investors remain uncertain whether UK PM Sunak fulfills the promise of halving inflation by year-end.Jeremy Hunt is expected to raise the minimum wage to offer some relief to workers against high inflation.The Pound Sterling (GBP) has resumed its upside journey after a mild correction from its weekly high as investors expect an improvement in the United Kingdom’s learning curve in handling the repercussions of higher interest rates by the Bank of England (BoE). The BoE has paused its policy-tightening spell after raising them to 5.25% to safeguard the economy from further slowdown. A sheer volatility is anticipated in the Pound Sterling ahead as UK Finance Minister Jeremy Hunt is expected to raise the minimum wage and ignore tax cuts at the annual Conservative Party conference. Apart from that, S&P Global Manufacturing PMI data for September will be keenly watched. The Manufacturing PMI is expected to remain below the 50.0 threshold for the 14th time in a row. Daily Digest Market Movers: Pound Sterling rebounds despite UK recession risks Pound Sterling recovered from 1.2180 despite investors remaining worried about the upside risks of a recession in the UK economy. Higher interest rates by the Bank of England and consumer inflation risks due to a pause in policy tightening have dented the demand outlook. Like other developed economies, the UK’s manufacturing sector has also gone through a vulnerable phase. Its labor demand and Services PMI were performing well, but now they are also facing the wrath of tight monetary policy and stubborn inflation. UK employers reduced their labor force in the last two months as firms aim to achieve efficiency through controlling costs in an uncertain demand environment. Services PMI has landed below the 50.0 threshold two times in a row, which indicates a contraction in service activities. For more clarity on UK factory activities, investors will focus on the S&P Global Manufacturing PMI data for September, which will be published at 08:30 GMT. The economic data is foreseen to remain unchanged at 44.2. This would be the 14th contraction in a row. The UK’s housing market consistently faces the consequences of higher interest rates. The BoE reported on Friday that credit approvals for house purchases dropped sharply to 45,354 vs. Reuters’ expectations of 49,532 as mortgage rates rise. Going forward, investors will focus on the announcement of a higher minimum wage by UK FM Jeremy Hunt at the annual Conservative Party conference. This weekend, UK Hunt announced, "We are waiting for the Low Pay Commission to confirm its recommendation for next year. But I confirm today, whatever that recommendation, we will increase it next year to at least 11 pounds an hour," as reported by Reuters. Jeremy Hunt ruled out tax cuts ahead of November’s mid-year fiscal statement to support UK PM Rishi Sunak’s promise of halving headline inflation by year-end. Meanwhile, the market mood has begun improving as investors shrug off the risk associated with a global slowdown. The US Dollar Index (DXY) faces selling pressure around 106.00. The USD index remained volatile on Friday despite a soft core Personal Consumption Expenditure (PCE) report for August. Monthly Core PCE expanded at a nominal pace of 0.1% in August against expectations and the former release of 0.2%. The annualized Core PCE has softened to 3.9% as expected from the former release of 4.3%. The Federal Reserve’s preferred inflation tool, Core PCE, now makes it less likely that the central bank will add another rate hike this year. Technical Analysis: Pound Sterling recovers from six-month low The Pound Sterling aims to keep recovering from its six-month low near 1.2110 intact. The outlook for the GBP/USD pair would improve on a recovery extension above the weekly high at 1.2270. The GBP/USD pair discovered buying interest as momentum oscillators turned oversold. The Cable could deliver a mean-reversion move to near the 20-day Exponential Moving Average (EMA) at 1.2340. The broader bias remains weak as the Cable is trading below the 200-DEMA, which trades around 1.2465. BoE FAQs What does the Bank of England do and how does it impact the Pound? The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP). How does the Bank of England’s monetary policy influence Sterling? When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling. What is Quantitative Easing (QE) and how does it affect the Pound? In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling. What is Quantitative tightening (QT) and how does it affect the Pound Sterling? Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.

Here is what you need to know on Monday, October 2: Financial markets held steady during the Asian trading hours on Monday amid thin trading condition

Here is what you need to know on Monday, October 2: Financial markets held steady during the Asian trading hours on Monday amid thin trading conditions, with stork markets in China, Hong Kong and India remaining closed for holidays. In the second half of the day, September ISM Manufacturing PMI survey will be featured in the US economic docket. Market participants will also pay close attention to comments from Federal Reserve officials, including Chairman Jerome Powell.ISM Manufacturing PMI Preview: US factory sector set to extend contraction into September.Over the weekend, US Congress passed a stopgap funding bill to avert a government shutdown. With this agreement, the previous budget will be extended for 45 days and government will be funded through November 17. Reflecting the positive impact of this development on risk mood, US stock index futures trade in positive territory in the European morning. Meanwhile, the US Dollar Index consolidates the previous week's gains at around 106.00 and the benchmark 10-year US Treasury bond yield fluctuates at around 4.6%. US Dollar price today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.  USDEURGBPCADAUDJPYNZDCHFUSD  -0.14% -0.07% -0.02% 0.31% 0.10% -0.09% -0.46%EUR0.14%   0.04% 0.12% 0.44% 0.24% 0.06% -0.33%GBP0.08% -0.06%   0.08% 0.38% 0.16% -0.01% -0.39%CAD0.02% -0.14% -0.02%   0.31% 0.10% -0.08% -0.44%AUD-0.31% -0.45% -0.38% -0.33%   -0.21% -0.39% -0.79%JPY-0.10% -0.22% -0.16% -0.10% 0.20%   -0.17% -0.55%NZD0.09% -0.06% 0.03% 0.08% 0.39% 0.17%   -0.37%CHF0.45% 0.32% 0.36% 0.44% 0.76% 0.55% 0.37%   The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).   The data from China showed early Sunday that the Caixin Manufacturing PMI declined to 50.6 in September from 51 in August. Additionally, the Services PMI fell to 50.2 from 51.8 in the same period. AUD/USD showed no immediate reaction to these figures due to the Labour Day holiday in Australia and was last seen fluctuating in a tight channel above 0.6400. In the Asian session on Tuesday, the Reserve Bank of Australia (RBA) will announce its policy decisions. The RBA is forecast to hold the policy rate unchanged at 4.1%. Following a quiet Asian session, EUR/USD gained traction in the European morning and edged higher toward 1.0600. Eurostat will publish the August Unemployment Rate later in the session.GBP/USD closed virtually unchanged on Friday but suffered large losses in the previous week. The pair managed to find a foothold at the beginning of the new week and was last seen trading modestly higher on the day above 1.2200.USD/JPY opened on a bullish note and advanced toward the critical 150.00 level in the Asian trading hours on Monday. Japanese Finance Minister Shunichi Suzuki repeated that they are watching currency moves cautiously. The pair retreated modestly but held above 149.50 by the European morning. Similarly, Japan’s Chief Cabinet Secretary Hirokazu Matsuno said they were “closely watching FX moves with a high sense of urgency.”Gold price started the week under modest bearish pressure and declined to its lowest level since early March near $1,840.

Japan’s Chief Cabinet Secretary Hirokazu Matsuno said on Monday, he was “closely watching FX moves with a high sense of urgency.” He added that it is

Japan’s Chief Cabinet Secretary Hirokazu Matsuno said on Monday, he was “closely watching FX moves with a high sense of urgency.” He added that it is “important for currencies to move in a stable manner reflecting fundamentals.” Market reaction USD/JPY is off the 11-month highs, trading at 149.65, at the time of writing. The pair is gaining 0.20% on the day.

The Euro (EUR) gains ground against the US Dollar (USD), motivating the EUR/USD to reclaim the area around 1.0590 and advance for the third session in

The Euro picks up extra pace vs. the US Dollar.Stocks in Europe open Monday’s session with decent gains.EUR/USD prints humble gains near 1.0580.The USD Index (DXY) meets initial hurdle near 106.30.Final Manufacturing PMIs in the euro zone come next.The ISM Manufacturing PMI takes centre stage across the pond.The Euro (EUR) gains ground against the US Dollar (USD), motivating the EUR/USD to reclaim the area around 1.0590 and advance for the third session in a row following the opening bell on the old continent on Monday. Meanwhile, the Greenback appears under some pressure, just above the 106.00 hurdle when measured by the USD Index (DXY), and is followed by the continuation of the recovery in the risk complex seen in the latter part of last week.   Furthermore, looking at the fixed-income markets on both sides of the ocean, yields appear directionless so far.   The monetary policy forecast remains unaltered, with investors still expecting the Federal Reserve (Fed) to raise interest rates by 25 bps before the end of the year. Meanwhile, market talks about a probable stalemate in policy changes at the European Central Bank (ECB) continue, despite inflation levels that surpass the bank's objective and rising fears about a potential recession. On the positioning front, EUR net longs extended the decline during the week ended on September 26 according to CFTC’s report, falling in line with the sharp sell-off observed in spot in the last few weeks. In the domestic docket, final Manufacturing PMIs in the euro zone are seconded by the Unemployment Rate in the broader euro bloc. In the US, all the attention is expected to be on the release of the USM Manufacturing PMI, seconded by Construction Spending, the final S&P Global Manufacturing PMI, and speeches by Philly Fed Patrick Harker (voter, hawk), FOMC Governor Michelle Barr (permanent voter, centrist), and New York Fed John Williams (permanent voter, centrist). Daily digest market movers: Euro appears supported by risk appetite trends The EUR extends the recovery vs. the USD. US and German yields show marginal price action so far. Markets factor in an extra rate hike by the Fed before year-end. Investors foresee an impasse at the ECB’s tightening campaign. Chinese PMIs came in mixed for the month of September. FX intervention fears remain well and sound around USD/JPY. Technical Analysis: Immediate support emerges at the 1.0490/80 band EUR/USD looks to consolidate the rebound from last week’s lows around 1.0490. If the EUR/USD rebound gets more serious, the pair should encounter the next up-barrier at the weekly high of 1.0767 (September 12), before reaching the crucial 200-day SMA at 1.0827. If the pair breaks beyond this level, it may set up a challenge of the transitory 55-day SMA at 1.0843, ahead of the weekly top at 1.0945 (August 30) and the psychological barrier of 1.1000. The surpass of the latter might prompt the pair to test the August peak of 1.1064 (August 10) ahead of the weekly high of 1.1149 (July 27) and the 2023 top of 1.1275. (July 18). On the downside, the September low of 1.0491 (September 28) emerges as the next support prior to the 2023 low of 1.0481. (January 6). However, it is critical to remember that as long as the EUR/USD remains below the 200-day SMA, the possibility of more negative pressure exists. Euro FAQs What is the Euro? The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro? The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro? Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro? Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro? Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

FX option expiries for Oct 2 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.0600 373m - GBP/USD: GBP amounts 1.2

FX option expiries for Oct 2 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.0600 373m - GBP/USD: GBP amounts      1.2150 300m 1.2275 947m 1.2300 411m - USD/JPY: USD amounts                      149.00 932m 150.00 729m - USD/CHF: USD amounts         0.9115 230m 0.9120 361m - AUD/USD: AUD amounts 0.6450 330m 0.6500 740m - NZD/USD: NZD amounts 0.5900 350m

Switzerland SVME - Purchasing Managers' Index registered at 44.9 above expectations (40.5) in September

The US Dollar Index strengthened by 3.2% in the third quarter. Economists at ING analyze DXY outlook. Settling into a stronger Dollar Given that long-

The US Dollar Index strengthened by 3.2% in the third quarter. Economists at ING analyze DXY outlook. Settling into a stronger Dollar Given that long-dated US yields have been a big driver of the Dollar over recent weeks, perhaps a more settled week for the bond market means that the USD can just consolidate at the highs. We note next week sees US three, ten and thirty-year US Treasury auctions and could be the next big driver for yields – assuming no major surprises from Friday's US jobs report. DXY should probably stay bid in the 106-107 range this week.  

Spain HCOB Manufacturing PMI came in at 47.7, above expectations (46.5) in September

NZD/USD ended the week just shy of 0.60. Economists at ANZ Bank analyze the pair’s outlook. Moves of late have been very USD-centric Quarter-end rebal

NZD/USD ended the week just shy of 0.60. Economists at ANZ Bank analyze the pair’s outlook. Moves of late have been very USD-centric Quarter-end rebalancing may well have added to volatility but moves of late have been very USD-centric, and it’s hard to see that backdrop changing much as we head into year-end, and into this week’s run of key US data (ISMs, payrolls, unemployment).  But this week will also be about the RBNZ (and via correlations, the RBA). We think the Kiwi is more likely to benefit from a more hawkish tone if we see it, but that may only help it hold its own against the USD, rather than overcome USD strength.  

The USD/CAD pair loses some ground after being rejected from the 1.3600 barrier during the early European session on Monday. Traders await the Canadia

USD/CAD retraces to 1.3570, and holds above the 50- and 100-hour EMAs on the four-hour chart. The key resistance level is seen at 1.3600; the initial support level is located at 1.3515.Relative Strength Index (RSI) is located in the bullish territory above 50. The USD/CAD pair loses some ground after being rejected from the 1.3600 barrier during the early European session on Monday. Traders await the Canadian S&P Global Manufacturing PMI for September ahead of the US ISM Manufacturing PMI due later in the North American session on Monday. The pair currently trades near 1.3570, losing 0.06% on the day. 

From the technical perspective, USD/CAD holds above the 50- and 100-hour Exponential Moving Averages (EMAs) on the four-hour chart, which supports the buyers for the time being.

The immediate resistance level for the pair is seen near the confluence of a psychological round figure and the upper boundary of the Bollinger Band of 1.3600. The additional upside filter to watch is near a high of May 31 at 1.3651. Further north, the pair will see a rally to a high of September 5 at 1.3670. Any follow-through buying above the latter will pave the way to a high of September 7 at 1.3695. 

On the flip side, the initial support level is located near the 100-hour EMA at 1.3515. any decisive break below the latter will see a drop to the next contention at 1.3450 (a low of May 25). Further south, the next downside stop will emerge at 1.3428, representing the lower limit of the Bollinger Band. 

It’s worth noting that the Relative Strength Index (RSI) is located in the bullish territory above 50, which means the path of the least resistance of USD/CAD is to the upside. USD/CAD four-hour chart    

Austria Unemployment dipped from previous 261.3K to 251.8K in September

Austria Unemployment Rate down to 5.9% in September from previous 6.1%

USD/JPY is now predicted to navigate the 148.50-150.50 range in the next few weeks, comment Markets Strategist Quek Ser Leang and Senior FX Strategist

USD/JPY is now predicted to navigate the 148.50-150.50 range in the next few weeks, comment Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group. Key Quotes 24-hour view: Last Friday, we expected USD to trade sideways between 149.05 and 149.70. We did not anticipate the choppy price action wherein USD plummeted to a low of 148.51 before snapping back up to end the day little changed at 149.35 (+0.04%). The strong rebound has scope to extend but is unlikely to break clearly above 150.00. Support is at 149.20, followed by 148.90.  Next 1-3 weeks: Our latest narrative was from last Thursday (28 Sep, spot at 149.45), wherein USD “could advance further to 150.00 if it stays above 148.55.” On Friday, USD dipped briefly to a low of 148.51 before snapping back up. While upward momentum has eased somewhat, it is premature to expect a sustained pullback in USD. From here, USD could edge upwards, but any advance is likely part of a higher range of 148.50/150.50. In other words, a clear break above 150.50 is unlikely. 

The Institute for Supply Management (ISM) will publish the United States September Manufacturing Purchasing Managers’ Index (PMI) on Monday, October 2

The US ISM Manufacturing PMI is foreseen at 47.8 in September, improving further after June’s bottom.ISM Prices Paid Index and Employment Index could give hints about the Federal Reserve’s next steps.The risk for a EUR/USD corrective advance increased as the pair has fallen for 11 weeks in a row.The Institute for Supply Management (ISM) will publish the United States September Manufacturing Purchasing Managers’ Index (PMI) on Monday, October 2. The index is expected to have ticked modestly higher to 47.8 from its previous monthly reading of 47.6. The official Manufacturing PMI has been within contraction levels ever since falling to 49 in November 2022 and slowly moving away from the multi-year low posted last June at 46. What to expect from the ISM manufacturing PMI report? Beyond the modest uptick in the headline figure, market players anticipate an improvement in all sub-components. The Employment Index is foreseen at 49 from 48.5 in August, while New Orders are expected to print 47 after posting 46.8 in August. Finally, the ISM Manufacturing Prices is anticipated at 48.9 in September, up 0.5 percentage points from the former reading. Back in August, the report indicated a ninth month of contraction after a 30-month period of expansion. More relevant, the Prices Index registered 48.4, up 5.8 percentage points compared to the July figure of 42.6. Inflation in the United States (US), as measured by the Consumer Price Index (CPI), rose by more than anticipated in August, while the core Personal Consumption Expenditures (PCE) Price Index – the Federal Reserve (Fed) favorite inflation figure –, met expectations while easing from July,  up 3.9% YoY in the same month.  A higher-than-anticipated ISM Manufacturing PMI Price Index sub-component, which gauges the price change that US manufacturers pay for its inputs, would hint at persistently high inflation extending into September. That should fuel speculation about at least one more rate hike in the US and support the central banks’ idea of “higher for longer” rates. As a result, the risk of an economic setback should increase, and the US Dollar benefits from a continued run to safety. Investors will also pay attention to the employment-related sub-component ahead of the Nonfarm Payrolls (NFP) report scheduled for Friday. The tight US labor market is a critical factor when it comes to monetary policy decisions, as it allows the central bank to maintain the restrictive policy. Policymakers see modest signs of loosening labor market conditions, not enough, however, to change the course of monetary policy. Offering a sneak peek into the US data, analysts at BBH noted: “ISM PMIs will also be important.  Manufacturing PMI will be reported Monday and the headline is expected at 47.9 vs. 47.6 in August. Keep an eye on employment and prices paid, which stood at 48.5 and 48.4 in August, respectively.” When will the ISM Manufacturing Purchasing Managers’ Index report be released and how could it affect EUR/USD? The ISM Manufacturing PMI report is scheduled for release at 14:00 GMT on October 2. Ahead of the data, the US Dollar trades near fresh multi-month highs against most major rivals, backed by mounting risk aversion and signs of a resilient American economy. An upbeat headline should confirm the economy remains strong enough and that the country may dodge a recession. Such speculation should lift the mood and put pressure on the US Dollar, at least in the near term. Strong inflation and employment sub-components, however, may spur speculation for tighter for longer Fed policy and boost USD demand amid renewed fears. From a technical perspective, Dhwani Mehta, Asian Session Lead Analyst at FXStreet, notes that “EUR/USD is struggling below the 1.0600 threshold on its road to recovery, as 14-day Relative Strength Index (RSI) indicator continue to sit beneath the 50 level.” “Any recovery will gather steam on a sustained move above the 1.0650 psychological level, above which the 1.0700 round figure will be on the Euro’s radar. Meanwhile, powerful support aligns near 1.0490, below which a fresh downside will open up toward the 1.0400 mark.” Related news EUR/USD seen trading within a range bound theme – UOB Gold Price Forecast: Will Fed Chair Jerome Powell rescue XAU/USD buyers? EUR/USD Weekly Forecast: Optimism not enough to take the US Dollar down Economic Indicator United States ISM Manufacturing PMI The Institute for Supply Management (ISM) Manufacturing Index shows business conditions in the US manufacturing sector It is a significant indicator of the overall economic condition in US. A result above 50 is seen as positive (or bullish) for the USD, whereas a result below 50 is seen as negative (or bearish). Read more.Next release: 10/02/2023 14:00:00 GMTFrequency: MonthlySource: Institute for Supply Management Why it matters to traders The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are considered to be leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labour market and inflation.

Considering advanced prints from CME Group for natural gas futures markets, open interest rose for the second session in a row on Friday, now by nearl

Considering advanced prints from CME Group for natural gas futures markets, open interest rose for the second session in a row on Friday, now by nearly 8K contracts. Volume, instead, dropped for the third straight session, this time by more than 2K contracts. Natural Gas: Upside remains capped around $3.00Natural gas prices rose to fresh monthly tops near the $3.00 mark before ending Friday’s session with modest losses. The move was amidst rising open interest and opens the door to further correction in the very near term. That said, the $3.00 region per MMBtu remains a tough barrier for natural gas bulls for the time being.

On Saturday, Congress passed a bill that funds the US federal government through November 17. We could still be looking at a government shutdown after

On Saturday, Congress passed a bill that funds the US federal government through November 17. We could still be looking at a government shutdown after November 17, economists at Commerzbank report. US shutdown averted, for now The US government shutdown feared for Oct. 1 is off the table for now, as Congress passed last-minute interim funding. However, this will only last until November 17. By mid-November, Congress must pass either regular budget legislation or another stopgap funding measure. However, the positions in Congress on the level of government spending and on issues such as Ukraine aid and border security are still far apart. Thus, the 22nd government shutdown since 1976 continues to loom.  

Silver price continues to follow its downward trajectory, trading lower around $21.80 during the Asian session on Monday. The prices of non-yielding a

Silver price persists as market caution prevails regarding the Fed's interest rate trajectory.Momentum indicators signal a potential bearish sentiment in the price movements.The psychological level at $21.50 emerges as the immediate support.Silver price continues to follow its downward trajectory, trading lower around $21.80 during the Asian session on Monday. The prices of non-yielding assets like Silver face challenges, primarily due to the upbeat US Treasury Yields. The yield on the 10-year US Treasury bond stands at 4.61%, up by 0.96% by the press time. Furthermore, China released its Manufacturing PMI data over the weekend, indicating improvement and entering positive territory. However, this positive development did not seem to have a favorable impact on Silver prices. Chinese NBS Manufacturing PMI for August increased to 50.2 from the previous 49.7 figures, surpassing the anticipated 50.0. Additionally, the Non-Manufacturing PMI climbed to 51.7 from the previous reading of 51.0, exceeding the market consensus of 51.5. The current downward momentum in the pair appears to have a bearish bias, given that the 14-day Relative Strength Index (RSI) remains below the 50 level. The XAG/USD pair could meet support at the $21.50 psychological level, following the $21.00 level. On the upside, the 23.6% Fibonacci retracement at $22.46 lined up with the seven-day Exponential Moving Average (EMA) at $22.49. A firm break above the latter could influence the XAG/USD pair to explore the area around the 14-day EMA at $22.79, followed by the $23.00 psychological level. The Moving Average Convergence Divergence (MACD) indicator is providing a weak signal for the Silver bulls. The MACD line lies below the centerline and the signal line. This configuration suggests that there is potentially weak momentum in the XAG/USD's price movement.  

Further upside could encourage AUD/USD to revisit the 0.6525 level in the short-term horizon, suggest Markets Strategist Quek Ser Leang and Senior FX

Further upside could encourage AUD/USD to revisit the 0.6525 level in the short-term horizon, suggest Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group. Key Quotes 24-hour view: We highlighted last Friday that “the strong rebound in AUD could test 0.6455 before easing.” We added, “the major resistance at 0.6480 is unlikely to come into view. The anticipated rebound exceeded our expectations, as AUD soared to a high of 0.6501. The advance was, however, short-lived, as AUD pulled back sharply from the high. The pullback in overbought conditions suggests AUD is unlikely to advance further. Today, AUD is more likely to trade sideways between 0.6400 and 0.6475.  Next 1-3 weeks: Last Friday (29 Sep, spot at 0.6435), we held the view that AUD “is still likely trading in a range, probably between 0.6360 and 0.6480.” AUD then rebounded strongly to a high of 0.6501 before pulling back to end the day slightly higher at 0.6435 (+0.11%). There is a slight buildup in momentum, and there is room for AUD to test the major resistance level at 0.6525. At this stage, it is too early to tell if AUD can break clearly above this level. On the downside, a breach of 0.6360 (‘strong support’ level) would indicate that the momentum buildup has faded. 

The greenback, in terms of the USD Index (DXY), adds to Friday’s small gains and revisits the 106.30 region at the beginning of the week. USD Index fo

The index advances modestly early on Monday.The dollar regains traction on risk-off sentiment.ISM Manufacturing takes centre stage later in the NA session.The greenback, in terms of the USD Index (DXY), adds to Friday’s small gains and revisits the 106.30 region at the beginning of the week. USD Index focuses on data The index advances for the second session in a row on Monday on the back of further correction in the risk-linked universe, while US yields remain directionless ahead of the opening bell in Euroland. In the meantime, the greenback puts further distance from Friday’s lows in the 105.70/65 band and appears to be retargeting the area of recent 2023 peaks near 106.80 (September 27). There have been no changes to the monetary policy front so far, where investors continue to price in an extra 25 bps rate hike by the Federal Reserve before year-end. In addition, the dollar gained extra strength after the US averted a federal government shutdown at the last minute, all following a Congress vote to pass a short-term funding bill over the weekend. Additionally, the recent rally in the greenback appears supported by the speculative community after net longs in the dollar rose to levels last seen in early January in the week ended on September 26, according to the CFTC’s positioning report. In the US docket, the ISM Manufacturing PMI will be in the limelight later in the session, seconded by Construction Spending, the final figures of the S&P Global Manufacturing PMI, and speeches by Philly Fed P. Harker (voter, hawk), FOMC Governor M. Barr (permanent voter, centrist), and NY Fed J. Williams (permanent voter, centrist). What to look for around USD The greenback looks to extend Friday’s lows, although it seems to have met some initial resistance in the 106.30 region so far. In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the renewed tighter-for-longer stance narrative from the Federal Reserve.Key events in the US this week: Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, Fed J. Powell (Monday) – MBA Mortgage Applications, ADP Employment Change, Final Services PMI, ISM Services PMI, Factory Orders (Wednesday) - Initial Jobless Claims, Balance of Trade (Thursday) – Nonfarm Payrolls, Unemployment Rate, Consumer Credit Change (Friday).Eminent issues on the back boiler: Persevering debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China. USD Index relevant levels Now, the index is gaining 0.03% at 106.20 and a breakout of 106.83 (2023 high September 27) would open the door to 107.19 (weekly high November 30, 2022) and finally 107.99 (weekly high November 21 2022). On the other hand, initial support emerges at 104.42 (weekly low September 11) ahead of 103.10 (200-day SMA) and then 102.93 (weekly low August 30).

The USD/JPY pair hovers around 149.70 after retreating from the 11-month highs of 149.82 during the early European trading session on Monday. The rene

USD/JPY edges higher to 149.70, near the 11-month highs on Monday.BoJ Governor said there was "a distance to go" before exiting its ultra-easy policy.The potential FX intervention from the Japanese authorities might warn traders from the bullish bet.Market players await the US ISM PMI while keeping an eye on the 150.00 level.The USD/JPY pair hovers around 149.70 after retreating from the 11-month highs of 149.82 during the early European trading session on Monday. The renewed US Dollar (USD) broadly boosts the major pair ahead of the US ISM PMI due later on Monday. However, traders might turn cautious amid the fear of possible FX intervention by Japanese authorities.

The higher for longer narratives in the US boosts the Greenback broadly. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, resumes its upward path by climbing to 106.28, the highest since November last year. The Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioned that Fed will need a restrictive policy stance for some time to achieve goals, while the Fed Bank of Richmond President Thomas Barkin said that the central bank holding steady at the September FOMC meeting was appropriate and Fed has time to see data before deciding what’s next for rates.

On Friday, the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. Meanwhile, the annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, grew 3.9% from 4.3% in July, in line with expectations.

On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures fell short of experts' expectations. Additionally, Personal Income and Personal Spending rose by 0.4% on a monthly basis as expected.

Market players will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday. The hawkish comments from officials could boost the US Dollar (USD) and act as a tailwind for the USD/JPY pair. However, the potential FX intervention from the Japanese authorities might warn traders from the bullish bet as the pair trades near the 150.00 level, a psychological round mark, and the zone that BoJ intervened in the market last year.

Early Monday, Japanese Finance Minister Shunichi Suzuki continued with the verbal intervention. Suzuki stated that he was watching currency moves “cautiously”. BoJ Governor Kazuo Ueda said on Saturday that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy. According to the BoJ Summary of Opinions at the Monetary Policy Meeting on September 21 and 22, BOJ said that they do not need to make additional tweaks to YCC as long-term rates moving fairly stably and said that end to negative rate must be tied to the success of achieving 2% inflation target.

Market participants will monitor the US ISM Manufacturing PMI for September due on Monday, followed by the Fed Chair Powell’s speech. Later this week, the US ADP Employment Change and ISM Services PMI for September will be released on Wednesday. The attention will shift to the US Nonfarm Payrolls on Friday. These events could give a clear direction to the USD/JPY pair.  

Switzerland Real Retail Sales (YoY) up to -1.8% in August from previous -2.2%

Sweden Purchasing Managers Index Manufacturing (MoM): 43.3 (September) vs previous 45.8

The Malaysian Ringgit has been under increasing pressure over the past month. Economists at ANZ Bank analyze USD/MYR outlook. A meaningful turnaround

The Malaysian Ringgit has been under increasing pressure over the past month. Economists at ANZ Bank analyze USD/MYR outlook. A meaningful turnaround in China’s economic activity will be a strong driver for the Ringgit The widening yield gap with the US and weakening domestic growth drivers have likely dragged down the Ringgit. However, the tourism recovery has been steady, with authorities targeting 16.1 million international tourist arrivals in 2023, which will support the MYR. At the same time, a meaningful turnaround in China’s economic activity, Malaysia’s largest trading partner, will also be a strong driver for the Ringgit.  We expect the MYR to recover modestly in Q4 and end the year at 4.55.  

In the view of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, GBP/USD could now trade between 1.2100 and 1.2380 i

In the view of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, GBP/USD could now trade between 1.2100 and 1.2380 in the next few weeks. Key Quotes 24-hour view: We highlighted last Friday that “the strong rebound in GBP could extend to 1.2250 before levelling off.” We also highlighted that “the next resistance at 1.2300 is unlikely to come under threat.” While GBP rebounded more than expected, it did not threaten the resistance at 1.2300 (it pulled back sharply and quickly from a high of 1.2271). The short-lived advance did not lead to any buildup in momentum and GBP is unlikely to advance further. Today, GBP is more likely to consolidate, probably in a range of 1.2145/1.2255.  Next 1-3 weeks: There is no change in our view from last Friday (29 Sep, spot at 1.2200). As highlighted, the recent month-long GBP weakness has finally ended. The current price movement is likely the early stages of a consolidation phase. In view of the sharp drop over the past month, GBP could consolidate in a relatively broad range of 1.2100/1.2380 for the time being. 

Open interest in crude oil futures markets shrank for the second session in a row on Friday, this time by just 692 contracts according to preliminary

Open interest in crude oil futures markets shrank for the second session in a row on Friday, this time by just 692 contracts according to preliminary readings from CME Group. In the same line, volume went down for the second straight session, now by around 208.6K contracts. WTI retargets the 2023 highs Prices of WTI dropped for the second session in a row on Friday following Thursday’s YTD peaks. The daily drop came on the back of shrinking open interest and volume and could leave the door open to a near-term rebound with the immediate target on the 2023 top at $94.99 (September 28).

United Kingdom Nationwide Housing Prices n.s.a (YoY) came in at -5.3%, above expectations (-5.8%) in September

Russia S&P Global Manufacturing PMI climbed from previous 52.7 to 54.5 in September

United Kingdom Nationwide Housing Prices s.a (MoM) came in at 0%, above forecasts (-0.4%) in September

The GBP/USD pair remains on the defensive below the 1.2200 barrier and trades in negative territory for the fifth consecutive week during the early Eu

GBP/USD remains under selling pressure near 1.2180 amid the rally of USD.The US annual Core PCE Price Index grew 3.9% vs. 4.3% prior, in line with expectations.Market players will focus on the US ISM Manufacturing PMI for September, followed by the Fed Chair Powell’s speech.The GBP/USD pair remains on the defensive below the 1.2200 barrier and trades in negative territory for the fifth consecutive week during the early European session on Monday. The major pair trades around 1.2180, losing 0.16% on the day.

The US Bureau of Economic Analysis revealed on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. Meanwhile, the annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, grew 3.9% from 4.3% in July, in line with expectations.

On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures fell short of experts' expectations. Additionally, Personal Income and Personal Spending rose by 0.4% on a monthly basis as expected.

The Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Fed Bank of Richmond President Thomas Barkin said that the central bank holding steady at the September FOMC meeting was appropriate and Fed has time to see data before deciding what’s next for rates.

However, market players will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday. The hawkish comments from officials could boost the US Dollar (USD) and act as a headwind for the GBP/USD pair.

On the GBP’s front, BoE policymakers stated that the central bank could raise or halt interest rates if necessary after the BoE decided to halt its rate-hiking cycle earlier last month. However, the market expects BoE to maintain its monetary policy in the next meeting, which exerts pressure on the British Pound (GBP).

In the absence of economic data released from the UK docket this week, the GBP/USD pair remains at the mercy of USD price dynamics. The US ISM Manufacturing PMI for September will be due on Monday, followed by the Fed Chair Powell’s speech. Later this week, the US ADP Employment Change and ISM Services PMI for September will be released on Wednesday. The attention will shift to the US Nonfarm Payrolls on Friday.  

Economist Lee Sue Ann at UOB Group sees the RBA maintaining its OCR at 4.10% at its event on October 3. Key Takeaways We continue to believe that the

Economist Lee Sue Ann at UOB Group sees the RBA maintaining its OCR at 4.10% at its event on October 3. Key Takeaways We continue to believe that the RBA will keep policy unchanged at the Oct meeting, although we are penciling in a chance that it will hike one last time this year, taking the cash rate target to a peak of 4.35%. In terms of timing, this is likely to occur at the 7 Nov meeting, following the release of the 3Q23 CPI on 25 Oct. Another factor that could prompt the RBA to hike once more is the risk that wages in the third quarter could spike higher after a large mandated increase in the minimum and award wages.

CME Group’s flash data for gold futures markets noted traders added around 5.6K contracts to their open interest positions after six consecutive daily

CME Group’s flash data for gold futures markets noted traders added around 5.6K contracts to their open interest positions after six consecutive daily pullbacks on Friday. Volume followed suit and went up by around 10.3K contracts, partially reversing the previous daily drop. Gold: Next on the downside comes $1800Gold prices extended the multi-session leg lower on Friday. The move was amidst increasing open interest and volume and suggests that extra decline appears on the cards in the very near term. Looking at the longer run, the precious metal faces the next support of note around the key $1800 region per troy ounce.

Western Texas Intermediate (WTI) oil price hovers around $90.00 per barrel during the Asian session on Monday. The Crude oil price struggles to recove

Crude oil prices receive downward pressure due to the Fed’s hawkish stance on interest rates trajectory.US Crude oil production has surged to multi-year highs.Higher US Treasury yields contribute support to underpin the US Dollar.US passed bills to avert a government shutdown, securing funding until November 17.Western Texas Intermediate (WTI) oil price hovers around $90.00 per barrel during the Asian session on Monday. The Crude oil price struggles to recover from recent losses due to market caution on the US Federal Reserve’s (Fed) interest rates trajectory. Fed is expected to attempt another 25 basis points (bps) rate hike through the end of the year. Additionally, the market is factoring in the likelihood of higher interest rates for a prolonged period. The higher interest costs raise borrowing costs, which can affect the demand for Crude oil. Recent weeks have witnessed a significant decline in US oil reserves, intensifying the bullish momentum in the oil market. However, according to the Energy Information Administration (EIA), US crude oil production has surged to multi-year highs. This increase in fossil fuel production is driven by the effort to meet the demand gap left by the extended production cuts of 1.3 million barrels per day by Saudi Arabia and Russia through the end of the year. Despite the drawdown in reserves, the surge in production is indicative of the complex dynamics influencing global oil markets. The total US crude reserves have sharply declined to approximately 420 million barrels, with the crucial Cushing, Oklahoma reserves plummeting to a mere 20 million barrels. Despite these supply constraints and diminishing reserves, there is an anticipation of US oil production reaching record highs. Investors are swiftly adapting their forward-looking expectations for crude costs in response to these developments, reflecting the intricate balance between supply, reserves, and production levels. Over the weekend, Chinese Manufacturing PMI data showed improvement into positive territory, which could provide support for the prices of black gold as China is the largest oil importer in the world. China’s NBS Manufacturing PMI for August grew to 50.2 from the previous 49.7 figures, exceeding the 50.0 expected. Additionally, the Non-Manufacturing PMI rose to 51.7 from the 51.0 previous reading, surpassing the market consensus of 51.5. The US Dollar Index (DXY) holds ground, continuing to gain on the second trading session following moderate datasets from the United States (US). The spot price trades higher around 106.20. Further support for the strength of the USD comes from the positive performance of US Treasury Yields. The yield on the 10-year US Treasury bond stands at 4.61% at the moment, marking a 0.96% increase. Crude oil faces challenges, primarily due to the upbeat US Dollar (USD) following the release of moderate economic data on Friday. The US Michigan Consumer Sentiment Index for September improved to 68.1 from the previous figure of 67.7, beating expectations for no change. The US Core Personal Consumption Expenditures (PCE) - Price Index (YoY) for August rose as estimated, reaching 3.9%, but showed a slight easing from the previous reading of 4.3%. Core PCE (MoM) recorded a softer reading of 0.1% against the market consensus for it to remain consistent at the 0.2% prior. Following Friday's session, bills were successfully passed in the US to prevent a government shutdown, securing funding until November 17. This development has prompted a resumption of the US Dollar Index (DXY) on an upward trajectory. Traders in the Crude oil market will likely pay close attention to the upcoming US ISM Manufacturing PMI for September ahead of a speech by Fed Chair Jerome Powell on Monday. These events can potentially influence market dynamics and impact the performance of both the US Dollar and Crude oil.  

EUR/USD is now expected to have entered in a consolidative phase, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia a

EUR/USD is now expected to have entered in a consolidative phase, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group. Key Quotes 24-hour view: Our view that EUR is likely to trade in a range was incorrect. Instead of trading in a range, EUR soared to a high of 1.0616. The advance was, however, short-lived, as EUR pulled back quickly to end the day slightly higher at 1.0570 (+0.10%). We view the current movement as part of a consolidation phase. Today, we expect EUR to traded sideways in a range of 1.0530/1.0605.  Next 1-3 weeks: Last Friday (29 Sep, spot at 1.0560), we highlighted that “downward momentum has waned considerably, and the likelihood of EUR breaking below the year’s low near 1.0480 has diminished considerably as well.” EUR then rebounded to a high of 1.0616 before pulling back to close at 1.0570 (+0.10%). The price action suggests that the EUR weakness that started early last week has ended. EUR appears to have entered a consolidation phase. For the time being, EUR is likely to trade in a range, probably between 1.0495 and 1.0650. 

Netherlands, The Markit Manufacturing PMI down to 43.6 in September from previous 45.9

Asian stocks posts modest gains on Monday amid the light trading volume. Investors digest economic data from China and Japan while awaiting the US PMI

Asian equities trade higher amid the light volume due to holidays in China and India.Chinese Caixin/S&P Global Manufacturing PMI dropped to 50.6 in September vs. 51.0 prior.BoJ Governor Kazuo Ueda said that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy.The Reserve Bank of India (RBI) is likely to maintain a status quo on interest rates on Friday.Asian stocks posts modest gains on Monday amid the light trading volume. Investors digest economic data from China and Japan while awaiting the US PMI data due later in the American session on Monday.

Chinese markets are closed for the Golden Week holiday. Stock markets in Hong Kong and India are also closed for holidays. At press time, Japan’s Nikkei is up 0.55% to 32,025, while the Topix rose 0.45%.

In China, data released on Saturday showed that the Chinese Caixin/S&P Global Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in September from the previous reading of 51.0, below the market consensus of 51.2. The Service PMI came in at 50.2 from 51.8 in the previous month. These figures indicated a sign of stabilization in the world's second-largest economy. However, the future is clouded by a housing downturn and plummeting exports.

Earlier Monday, BoJ Summary of Opinions at the Monetary Policy Meeting on September 21 and 22 stated that BOJ does not need to make additional tweaks to YCC as long-term rates moving fairly stably and said that end to negative rate must be tied to the success of achieving 2% inflation target. One board member added that given recent FX and oil price moves, there is a chance inflation may not slow much and overshoot expectations.

BoJ Governor Kazuo Ueda said on Saturday that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy. Japan’s overall business conditions of the large manufacturing companies in Japan improved in the third quarter (Q3). The Japanese Tankan Large Manufacturing Index (Q3) came in at 9.0 from the previous reading of 5.0, better than the expectation of 6.0.

Apart from this, BoJ announced on Monday an unscheduled purchase of the Japanese government bonds (JGB), to slow down the ongoing surge in in yields. The 10-year JGB yield hit the highest level since September last year at 0.775% in the early Asian session.

In India, the Reserve Bank of India (RBI) will begin its three-day meeting on Wednesday and the interest rate decision will be announced on Friday. RBI is likely to maintain a status quo on interest rates for the fourth consecutive time at its upcoming monetary policy meeting.

Looking ahead, market players will take cues from the US ISM Manufacturing PMI for September, followed by the Fed Chair Powell’s speech on Monday.

 

On Monday, the Bank of Japan (BoJ) announced an unscheduled purchase of the Japanese government bonds (JGB), in an effort to slow down the ongoing sur

On Monday, the Bank of Japan (BoJ) announced an unscheduled purchase of the Japanese government bonds (JGB), in an effort to slow down the ongoing surge in in yields. This comes after the benchmark 10-year JGB yield rose 1 basis point in early Asia to reach the highest since September last year at 0.775%.

The EUR/USD pair struggles to gain any meaningful traction on the first day of a new week and oscillates in a narrow trading band, just above mid-1.05

EUR/USD is seen consolidating in a narrow range through the Asian session on Monday.The formation of a downward-sloping channel on the daily chart favours bearish traders.A sustained strength beyond the 1.0700 mark is needed to negate the negative outlook.The EUR/USD pair struggles to gain any meaningful traction on the first day of a new week and oscillates in a narrow trading band, just above mid-1.0500s through the Asian session. The prospects for further policy tightening by the Federal Reserve (Fed) trigger a fresh leg up in the US Treasury bond yields, which continues to underpin the US Dollar (USD). Apart from this, expectations that additional ECB rate hikes may be off the table for now act as a headwind for the EUR/USD pair. That said, the risk-on impulse holds back traders from placing fresh bets around the safe-haven Greenback and lends some support to spot prices. From a technical perspective, the recent downfall witnessed over the past two-and-half months or so has been along a downward-sloping channel and points to a well-established short-term downtrend. Moreover, the Relative Strength Index (RSI) on the daily chart has also recovered from the oversold territory and favours bearish traders. This, along with the occurrence of a death cross, suggests that the path of least resistance for the EUR/USD pair is to the downside. Some follow-through selling below the daily low, around the 1.0555 area, will reaffirm the negative bias and drag spot prices back below the 1.0500 psychological mark, or the lowest level since January touched last week. The latter coincides with the lower end of the aforementioned trend channel and should act as a pivotal point. A convincing break below will, in turn, set the stage for an extension of the downward trajectory towards testing the 1.0400 round figure. On the flip side, the 1.0600 mark, closely followed by Friday's swing high, around the 1.0615 region, should cap the immediate upside for the EUR/USD pair. A sustained strength beyond might trigger a short-covering rally and lift spot prices towards the trend-channel barrier, currently pegged near the 1.0700 round figure. Some follow-through buying, meanwhile, will suggest that the pair has bottomed out and shift the near-term bias in favour of bullish traders. EUR/USD daily chart Technical levels to watch  

Indonesia Core Inflation (YoY) came in at 2%, below expectations (2.1%) in September

European Central Bank (ECB) Vice President, Luis de Guindos, in a Financial Times (FT) interview on Monday, dismissed rate cuts and said that “getting

European Central Bank (ECB) Vice President, Luis de Guindos, in a Financial Times (FT) interview on Monday, dismissed rate cuts and said that “getting back to the 2% target of inflation will not be easy.” He added that the “last mile of disinflation is the hardest.”

Indonesia Inflation (YoY) above forecasts (2.25%) in September: Actual (2.28%)

Indonesia Inflation (MoM) above forecasts (0.15%) in September: Actual (0.19%)

USD/INR holds positive ground around 83.15 during the Asian session on Monday. The uptick of the pair is supported by the stronger US dollar (USD) and

USD/INR gains momentum above 83.00 as the US Dollar (USD) resumes its upward path.Reserve Bank of India (RBI) is likely to maintain a status quo in the upcoming interest rate meeting.The annual Core PCE Price Index grew 3.9% from 4.3% in July, in line with expectations.RBI rate decision will be a closely watched event on Friday.USD/INR holds positive ground around 83.15 during the Asian session on Monday. The uptick of the pair is supported by the stronger US dollar (USD) and the higher-for-longer rate narrative in the US. Investors await the Reserve Bank of India (RBI) rate decision, which is expected to keep the policy repo rate steady on Friday.

RBI will begin its three-day meeting on Wednesday and the interest rate decision will be announced on Friday. RBI is likely to maintain a status quo on interest rates for the fourth consecutive time at its upcoming monetary policy meeting. Due to elevated retail inflation and global factors, including high crude oil prices, the benchmark repo rate was raised to 6.5% in February and remained unchanged since then

On the USD front, Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Fed Bank of Richmond President Thomas Barkin said that the central bank holding steady at the September FOMC meeting was appropriate and Fed has time to see data before deciding what’s next for rates.

About the data on Friday, the Personal Consumption Expenditures (PCE) Price Index rose by 3.5% YoY in August from the previous month of 3.4%, in line with the market estimation. The annual Core PCE Price Index grew 3.9% from 4.3% in July, meeting the expectation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose by 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market estimations.

Traders will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday. The hawkish comments from officials could boost the US Dollar (USD) and act as a tailwind for USD/INR.

Market players will monitor the US ISM Manufacturing PMI for September due on Monday, followed by the Fed Chair Powell’s speech. Later this week, S&P Global India Services PMI for September will be released on Thursday. On Friday, RBI will announce the monetary policy decision. These figures could give a clear direction of the USD/INR pair.  

Gold price (XAU/USD) settled deep in the red on Friday to end September down over 4.5% and lower for the second quarter in a row. The yellow metal als

Gold price continues losing ground for the sixth straight day and drops to a fresh six-month low.Bets for further policy tightening by the Fed turn out to be a key factor weighing on the “XAU/USD”.The risk-on impulse further contributes to driving flows away from the safe-haven precious metal.Gold price (XAU/USD) settled deep in the red on Friday to end September down over 4.5% and lower for the second quarter in a row. The yellow metal also recorded its biggest weekly decline in more than two years on growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer. In fact, the US central bank left the benchmark rate unchanged at its September meeting, though maintained the projection for one more rate hike by the year-end. Gold price did gain some respite on Friday following the release of the Personal Consumption Expenditures (PCE) Price Index from the United States (US), though the uptick ran out of steam rather quickly. The data does little to change the view that the Fed will continue to tighten its monetary policy. The outlook, meanwhile, triggers a fresh leg up in the US Treasury bond yields on Monday and continues to drag the XAU/USD lower for the sixth successive day. This also marks the ninth day of a negative move in the previous ten and drags the Gold price to its lowest level since March 13, around the $1,843-1,842 region during the Asian session. Apart from hawkish Fed expectations, the risk-on impulse is seen as another factor undermining the safe-haven precious metal. The global risk sentiment gets a boost in reaction to slightly better official Chinese PMIs and the passage of a stopgap US government funding bill over the weekend. The aforementioned fundamental backdrop suggests that the path of least resistance for the Gold price is to the downside, though extremely oversold conditions warrant caution for bearish traders. Investors might also refrain from placing fresh directional bets ahead of important US macro data scheduled at the beginning of a new month. A rather busy week kicks off with the release of the US ISM Manufacturing PMI on Monday, though the focus will remain on the closely watched monthly employment details, popularly known as the NFP report on Friday. Daily Digest Market Movers: Gold price refreshes multi-month low on hawkish Fed expectations Market participants seem convinced that the Fed will stick to its hawkish stance and keep rates higher for longer. The US PCE Price Index rose in line with consensus estimates, to 3.5% over the past twelve months through August. The annual Core PCE Price Index – the Fed's preferred gauge of inflation – decelerated from 4.3% in July to 3.9%. The rise in consumer spending, meanwhile, along with surging gasoline prices, points to higher prices going forward. Hawkish Fed expectations keep the 10-year US Treasury yield elevated near a 16-year top and underpin the US Dollar. The official Chinese PMIs showed that business activity in the manufacturing sector grew for the first time in six months. The US Congress on Sunday approved the stopgap funding bill to avert a government shutdown for another 45 days. Traders now look to the US ISM Manufacturing PMI, expected to come in at 47.9 in September, for a fresh impetus. Investors might refrain from placing fresh directional bets ahead of the closely-watched US NFP report on Friday. Technical Analysis: Gold price could pause the descending trend amid oversold conditions From a technical perspective, the Relative Strength Index (RSI) on the daily chart is already flashing oversold conditions and warrants some caution for bearish traders. Hence, it will be prudent to wait for some near-term consolidation or a modest bounce before positioning for an extension of the ongoing downward trajectory. Nevertheless, the Gold price seems poised to test the next relevant support near the $1,820 level before eventually dropping to the $1,800 mark. On the flip side, the $1,850 level is likely to act as an immediate barrier, which if cleared might trigger a short-covering move. The subsequent move up, however, might still be seen as a selling opportunity and cap the XAU/USD near the $1,863-1,864 resistance zone. Fed FAQs What does the Federal Reserve do, how does it impact the US Dollar? Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback. How often does the Fed hold monetary policy meetings? The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis. What is Quantitative Easing (QE) and how does it impact USD? In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar. What is Quantitative Tightening (QT) and how does it impact the US Dollar? Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Gold price extends its losing streak that began on September 25, trading lower around $1,840 per troy ounce during the Asian session on Monday. China’

Gold price faces challenges after the moderate US data on Friday.US passed bills to avert a government shutdown, securing funding until November 17.Higher US Treasury yields put pressure on non-yielding assets like Gold.Gold price extends its losing streak that began on September 25, trading lower around $1,840 per troy ounce during the Asian session on Monday. China’s Manufacturing PMI data was released over the weekend, which showed improvement into positive territory but failed to provide any support for the Gold prices. China’s NBS Manufacturing PMI for August grew to 50.2 from the previous 49.7 figures, exceeding the 50.0 expected. Additionally, the Non-Manufacturing PMI rose to 51.7 from the 51.0 previous reading, surpassing the market consensus of 51.5. The US Dollar Index (DXY) holds ground to continue to gain in the second trading session after the moderate datasets from the United States (US). The spot price bids higher around 106.20. Additionally, the upbeat US Treasury Yields are contributing support to the USD’s strength. The yield on the 10-year US Treasury bond stands at 4.61% by the press time, up by 0.96%. The prices of precious metals face challenges, primarily due to the upbeat US Dollar (USD) after the moderate economic data released on Friday. US Michigan Consumer Sentiment Index (Sep) improved to 68.1 from the previous figure of 67.7, which was expected to remain unchanged. US Core PCE - Price Index (YoY) for August rose 3.9% as estimated, eased from the previous reading of 4.3%. Core PCE (MoM) showed a soft reading of 0.1% against the market consensus to be consistent at the 0.2% prior. Following the Friday session, bills were successfully passed in the US to avert a government shutdown, securing funding until November 17. This development has prompted a resumption of the US Dollar Index (USD) upward trajectory. The Gold traders will likely watch the upcoming US ISM Manufacturing PMI for September ahead of the Fed’s Chair Jerome Powell's speech on Monday.  

USD/CAD kicks off the week by continuing the gains in the second trading session. The spot price is bidding the quotes higher around 1.3580 during the

USD/CAD receives upward support after the moderate US data on Friday.US bills were successfully passed to avert a government shutdown, securing funding until November 17.The recovery in Crude oil prices could limit the losses of the Canadian Dollar.USD/CAD kicks off the week by continuing the gains in the second trading session. The spot price is bidding the quotes higher around 1.3580 during the early Asian session on Monday. The US Dollar Index (DXY) holds ground to continue to gain in the second trading session after the moderate datasets from the United States (US). The spot price bids higher around 106.20. Additionally, the upbeat US Treasury Yields are contributing support to the USD’s strength. The yield on the 10-year US Treasury bond stands at 4.61% by the press time, up by 0.96%. The USD/CAD pair faces upward support, primarily due to the upbeat US Dollar (USD) after the moderate economic data released on Friday. The US Michigan Consumer Sentiment Index (Sep) improved to 68.1 from the previous figure of 67.7, which was expected to remain unchanged. US Core PCE - Price Index (YoY) for August rose 3.9% as estimated, eased from the previous reading of 4.3%. Core PCE (MoM) showed a soft reading of 0.1% against the market consensus to be consistent at the 0.2% prior. Following the Friday session, bills were successfully passed in the US to avert a government shutdown, securing funding until November 17. This development has prompted a resumption of the US Dollar Index (USD) upward trajectory. On the other side, the CAD received downward pressure due to the downbeat Gross Domestic Product (MoM) data for July, which reported flat at 0.0% against the market expectations of 0.1% growth. The GDP was at 0.2% contraction in June. Crude oil prices retreated from one-year highs over the last two trading sessions in the previous week, due to market caution on the Fed’s interest rates trajectory. This development weakened the Canadian Dollar (CAD) against the Greenback as Canada is the biggest oil exporter to the United States (US). However, Western Texas Intermediate (WTI), the US crude oil benchmark attempts to break the losing streak on Monday, trading around $90.10 per barrel. Traders await US ISM Manufacturing PMI for September ahead of the Fed’s Chair Jerome Powell's speech on Monday. The Canada’s S&P Global Manufacturing PMI (Sep) will also be eyed.  

The USD/MXN pair attracts some sellers near the 17.4420 area during the Asian session and trades with a mild negative bias for the third successive da

USD/MXN remains depressed for the third successive day on Monday.The mixed technical setup warrants some caution for bearish traders.Any further decline towards the 17.2500 support could get bought into.The USD/MXN pair attracts some sellers near the 17.4420 area during the Asian session and trades with a mild negative bias for the third successive day on Monday. Spot prices, however, manage to hold above a multi-day touched on Friday and currently hover around the 17.4000 level, down just over 0.10% for the day. From a technical perspective, last week's failure near the 17.8175 confluence – comprising a declining trendline extending from the July swing high and the very important 200-day Simple Moving Average (SMA) – and the subsequent slide favours bearish traders. That said, oscillators on the daily chart are holding in the positive territory and warrant some caution before positioning for any further losses for the USD/MXN pair. Hence, any further decline is more likely to find decent support near the 17.2510-17.2500 horizontal zone. The mentioned area should act as a pivotal point, which if broken decisively will reaffirm the negative outlook and drag the USD/MXN pair to the next relevant support near the 17.0400 area en route to sub-17.0000 levels (September 20 low). The downward trajectory could get extended further towards the 16.7550 support. On the flip side, the 17.5415-17.5420 region now seems to act as an immediate hurdle ahead of the 17.6695-17.7000 area. Some follow-through buying should allow the USD/MXN to challenge the aforementioned confluence, around the 17.8100-17.8175 zone. A convincing breakout through will be seen as a fresh trigger for bullish traders and pave the way for an extension of the recent recovery from a multi-year low touched in August. USD/MXN daily chart Technical levels to watch  

The USD/JPY pair holds positive ground around 149.70 during the early Asian session on Monday. The pair trades at the highest level in 11 months after

USD/JPY gains traction near 149.70 amid the USD demand.BoJ Governor said that the central bank has a long way to go before exiting its ultra-loose monetary policy.The US annual Core PCE Price Index grew 3.9% from 4.3% in July, in line with expectations.Investors will monitor the US ISM Manufacturing PMI, Fed Chair Powell’s speech.The USD/JPY pair holds positive ground around 149.70 during the early Asian session on Monday. The pair trades at the highest level in 11 months after bouncing off the low of 148.52 following the release of the Bank of Japan (BoJ) Summary of Opinions. Meanwhile, the US Dollar Index (DXY) holds above 106.00 amid the renewed demand.

On Saturday, BoJ Governor Kazuo Ueda said that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy. Earlier Monday, BoJ Summary of Opinions at the Monetary Policy Meeting on September 21 and 22 stated that BOJ does not need to make additional tweaks to YCC as long-term rates moving fairly stably and said that the end to negative rate must be tied to success of achieving 2% inflation target. One board member added that given recent FX and oil price moves, there is a chance

Furthermore, the latest data from the BoJ showed overall business conditions of the large manufacturing companies in Japan improved in the third quarter (Q3). The Japanese Tankan Large Manufacturing Index (Q3) came in at 9.0 from the previous reading of 5.0, better than the expectation of 6.0.

Across the pond, Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Traders will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday.

About the data, the US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from the previous month of 3.4%, in line with the market estimation. The annual Core PCE Price Index grew 3.9% from 4.3% in July, meeting the expectation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose by 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market estimations.

In the absence of top-tier economic data released from the Japanese docket this week, the USD/JPY pair remains at the mercy of USD price dynamics. However, traders will be cautious about the potential FX intervention from Japanese authorities as the pair trades near the 150.00 mark. Also, the US ISM Manufacturing PMI for September will be due on Monday ahead of the Fed Chair Powell’s speech.  

Japanese Finance Minister Shunichi Suzuki is crossing the wires early Monday, continuing with the verbal intervention, as the USD/JPY pair approaches

Japanese Finance Minister Shunichi Suzuki is crossing the wires early Monday, continuing with the verbal intervention, as the USD/JPY pair approaches 150.00 once again. Suzuki said that he was watching currency moves "cautiously", per Bloomberg. Market reaction At the time of writing, USD/JPY is adding 0.30% on the day to trade near 149.70.

The GBP/USD pair finds some support near the 100-hour Simple Moving Average (SMA) during the Asian session on Monday, albeit struggles to attract any

GBP/USD struggles to gain any meaningful traction and oscillates in a narrow trading range.The risk-on impulse is seen undermining the safe-haven USD and lending support to the major.The divergent Fed-BoE policy outlook should keep a lid on any meaningful upside for the pair.The GBP/USD pair finds some support near the 100-hour Simple Moving Average (SMA) during the Asian session on Monday, albeit struggles to attract any meaningful buying and oscillates in a range just below the 1.2200 mark. A small gap higher opening for the US equity futures holds back traders from placing fresh bullish bets around the safe-haven US Dollar (USD), which, in turn, is seen acting as a tailwind for the GBP/USD pair. The global risk sentiment gets a goodish lift in reaction to the encouraging weekend news on China's economy and the funding for the US government. The official Chinese PMIs showed that business activity in the manufacturing sector recorded growth for the first time in six months and the services sector remained in expansion territory during September. Adding to this, the US Congress approved the stopgap funding bill to avert a government shutdown for another 45 days and further boosted investors' confidence. The US macro data released on Friday, meanwhile, does little to change the view that the Federal Reserve (Fed) will stick to its hawkish stance and help limit the downside for the USD, capping gains for the GBP/USD pair. The US PCE Price Index rose in line with consensus estimates, to 3.5% over the past twelve months through August from the the previous month's upwardly revised reading of 3.4%. that said, the annual Core PCE Price Index – the Fed's preferred gauge of inflation – eased from the 4.3% (revised from 4.2%) increase recorded in July and dipped below 4% for the first time in over two years. Inflation, however, remains elevated above the 2% target and supports prospects for further tightening by the Fed. The outlook remains supportive of a fresh leg up in the US Treasury bond yields and favours the USD bulls. Apart from this, the fact that the Bank of England (BoE) surprisingly paused its rate-hiking cycle earlier this month and provided little hints of its intention to raise rates any further contributes to keeping a lid on the GBP/USD pair. This makes it prudent to wait for strong follow-through buying before positioning for any meaningful recovery from the vicinity of the 1.2100 mark, or the lowest level since March touched last week. Market participants now look to the release of the US ISM Manufacturing PMI for some impetus ahead of Fed Chair Jerome Powell's scheduled speech later during the early North American session. Technical levels to watch  

The Australian Dollar (AUD) holds ground to continue the winning streak on the third successive day on Monday. The AUD/USD pair receives upward suppor

Australian Dollar holds ground ahead of the RBA interest rates decision on Tuesday.Australia’s TD Securities Inflation grew 5.7% in September, lower than 6.1% in August.US Core PCE for August rose as estimated but lowered than July’s figures.The Australian Dollar (AUD) holds ground to continue the winning streak on the third successive day on Monday. The AUD/USD pair receives upward support, primarily supported by the Chinese upbeat PMI data released on the weekend. However, the US Dollar (USD) continues to demonstrate resilience after the moderate economic data released on Friday. Australia’s TD Securities Inflation (YoY) data showed that inflation estimation in September was lower than August’s readings. The Reserve Bank of Australia (RBA) is expected to keep the interest rate unchanged in the upcoming policy meeting on Tuesday. However, the Consumer Price Index (CPI) in Australia for the month showed improvement compared to July, which could be attributed to the increasing energy prices. The rise in inflation could impact the RBA’s policy decision. The US Dollar Index (DXY) holds ground to continue to gain in the second trading session after the moderate datasets from the United States (US). Core Personal Consumption Expenditures (PCE) - Price Index (YoY) for August rose as estimated but lowered than July’s figures. US Core PCE (MoM) showed a soft reading against the market consensus. While the Michigan Consumer Sentiment Index (Sep) improved from the previous figures. Additionally, the USD’s strength is attributed to the positive performance of US Treasury yields. The yield on the 10-year US Treasury note hovers below the record highs.Daily Digest Market Movers: Australian Dollar attempts to gain amid market caution surrounding Fed’s interest rates trajectory, RBA decisionAUD/USD extends gains, trading around 0.6430 at the time of writing during early Asian trading hours on Monday. The Aussie Dollar could further face challenges due to increased market caution surrounding the US Federal Reserve (Fed) interest rates trajectory. RBA is expected to keep current interest rates at 4.1% in the upcoming policy meeting on Tuesday.  Australia’s TD Securities Inflation (YoY) rose 5.7% in September, lower than 6.1% in August. Australia’s Monthly Consumer Price Index (CPI) year-over-year for August rose 5.2% as expected, up from the previous rate of 4.9%. China’s Manufacturing PMI data rose into positive territory. China’s NBS Manufacturing PMI for August grew to 50.2 from the previous 49.7 figures, exceeding the 50.0 expected. Additionally, the Non-Manufacturing PMI rose climbed to 51.7 from the 51.0 previous reading, surpassing the market consensus of 51.5 readings. US Core PCE - Price Index (YoY) for August rose 3.9% as estimated, eased from the previous reading of 4.3%. Core PCE (MoM) showed a soft reading of 0.1% against the market consensus to be consistent at the 0.2% prior. US Michigan Consumer Sentiment Index (Sep) improved to 68.1 from the previous figure of 67.7, which was expected to remain unchanged. After the Friday session, bills were successfully passed in the US to avert a government shutdown, securing funding until November 17. This development has prompted a resumption of the US Dollar Index (USD) upward trajectory. Chicago Fed President Austan Goolsbee expressed confidence on Thursday that the Fed will bring inflation back to its target. Goolsbee also highlighted the rare opportunity to achieve this without a recession, indicating the US Federal Reserve’s (Fed) commitment to managing inflation while sustaining economic growth. Fed President Thomas Barkin acknowledged that recent inflation data has been positive but emphasized that it's premature to determine the future course of monetary policy. Barkin also noted that the data lost during a government shutdown could complicate the understanding of the economy. Traders await US ISM Manufacturing PMI for September ahead of the Fed’s Chair Jerome Powell's speech on Monday. The RBA interest rate decision will be eyed on Tuesday.Technical Analysis: Australian Dollar hovers below 0.6450, barrier at 23.6% Fibonacci retracementAustralian Dollar trades around 0.6430, followed by 0.6450 psychological level. A firm break above the latter could support the Aussie Dollar (AUD) to explore the region around 23.6% Fibonacci retracement at 0.6464 level, followed by the 50-day Exponential Moving Average (EMA) at 0.6482. On the downside, September’s low at 0.6331, followed by the 0.6300 psychological emerges as the key support.AUD/USD: Daily ChartInterest rates FAQs What are interest rates? Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%.
If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation. How do interest rates impact currencies? Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money. How do interest rates influence the price of Gold? Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank.
If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold. What is the Fed Funds rate? The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure.
Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

The NZD/USD pair consolidates below the 0.6000 mark after retracing from the seven-week highs of 0.6048 during the early Asian session on Monday. Trad

NZD/USD remains flat around 0.5994 ahead of the Reserve Bank of New Zealand (RBNZ) rate decision.New Zealand’s Building Permits for August came in at -6.7% MoM vs. -5.4% prior.The annual Core PCE Price Index grew 3.9% from 4.3% in July, in line with expectations.Market players await the US ISM Manufacturing PMI, RBNZ monetary policy meeting.The NZD/USD pair consolidates below the 0.6000 mark after retracing from the seven-week highs of 0.6048 during the early Asian session on Monday. Traders prefer to wait on the sidelines ahead of the US ISM Manufacturing PMI data and the Reserve Bank of New Zealand (RBNZ) rate decision. The pair currently trades near 0.5996, up 0.05% for the day.

The latest data from Statistics New Zealand on Monday revealed that the nation’s Building Permits for August came in at -6.7% MoM from the previous reading of -5.4%. The Reserve Bank of New Zealand (RBNZ) will announce its interest rate decision on Wednesday, and the Official Cash Rate (OCR) is expected to remain steady at 5.5%. 

Apart from this, economic data released on Saturday showed that the Chinese Caixin/S&P Global Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in September from the previous reading of 51.0, below the market consensus of 51.2. The Service PMI came in at 50.2 from 51.8 in the previous month. These figures indicated a sign of stabilization in the world's second-largest economy. However, the future is clouded by a housing downturn and plummeting exports, which could weigh on the China-proxy New Zealand Dollar (NZD).

On the US dollar front, the US Bureau of Economic Analysis showed on Friday that the Personal Consumption Expenditures (PCE) Price Index rose by 3.5% YoY in August from 3.4% in July, meeting market estimation. The annual Core PCE Price Index grew 3.9% from 4.3% in July, in line with expectations. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market consensus.

Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank is at or near peak for the federal funds rate while mentioning that the Fed will need a restrictive policy stance for some time to achieve goals. Traders will take cues from the Fed’s Chair Jerome Powell's speech later in the American session on Monday.

On Saturday, the US Congress passed a bill to prevent a government shutdown and keep the government running for 45 days. The vote extends government funding through November 17.

Market participants will focus on the US ISM Manufacturing PMI for September ahead of the Fed Chair Powell’s speech on Monday. The key event will be the RBNZ Interest Rate Decision on Wednesday. Traders will take cues from these events and find trading opportunities around the NZD/USD pair.  

The EUR/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading band, just above mid-1.0500s during the Asian session. Th

EUR/USD struggles for a firm direction and oscillates in a narrow band on Monday.The risk-on impulse undermines the safe-haven USD and lends support to the pair.Expectations that further ECB rate hikes may be off the table undermine the Euro.Traders look to the US ISM PMI for a fresh impetus ahead of Fed Powell’s speech.The EUR/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading band, just above mid-1.0500s during the Asian session. The global risk sentiment gets a goodish lift in reaction to slightly better-than-expected official Chinese PMIs and the passage of a stopgap US government funding bill over the weekend. The upbeat market mood keeps a lid on any meaningful upside for the safe-haven US Dollar (USD) and lends some support to the EUR/USD pair. That said, growing acceptance that the next move by the European Central Bank (ECB) is likely to be a rate cut continues to act as a headwind for the shared currency. Signs of the beginning of the end of the high inflation in the Eurozone, along with speculations about a possible contraction in GDP during the second half of the year, have been fueling bets that additional ECB rate hikes may be off the table for now. The expectations were reaffirmed by the latest Eurozone consumer inflation figures released on Friday, which showed that that the core gauge, which strips out the volatile categories of food, fell to 4.5% in September from the 5.3% previous. The US Personal Consumption Expenditures (PCE) data, on the other hand, does little to change the market view that the Federal Reserve (Fed) will continue to tighten its monetary policy. This continues to underpin the USD and hold back bulls from placing aggressive bets around the EUR/USD pair. In fact, the US PCE Price Index rose in line with consensus estimates, to 3.5% over the past twelve months through August from the the previous month's upwardly revised reading of 3.4%. That said, the annual Core PCE Price Index – the Fed's preferred gauge of inflation – eased from the 4.3% (revised from 4.2%) increase recorded in July to 3.9% during the reported month. Meanwhile, the rise in consumer spending, along with surging gasoline prices, points to higher prices going forward. This ensures that the US central bank will stick to its hawkish stance and keep rates higher for longer, which remains supportive of elevated US Treasury bond yields and favours the USD bulls. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of the EUR/USD pair's modest bounce from sub-1.0500 levels, or a multi-month low touched last week. Traders might also prefer to wait on the sidelines ahead of important US macro data scheduled at the beginning of a new month. A rather busy week kicks off with the release of the US ISM Manufacturing PMI, which, along with a speech by Fed Chair Jerome Powell, will influence the USD price dynamics later during the early North American session and provide some impetus to the pair. Technical levels to watch  

The Bank of Japan (BoJ) Summary of Opinions at the Monetary Policy Meeting on September 21 and 22, 2023, per Reuters. Key quotes “said inflation likel

The Bank of Japan (BoJ) Summary of Opinions at the Monetary Policy Meeting on September 21 and 22, 2023, per Reuters.Key quotes“said inflation likely to slow ahead”

“said inflation exceeding 2% but this is largely due to firms passing on higher import costs”

“Inflation likely to keep rising next fiscal year due to expected rises in transportation, public service fees”

“said seeing signs that positive cycle rising wages and inflation may be kicking off”

“said there is chance next year's wage growth may exceed that of this year”

“said given recent fx, oil price moves, there is chance inflation may not slow much and overshoot expectations”

“said no need to make additional tweaks to YCC as long-term rates moving fairly stably”

“said end to YCC, negative rate must be tied to success of achieving 2% inflation target”

“said to sustainably hit price goal, wage gains must become sustained and lead to inflation driven by service prices”

“said there is still some distance but japan nearing achievement of price target, so latter half of current fiscal year will be crucial phase in determining next year's price outlook, other factors”

“said cannot determine now timing of policy tweak as that will depend largely on economic, price conditions at the time”

“said BOJ's communication, guidance must be made in a way that does not constrain too much its freedom on timing, order of policy move”

“said it is important to prepare for exit from risk-management perspective as we could have clarity around January - March next year on whether 2% inflation target can be met in sustained, stable fashion”

“said side-effect of YCC remains even after steps in July to make it more flexible”

“said even if BOJ ends negative rate policy, monetary conditions will remain accommodative as long as real interest rates are negative”

 Market reactionThis headline had little to no impact on the Japanese Yen's performance against its rivals. As of writing, the USD/JPY pair was up 0.15% on the day at 149.60.

Japan Jibun Bank Manufacturing PMI came in at 48.5, below expectations (48.6) in September

Australia TD Securities Inflation (YoY): 5.7% (September) vs previous 6.1%

Ireland Purchasing Manager Index Manufacturing declined to 49.6 in September from previous 50.8

Australia TD Securities Inflation (MoM) dipped from previous 0.2% to 0% in September

Bank of Japan (BoJ) Governor Kazuo Ueda spoke on Saturday at the annual meeting of the Japan Society of Monetary Economics. He said that there was "a

Bank of Japan (BoJ) Governor Kazuo Ueda spoke on Saturday at the annual meeting of the Japan Society of Monetary Economics. He said that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy.Key quotes"The objective of the Bank's monetary policy is achieving price stability, which is its mission as stipulated by law. Considerations of the Bank's finances, etc. do not prevent it from implementing necessary policies,”

"A central bank's ability to conduct monetary policy is not impaired by a temporary decrease in its profits and capital, provided that it conducts appropriate monetary policy,"
Market reactionThe pair trades firmer in the early Asian session on Monday. As of writing, the USD/JPY pair was up 0.13% on the day at 149.56.

Japan Tankan Large Manufacturing Index above expectations (6) in 3Q: Actual (9)

Japan Tankan Large All Industry Capex: 13.6% (3Q) vs 13.4%

Japan Tankan Non - Manufacturing Index registered at 27 above expectations (24) in 3Q

Japan Tankan Large Manufacturing Outlook above forecasts (5) in 3Q: Actual (10)

Japan Tankan Non - Manufacturing Outlook came in at 21, below expectations (22) in 3Q

Gold price (XAU/USD) extends its downside and trades in negative territory for the sixth consecutive day during the early Asian trading hours on Monda

Gold price loses traction below the $1,850 mark as the US Dollar (USD) resumes its upward path.The annual Core PCE Price Index grew 3.9% vs. 4.3% prior.The US passed bills to prevent a government shutdown following Friday's session.Traders will focus on the US ISM Manufacturing PMI, the Fed Chair Powell’s speech.Gold price (XAU/USD) extends its downside and trades in negative territory for the sixth consecutive day during the early Asian trading hours on Monday. The renewed US Dollar (USD) demand exerts some selling pressure on USD-denominated Gold price. The precious metal currently trades near $1,846, losing 0.12% on the day. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, holds above 106.25 after retracing the low of 105.65 on Friday.

The US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. The annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, grew 3.9% from 4.3% in July, in line with the estimation. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures came in below the market expectations.

On the weekend, China’s manufacturing activity grew into positive territory. The Chinese Caixin/S&P Global Manufacturing Purchasing Managers' Index (PMI) dropped to 50.6 in September from the previous reading of 51.0, below the market consensus of 51.2. However, this figure failed to boost gold price.

Furthermore, the US passed bills to prevent a government shutdown following Friday's session, extending funding until November 17. This, in turn, lifts the US Dollar and drags XAU/USD lower.

Gold traders will monitor the US ISM Manufacturing PMI for September due on Monday. Also, Fed Chair Powell’s speech could offer hints about potential interest rate hikes. Traders will take cues from these events and find trading opportunities around the gold price.  

Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank may be done raising interest rates since inflation

Federal Reserve (Fed) Bank of New York President John Williams said on Friday that the central bank may be done raising interest rates since inflationary pressures are going back towards the 2% target, although still elevated.Key quotes
"Monetary policy is having the desired effects on the economy."

"Fed is at or near peak for the federal funds rate."

"Fed will need restrictive policy stance for some time to achieve goals."

"Sees inflation ebbing to 3.25% this year, heading to 2% in 2025."

"Future is uncertain, data will drive future policy choices."

"Will still take a while for full monetary policy tightening to affect economy"

"Inflation is still too high, price stability essential for economy."

 

The AUD/USD pair trades sideways below the mid-0.6400s during the early Asian session on Monday. The Australian Dollar (AUD) sell-off pauses due to th

AUD/USD remains confined near 0.6430 amid the USD demand.The annual Core PCE Price Index rose 3.9% vs. 4.3% prior, the monthly figure grew 0.1% vs. 0.2% prior.China’s manufacturing PMI grew into positive territory.Traders await the US ISM Manufacturing PMI ahead of the Reserve Bank of Australia (RBA) rate decision on Tuesday.The AUD/USD pair trades sideways below the mid-0.6400s during the early Asian session on Monday. The Australian Dollar (AUD) sell-off pauses due to the upbeat Chinese PMI data. However, the stronger UD Dollar (USD) might cap the upside of the pair. AUD/USD currently trades around 0.6430, losing 0.05% on the day.

On Friday, the US Bureau of Economic Analysis revealed that the Personal Consumption Expenditures (PCE) Price Index climbed 3.5% YoY in August from 3.4% in July, meeting market expectations. Meanwhile, the annual Core PCE Price Index, the Federal Reserve's preferred inflation indicator, rose 3.9% from 4.3% in July, in line with expectations. On a monthly basis, the PCE Price Index and the Core PCE Price Index rose 0.4% and 0.1% MoM, respectively. Both of these figures fell short of experts' expectations.

Following Friday's session, the US passed bills to prevent a government shutdown, extending funding until November 17th. The US Dollar Index (USD) resumes its upward path and holds above 106.25 on Monday.

Chicago Federal Reserve (Fed) President Austan Goolsbee said on Thursday that the Fed will return inflation to target and has a chance to do something rare by accomplishing that without a recession. Richmond Fed President Thomas Barkin remarked that the past five months of inflation data have been upbeat but that it is too early to determine what monetary policy would be next. Traders will monitor the Fed’s Chair Jerome Powell's speech later in the American session on Monday for fresh impetus.

On the Aussie front, market players expect another interest rate pause at the Reserve Bank of Australia (RBA) October RBA meeting on Tuesday. These events could trigger the volatility in the market.

On the weekend, data release showed that China’s manufacturing PMI grew into positive territory. The Chinese Caixin/S&P Global manufacturing purchasing managers' index (PMI) fell to 50.6 in September from 51.0 in the previous month, below the market consensus of 51.2. However, this figure failed to lift the Aussie against the US Dollar.

Looking ahead, market players will keep an eye on the US ISM Manufacturing PMI for September ahead of the Fed’s Chair Jerome Powell's speech on Monday. The attention will shift to the RBA interest rate decision on Tuesday. These events could give a clear direction to the AUD/USD pair.  

Australia S&P Global Manufacturing PMI: 48.7 (September) vs 48.2

New Zealand Building Permits s.a. (MoM): -6.7% (August) vs previous -5.2%

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