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The Bank of Japan (BOJ) announced on Wednesday that it offers to purchase Japanese Government Bonds (JGB) across various maturities. Key details BOJ o

The Bank of Japan (BOJ) announced on Wednesday that it offers to purchase Japanese Government Bonds (JGB) across various maturities.

Key details

BOJ offers to purchase 150bln yen of 1 year JGBs.

BOJ offers to purchase 475bln yen of 1-3 year JGBs.

BOJ offers to purchase 475bln yen of 3-5 year JGBs.

Market reaction

USD/JPY was last seen trading at 144.20, up 0.07% on the day, littie changed by the above BOJ’s operation.

AUD/USD is trading modestly flat around the 0.6500 level, having failed to find acceptance above the 0.6530 barrier once again. The retreat in the pai
  • AUD/USD is treading water around 0.6500 after the hawkish RBNZ rate hike.
  • USD attempts a tepid recovery, as S&P 500 futures drop 0.50%.
  • The aussie’s rejection at the ascending triangle resistance keeps sellers hopeful.

AUD/USD is trading modestly flat around the 0.6500 level, having failed to find acceptance above the 0.6530 barrier once again.

The retreat in the pair could be linked to the AUD/NZD driven sell-off after NZD/USD rallied hard on the Reserve Bank of New Zealand (RBNZ) 50 bps rate hike and hawkish guidance. The RBNZ announcement underscores its monetary policy divergence with the RBA, capping the upside in the aussie pair. The RBA slowed its tightening pace on Tuesday by delivering a smaller-than-expected 25 bps rate increase.

Further, resurgent haven demand for the US dollar amid a mixed market mood also cautions AUD bulls. Despite the risk rally in the Asian stocks, the US S&P 500 futures have turned in the red, dropping 0.52%, as of writing. Markets could be feeling nervous ahead of Wednesday’s US ISM Services PMI and employment data due later this week. Note that the greenback tumbled sharply on Tuesday, in the face of a remarkable decline in the American JOLT job openings data.

From a short-term technical perspective, the pair is unable to cross the horizontal trendline resistance placed around 0.6535 on a daily closing basis, leaving sellers in control.

That said, the 14-day Relative Strength Index (RSI) continues to lurk below the midline, supporting the case for a drop towards the 0.6450 psychological level.

The next downside target is seen at the rising trendline support at 0.6424.

AUD/USD: Daily chart

On the flip side, a firm break above the aforesaid critical resistance at around 0.6535 will validate an ascending triangle breakout.

Bulls will then aim for the downward-sloping 21-Daily Moving Average (DMA) at 0.6628. Ahead of that level, 0.6600 will challenge bearish commitments.

AUD/USD: Additional levels to consider

 

The Reserve Bank of New Zealand has hiked 50 bps as expected and the market is now digesting the statement, and the committee considered whether to in
  • NZD/USD is under pressure and taking the cross along for the ride despite the hawkish RBNZ.
  • The fact that the central bank only raised by 50bps is pressuring the bird away from the knee-jerk highs.

The Reserve Bank of New Zealand has hiked 50 bps as expected and the market is now digesting the statement, and the committee considered whether to increase by 50 or 75bps at this meeting, concluding that it is appropriate to continue hiking at the current pace. 

The OCR is now at a seven-year high of 3.5% while the central bank flagged more to come as it struggles to contain stubbornly high inflation.

The board decided not to hike by 75bps, so while there was scope for the upside to 0.5800, the price may struggle to gain traction at this stage of the runnings as it crumbles away, especially on a resurgence in the greenback that is trying to base at the lows of the week so far:

NZD/USD M15

NZD/JPY M15

The price could be expected on NZD/JPY to crash into support near 82.30 and in doing so, it will be leaving last week's highs for dust and put a significant risk of a move lower for the rest of the week. Bears can eye a test of 81 the figure. 

The AUD/NZD pair has witnessed a perpendicular fall after the Reserve Bank of New Zealand (RBNZ) hiked its Official Cash Rate (OCR) by 50 basis points
  • AUD/NZD has dropped significantly to 1.1250 on RBNZ hikes interest rates by 50 bps.
  • This is the fifth consecutive 50 bps rate hike which has pushed the OCR to 3.5%.
  • Earlier, RBA surprised the FX domain by announcing a 25 bps rate, lesser than projections.

The AUD/NZD pair has witnessed a perpendicular fall after the Reserve Bank of New Zealand (RBNZ) hiked its Official Cash Rate (OCR) by 50 basis points (bps) consecutively for the fifth time. The extent of the rate hike is in line with the projections and has pushed the OCR to 3.5%. The cross has dropped firmly to near 1.1250.

It is worth noting that RBNZ Governor Adrian Orr has preferred to continue focusing on bringing price stability and has ditched focus on growth prospects for now. Mounting inflationary pressures are required to tame sooner as they will continue to hurt the wallets of households. For the second quarter of CY2022, the inflation rate was recorded at 7.3%.

On the Australian front, the aussie bulls are still in the hangover of a lower-than-projected rate hike by the Reserve Bank of Australia (RBA). In its October monetary policy meeting on Tuesday, RBA Governor hiked the OCR by 25 bps, lower than the expectations of 50 bps. RBA’s surprise move of ditching the 50 bps rate hike pattern at the fifth time restricted aussie at the lower side.

The current RBA’s OCR stood at 2.6% and the RBA is seeing the interest rate top around 3.85%. The novel approach of keeping the growth prospects along with the priority of cooling down price pressures by the RBA will reach the desired interest rates in 2023.

 

 

The NZD/USD pair has picked significant bids and has touched an intraday high of 0.5769 as the Reserve Bank of New Zealand (RBNZ) has hiked its Offici
  • NZD/USD has hit 0.5770 as RBNZ hiked its OCR for firth time consecutively by 50 bps.
  • RBNZ’s interest rates have jumped to 3.5% and the central bank is sticking to its path of bringing price stability.
  • The DXY is expected to surrender the immediate cushion of 110.00 on weaker NFP projections.

The NZD/USD pair has picked significant bids and has touched an intraday high of 0.5769 as the Reserve Bank of New Zealand (RBNZ) has hiked its Official Cash Rate (OCR) by 50 basis points (bps) consecutively for the fifth time. The extent of the rate hike is in line with the projections of institutional investors. This has pushed the OCR to 3.5%.

Price pressures in the NZ economy have been recorded at 7.3% for the second quarter of CY2022. Therefore, a continuation of a hawkish policy was highly required. But at the same time, the RBNZ has ditched the growth prospects and has chosen price stability as its foremost priority.

Meanwhile, the US dollar index (DXY) is juggling around the 110.00 ground and is expected to surrender the same sooner amid weaker consensus for US Nonfarm Payrolls (NFP) data. Subdued preliminary estimates for the US Nonfarm Payrolls (NFP) data have been discounted by the market participants. As expected, the US economy created 250k jobs in September, lower than the August reading of 315k. The US economy has been maintaining full employment levels, therefore, space for generating more employment is extremely less. Adding to that, the escalating Federal Reserve (Fed)’s interest rates are also restricting the corporate to continue their hiring programs with sheer pace.

What could dampen the DXY’s appeal further is the Average Hourly Earnings data. The projections are indicating a soft landing at 5.1% vs. the prior release of 5.2%. In time, when households are facing the headwinds of mounting inflation, lower earnings would be insufficient to offset the inflated payouts.

 

The Reserve Bank of New Zealand has hiked 50 bps as expected and the market is now digesting the statement, and the committee considered whether to i

The Reserve Bank of New Zealand has hiked 50 bps as expected and the market is now digesting the statement, and the committee considered whether to increase by 50 or 75bps at this meeting, concluding that it is appropriate to continue hiking at the current pace. 

The OCR is now at a seven-year high of 3.5% while the central bank flagged more to come as it struggles to contain stubbornly high inflation.

"The Committee agreed it remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and contribute to maximum sustainable employment," the RBNZ said in a statement.

Ahead of the event, analysts at ANZ Bank argued that capacity pressures ''are only easing slowly and the labour market remains very tight. In this inflationary environment, we see the RBNZ has little choice but to focus on dampening inflation pressures by delivering another 50bp rate hike.''

  • The committee agreed appropriate to continue to tighten policy.
  • The committee members agreed monetary conditions needed to continue to tighten until inflation back in target range.
  • The core consumer price inflation is too high and labour resources are scarce. 
  • The level of domestic spending has remained resilient to date.
  • Household balance sheets remain resilient despite the fall in house prices.
  • New Zealand's productive capacity still being constrained by labour shortages and wage pressures are heightened.

NZD/USD update

As per the preview, When is the RBNZ and how might it affect NZD/USD?, the price was leaning over the top of a 100 pip box and resisted by the 0.5750s but is now bid on the release of the decision and statement.

It was stated that  ''the price could shoot up on a hawkish outcome towards a 50% mean reversion of the daily bearish impulse near 0.5800 and beyond.''

Also worth noting, the knee jerk to the RBA on Tuesday was a 50 pip sell-off before a 100 pip rally that was faded by the bears in London back to the post-RBA lows until the US dollar was sold off in New York. 

The kiwi is now testing the upside as follows: 

It is not evident that the price can continue much higher, however, as the board decide not to hike by 75bps. While there is cope for the upside, the price may struggle to gain traction at this stage of the runnings, especially on a resurgence in the greenback that is trying to base at the lows of the week so far. 

About the RBNZ

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.

 

New Zealand RBNZ Interest Rate Decision meets forecasts (3.5%)
USD/JPY is under pressure with the price trading 0.15% lower and extending on the overnight move in the US dollar to a low of 143.52 so far. The US yi
  • USD/JPY bears eye a deeper correction below critical support. 
  • The US dollar remains under pressure while below 110.50, DXY.

USD/JPY is under pressure with the price trading 0.15% lower and extending on the overnight move in the US dollar to a low of 143.52 so far. The US yields made fresh lows as the 10-year yield fell 1.4 basis points to 3.6% while the two-year rate slipped by less than one basis point to 4.1%. while the US dollar was sold off on yet further data disappointments. 

The DXY, which measures the greenback vs. a basket of currencies fell from a high of 111.886 for the day, or 110.870 on the JOLTS data that showed US job openings fell to almost 10.1 million in August, according to the Bureau of Labor Statistics.

This was below the consensus on Econoday for 11.15 million and down from 11.17 million reported in July.

The larger-than-expected decline could be the first sign that demand for labour is falling ahead of this week's main event in the US Nonfarm Payrolls data. 

The weaker data has caused traders to bet the Federal Reserve may raise interest rates less than previously expected as the central bank turns more dovish as the US economy slows.

In other data for the day, new orders for factory goods were flat in August, below expectations for a 0.2% increase in a survey compiled by Bloomberg and following a 1% decrease in July. 

Redbook reported that US same-store retail sales were up 12.3% year-over-year in the week ended Oct. 1, larger than an 11% gain in the prior week due to an increase in fall apparel sales at the end of the week as temperatures turned cooler.

all combined, along with the prior days' poor manufacturing data, consequently, US stocks advanced on signs that the supply-demand gap in the labour market was narrowing. This is a dovish factor that is supportive of risk appetite on Wall Street and weighing on USD/JPY. The Dow Jones Industrial Average leapt 2.8% to 30,316.32, the S&P 500 surged 3.1% to 3,790.93 and the Nasdaq Composite was 3.3% higher at 11,176.41. 

USD/JPY M15 chart

As for the technical, the price is breaking below the key structure and could be on the verge of a deeper move to correct the prior rally. The DXY is trying to base at support:

The US dollar index (DXY) is displaying a lackluster performance after declining to near the psychological support of 110.00. The asset is oscillating
  • The DXY is expected to surrender the immediate support of 110.00.
  • Poor demand by the households is responsible for weak ISM Service PMI projections.
  • This week, the US NFP data will keep the DXY on the tenterhooks.

The US dollar index (DXY) is displaying a lackluster performance after declining to near the psychological support of 110.00. The asset is oscillating in a narrow range of 110.05-110.28 in the Asian session and is expected to deliver more weakness ahead of the US Nonfarm Payrolls (NFP) data. But before that, investors will execute positions on US ISM Services PMI data. As investors have shrugged off the uncertainty of a global slowdown, risk-sensitive currencies are sky-rocketing. 

Poor demand is responsible for weak ISM Service PMI projections

As per the projections, the US ISM Services PMI data is seen lower at 56 vs. the previous reading of 56.9. Mounting price pressures in the US economy have titled the overall demand to the downside. The households are having less liquidity in their palms due to inflation-adjusted payouts, which has forced them to stick with demand for necessities only. Also, the New Orders Index data, which illustrates forward demand is expected to trim significantly to 58.9 against the prior release of 61.8.

US NFP, the critical trigger

This week, the release of the US NFP data will keep the DXY on the tenterhooks. The US NFP is seen lower at 250k vs. the prior release of 315k. While the Unemployment Rate is seen stabilizing at 3.7%.

Apart from that, investors will keenly focus on the Average Hourly Earnings data. As price pressures have not shifted significantly to the lower side, the earnings data holds meaningful importance. The labor cost index is seen lower by 10 basis points (bps) to 5.1% on an annual basis. Due to higher inflation, households are forced to make higher payouts for the usual quantity purchased and lower earnings won’t help them to offset the extra inflation-led spending.

 

Japan Jibun Bank Services PMI registered at 52.2 above expectations (51.9) in September
The EUR/USD pair is hovering around the psychological resistance of 1.0000 after a perpendicular rally post a break above the 0.9732-0.9850 consolidat
  • EUR/USD is aiming to cross the parity amid lower consensus for US employment data.
  • ECB Lagarde has failed to provide a true picture of the inflation situation.
  • Retail Sales data in the trading bloc is expected to decline by 1.7% against a decline of 0.9% recorded earlier.

The EUR/USD pair is hovering around the psychological resistance of 1.0000 after a perpendicular rally post a break above the 0.9732-0.9850 consolidation. The major is preparing to demolish the parity as the US dollar index (DXY) is witnessing an intense sell-off by market participants. The DXY is expected to display a sheer downside move after surrendering the crucial support of 110.00.

The DXY’s appeal has been weakened ahead of the US employment data. Federal Reserve (Fed)’s extremely hawkish campaign to achieve price stability has resulted in weaker projections for the US Nonfarm Payrolls (NFP) data.  The corporate has postponed the capacity expansion plans and fresh investment opportunities to dodge higher interest obligations. This has slowed down the recruitment process and henceforth the job opportunities.

As per the estimates, the US economy added a fresh 250k jobs in the labor market in September, which is extremely lower than the prior release of 315k. A lower-than-expected reading would weaken the DXY further as the Fed will be compelled to trim its hawkish tone to safeguard the economy from a recession situation.

On the Eurozone front, the comments from European Central Bank (ECB) Christine Lagarde on Tuesday cleared that the inflation rate is still in unchartered territory. ECB Lagarde cited that it was difficult to say whether or not inflation has peaked in the euro area, as reported by Reuters. She further added that "The minimum that we have to do is to stop stimulating demand,"

Going forward, the Eurozone Retail Sales data will be of utmost importance. The economic data is seen lower at -1.7% vs. the prior release of -0.9% on an annual basis. In times, when price pressures are soaring, a decline in retail sales will weaken the shared currency bulls.

 

 

The Reserve Bank of New Zealand is seen raising OCR by 50 bps to 3.5% in October today when it meets and announces the decision at 0100 GMT. ''The RBA

The Reserve Bank of New Zealand is seen raising OCR by 50 bps to 3.5% in October today when it meets and announces the decision at 0100 GMT.

''The RBA’s surprise smaller 25bp hike yesterday has gotten FX markets wondering if the Reserve Bank of New Zealand might be the next central bank to slow the pace of tightening,'' analysts at ANZ Bank said.

However, as they note,  inflation risks are a more pressing matter for New Zealand. However, a surprise 75 bps rate hike now seems off the table after the RBA hiked by only 25 bps.

''We expect a 50bp hike and hawkish tone, but the market is already pricing in a lot, so the bar is high.''

''While officials in Australia may be taking a more cautious approach we expect the RBNZ will lift the official cash rate by 50bps today. The Quarterly Survey of Business Opinion released by the NZIER yesterday shows inflationary pressures remain very strong.

Capacity pressures are only easing slowly and the labour market remains very tight. In this inflationary environment we see the RBNZ has little choice but to focus on dampening inflation pressures by delivering another 50bp rate hike,'' the analysts explained. 

Overall, the focus will be on RBNZ’s policy guidance.''

How might the RBNZ affect the NZD/USD price NZD/USD?

The price is leaning over the top of a 100 pip box and resisted by the 0.5750s. Should the RBNZ outcome be dovish, then this could lead to a hefty sell-off towards the middle of the 100 pip box near 0.5650 and then 0.5600.

On the other hand, the price could shoot up on a hawkish outcome towards a 50% mean reversion of the daily bearish impulse near 0.5800 and beyond. 

The knee jerk to the RBA on Tuesday was a 50 pip sell-off before a 100 pip rally that was faded by the bears in London back to the post-RBA lows until the US dollar was sold off in New York. 

About the RBNZ

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.

 

Ireland Purchasing Manager Index Services: 54.1 (September) vs previous 54.7
The USD/CAD pair has turned sideways in early Asia after dropping to near the psychological cushion of 1.3500. The major is expected to surrender the
  • USD/CAD is eyeing more weakness below 1.3500 as the focus has shifted to employment data.
  • The DXY may surrender the 110.00 cushion amid weaker US NFP projections.
  • An upbeat consensus for Canada’s labor market data amid hawkish BOC will strengthen loonie.

The USD/CAD pair has turned sideways in early Asia after dropping to near the psychological cushion of 1.3500. The major is expected to surrender the 1.3500 cushion and will deliver more weakness ahead. On a broader note, the asset shifted into a negative trajectory after dropping below the crucial support of 1.3600.

The pair is displaying a vulnerable performance as the US dollar index (DXY) is going through a rough time ahead of the US employment data. Policy tightening measures by the Federal Reserve (Fed) have started displaying their consequences and the job creation process is a major victim now. Investors are dumping the DXY on lower consensus for the Nonfarm Payrolls (NFP) data. Weaker-than-expected US employment data will force the Fed to slow down the pace of hiking interest rates.

The US NFP is seen lower at 250k vs. the prior release of 315k. While the Unemployment Rate is seen stabilizing at 3.7%.

On the loonie front, investors are similarly looking for the Canadian employment data, which is due on Friday. Net Change in Employment is seen extremely higher at 20k vs. the prior release of -39.7k. While the jobless rate is seen steady at 5.4%. In times, when the Bank of Canada (BOC) is continuously escalating the interest rate, upbeat employment data will delight the central bank.

Meanwhile, oil prices have comfortably established above the $85.00 hurdle ahead of the OPEC+ meeting. Oil prices have remained in negative territory for the past few months, which will force the oil cartel to announce production cuts. The majority of the OPEC members have not been able to produce promised output. Therefore, the production cuts are not expected to be huge and a pullback in the black gold will conclude.

 

 

 

 

 

Gold price (XAU/USD) has witnessed a juggernaut rally after demolishing the psychological hurdle of $1,700.00. The precious metal is oscillating aroun
  • Gold prices are aiming to smash the 61.8% Fibo retracement at $1,734.58.
  • Fed’s soaring interest rates have trimmed employment generation opportunities.
  • The Average Hourly Earnings data is expected to decline by 10 bps to 5.1% on an annual basis.

Gold price (XAU/USD) has witnessed a juggernaut rally after demolishing the psychological hurdle of $1,700.00. The precious metal is oscillating around Tuesday’s high at $1,729.00 and is expected to break the same with sheer confidence. The yellow metal has shifted into positive territory and is expected to continue its six-day winning streak after crossing the immediate hurdle of $1,730.00.

Weaker estimates for the US employment data are strengthening the gold prices. Escalating interest rates by the Federal Reserve (Fed) to combat the mounting inflation has trimmed employment opportunities. The corporate has left with no other option than to postpone the capacity expansion and investment plans to avoid higher interest obligations. This is resulting in a slowdown in the job creation process.

As per the expectations, the US Nonfarm Payrolls (NFP) data will decline to 250k vs. the prior release of 315k. The jobless rate is seen as stable at 3.7%. Apart from that, the Average Hourly Earnings data will remain in focus, which is expected to trim by 10 basis points (bps) to 5.1% on an annual basis.

Meanwhile, the US dollar index (DXY) has slipped to near the psychological support of 110.00. The DXY will continue to remain on the tenterhooks amid a decline in the employment generation process.

Gold technical analysis

On a four-hour scale, gold prices are near to hitting the 61.8% Fibonacci retracement (placed from August 10 high at $1,807.93 to September low at $1,614.85) at $1,734.58. The upside momentum is extremely strong as the asset has crossed the 50-and 200-period Exponential Moving Averages (EMAs) at $1,674.30 and $1,695.80 respectively while the 50-EMA is still lower than the longer one.

The Relative Strength Index (RSI) (14) has been established in the bullish range of 60.00-80.00, which indicates that bullish momentum has been activated.

Gold four-hour chart

 

South Korea Consumer Price Index Growth (YoY) came in at 5.6%, below expectations (5.7%) in September
South Korea Consumer Price Index Growth (MoM) came in at 0.3% below forecasts (0.4%) in September
The GBP/JPY registers minimal losses as the Asian Pacific session begins. On Tuesday, the GBP/JPY opened below the 164.00 figure and rose towards the
  • GBP/JPY registers minimal losses as the Asian session begins, down 0.08%.
  • The cross-currency pair needs to break above 166.00 to open the door for upward prices.
  • Deterioration in traders’ mood and failures to crack 166.00 could send the GBP/JPY tumbling towards 163.00.

The GBP/JPY registers minimal losses as the Asian Pacific session begins. On Tuesday, the GBP/JPY opened below the 164.00 figure and rose towards the daily high at 165.54 before retracing some of its gains, finishing Tuesday’s trading session positive by 1%. At the time of writing, the GBP/JPY is trading at 165.24.

GBP/JPY Price Analysis: Technical outlook

Even though the cross-currency pair printed six days of gains, the GBP/JPY needs to clear September’s high at 167.94 to cement its upward bias. GBP/JPY traders should be aware that the Relative Strength Index (RSI) shifted from aiming upwards to flat, suggesting buyers’ exhaustion. Therefore, as buyers get a respite, the GBP/JPY might correct lower to challenge the YTD high at 168.73.

Short term, the GBP/JPY one-hour chart delineates prices advancing steadily, with the 20-hour EMA, as dynamic support, previously tested four times. Still, the GBP/JPY managed to stay on the bullish side of the moving average (MA), used for dip buyers to re-enter longs.

If the GBP/JPY is going to extend its gains, the first resistance would be 166.00. Once cleared, the next resistance would be the R1 daily pivot at 166.14, followed by the R2 pivot point at 167.00.

GBP/JPY’s failure to decisively break 166.00 and deterioration in sentiment could pave the way for further losses. Therefore, the first support would be the confluence of the daily pivot point and the 20-hour EMA at 165.26. Break below will expose the S1 pivot at 164.02, followed by the 50-hour EMA at 163.47 and the 163.00 mark.

GBP/JPY Key Technical Levels

 

The GBP/USD pair is struggling to smash the psychological resistance of 1.1500 after a juggernaut rally. The asset is gathering momentum at elevated l
  • The cable has entered the highest auction area which was recorded in the downside journey.
  • Bulls have crossed the 200-EMA for the first time in the past 11 weeks.
  • The RSI (14) has established into the bullish range of 60.00-80.00 comfortably.

The GBP/USD pair is struggling to smash the psychological resistance of 1.1500 after a juggernaut rally. The asset is gathering momentum at elevated levels and is expected to continue its six-day winning streak after overstepping Tuesday’s high at 1.1490. The major witnessed a responsive buying action after forming a buying tail on September 26.

On a four-hour scale, the cable has entered into the demon’s arena where most of the trading activity took place while the downside journey of the asset. The major has poked the prior balanced area in a 1.1370-1.1770 range, which serves as the highest auction territory.

The asset has crossed the 200-period Exponential Moving Average (EMA) at 1.1400 for the first time after a period of 11 weeks. Also, a bullish crossover delivered by the 20 and 50-EMAs at 1.1051 adds to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) has been established in the bullish range of 60.00-80.00, which indicates that bullish momentum has been activated.

A minor pullback to near September 19 low at 1.1355 will serve as a bargain buy to the market participants, which will drive the asset towards the psychological resistance at 1.1500, followed by an August 31 high at 1.1694.

On the flip side, a downside break of the September 30 low at 1.1235 will drag the cable towards September 28 high at 1.0916. A slippage below the latter will drag the asset further towards September 29 low at 1.0763.

GBP/USD four-hour chart

 

Australia S&P Global Services PMI came in at 50.6, above expectations (50.4) in September
Australia S&P Global Composite PMI rose from previous 50.8to 50.9 in September
The AUD/USD pair is oscillating majorly above the psychological resistance of 0.6500 in the early Tokyo session. The asset is aiming to comfortably es
  • AUD/USD is eyeing the establishment of an auction profile above 0.6500.
  • The RBA trimmed its pace of hiking interest rates to keep the growth prospects intact.
  • A lower-than-expected US ISM Services PMI reading could weaken the DXY further.

The AUD/USD pair is oscillating majorly above the psychological resistance of 0.6500 in the early Tokyo session. The asset is aiming to comfortably establish above 0.6500 as the US dollar index (DXY) has extended its losses after dropping below the cushion of 111.00. The major is displaying signs of volatility contraction after the announcement of the interest rate decision by the Reserve Bank of Australia (RBA).

On Tuesday, RBA Governor Philip Lowe announced a rate hike by 25 basis points (bps). The extent of the rate hike was lower than the expectations of 50 bps as the central bank preferred to take growth prospects along with the foremost agenda of bringing price stability to the economy. This has pushed the Official Cash Rate (OCR) to 2.6%. RBA policymaker ditched the ongoing pattern of accelerating interest rates by 50 bps.

Now, the deviation between current rates at 2.6% and desired rate of 3.85% is extremely low, therefore the RBA has scaled down the pace of hiking interest rates.

Meanwhile, the DXY has slipped to near the psychological support of 110.00. The asset is expected to display a pullback move as short covering will kick-start after a sheer weakness.

In today’s session, the DXY will dance to the tunes of US ISM Services PMI data. The economic data is seen lower at 56 vs. the previous reading of 56.9. Also, the New Orders Index data will trim significantly to 58.9 against the prior release of 61.8.

 

The knee jerk to the RBA on Tuesday was a 50 pip sell-off before a 100 pip rally that was faded by the bears in London back to the post-RBA lows until
  • NZD/USD traders await the RBNZ for clarity.
  • Should the RBNZ outcome be dovish, then this could lead to a hefty sell-off towards 0.5650 and then 0.5600.
  • On a hawkish outcome, NZD/USD could head towards a 50% mean reversion of the daily bearish impulse near 0.5800 and beyond. 

The knee jerk to the RBA on Tuesday was a 50 pip sell-off before a 100 pip rally that was faded by the bears in London back to the post-RBA lows until the US dollar was sold off in New York. 

It is the Reserve Bank of New Zealand's turn today and NZD/USD was unable to benefit as well as its counterparts in Europe due to the Reserve Bank of Australia's dovish tilt. The kiwi moved higher but was little changed on the day despite softer US yields and a much weaker US dollar.

NZD/USD moved up from a low of 0.56795 to score a high of 0.5783. The bird has since fallen back to the middle of the range and idles in the 0.5720 awaiting the next catalyst. 

''The RBA’s surprise smaller 25bp hike yesterday has gotten FX markets wondering if the Reserve Bank of New Zealand might be the next central bank to slow the pace of tightening,'' analysts at ANZ Bank said.

''That and NZD/AUD relatives is weighing on the Kiwi this morning. Still, it won’t be long (2pm) before the RBNZ get the chance to make their views known. We expect a 50bp hike and hawkish tone, but the market is already pricing in a lot, so the bar is high.''

''While officials in Australia may be taking a more cautious approach we expect the RBNZ will lift the official cash rate by 50bps today. The Quarterly Survey of Business Opinion released by the NZIER yesterday shows inflationary pressures remain very strong.

Capacity pressures are only easing slowly and the labour market remains very tight. In this inflationary environment we see the RBNZ has little choice but to focus on dampening inflation pressures by delivering another 50bp rate hike,'' the analysts explained. 

NZD/USD technical analysis

The price is leaning over the top of a 100 pip box and resisted by the 0.5750s. Should the RBNZ outcome be dovish, then this could lead to a hefty sell-off towards the middle of the 100 pip box near 0.5650 and then 0.5600.

On the other hand, the price could shoot up on a hawkish outcome towards a 50% mean reversion of the daily bearish impulse near 0.5800 and beyond. 

The knee jerk to the RBA on Tuesday was a 50 pip sell-off before a 100 pip rally that was faded by the bears in London back to the post-RBA lows until the US dollar was sold off in New York. 

The shared currency continues its recovery against the greenback, as the EUR/USD cleared the 20-day EMA at 0.9891 and climbed towards the 50-day EMA,
  • EUR/USD is closing towards the parity on speculations that the Fed could shift “dovish.”
  • The EUR/USD continues its recovery, though shy of breaking the 50-day EMA above parity.
  • For the EUR/USD to shift neutral, it needs to clear 1.0226; otherwise, the bias remains downwards.

The shared currency continues its recovery against the greenback, as the EUR/USD cleared the 20-day EMA at 0.9891 and climbed towards the 50-day EMA, though it fell short of reaching it, printing a daily high at 0.9997. At the time of writing, the EUR/USD is trading at 0.9984, up by 1.66%.

The EUR/USD extended its recovery due to some fundamental reasons. US Treasury bond yields edge lower as speculations of central banks tightening at a slower pace grew as reflected by a risk-on impulse. Therefore, as shown by the US Dollar Index, the greenback dropped from its YTD high at 114.77, to 110.184, at the time of typing.

EUR/USD Price Analysis: Technical outlook

The EUR/USD daily chart delineates that the euro, even though it recovered from two-decade lows, it is still downward biased. The major could shift its bias to neutral if it clears the 100-day EMA at 1.0226 and would shift bullish if the pair is back above 1.0615, which could pave the way for a 200-day EMA test at 1.0632. That said, failure at parity or the 50-day EMA at 1.0015 would expose the EUR/USD to selling pressure.

Therefore, the EUR/USD first support would be 0.9900, closely followed by the 20-day EMA at 0.9890. A breach of the latter will expose the 0.9800 figure, followed by the YTD low at 0.9635.

EUR/USD Key Technical Levels

 

United States API Weekly Crude Oil Stock fell from previous 4.15M to -1.77M in September 30
The gold price rallied on Tuesday printing a fresh high for the week so far around $1,730 and traders have their sights set on September's high of $1,
  • Gold has rallied towards last week's highs as the US dollar and yields drop, risk rallies.
  • Gold bears focus on the downside and a 50% mean reversion near the $1,685/75 area. 

The gold price rallied on Tuesday printing a fresh high for the week so far around $1,730 and traders have their sights set on September's high of $1,735. The yellow metal rallied from a low of $1,695.24 on the day as the US yields made fresh lows of 3.564% in the benchmark 10-year Treasury yield while the US dollar got smacked down on yet further data disappointments. 

The DXY, which measures the greenback vs. a basket of currencies fell from a high of 111.886 for the day, or 110.870 on the following JOLTS data:

US job openings fell to almost 10.1 million in August, according to the Bureau of Labor Statistics, below the consensus on Econoday for 11.15 million and down from 11.17 million reported in July. The larger-than-expected decline could be the first sign that demand for labour is falling ahead of this week's main event in the US Nonfarm Payrolls data.  The weaker data has caused traders to bet the Federal Reserve may raise interest rates less than previously expected as the central bank turns more dovish as the US economy slows.

Elsewhere, also weighing on the greenback, US stocks advanced on signs that the supply-demand gap in the labour market was narrowing, a dovish factor that is supportive of risk appetite on Wall Street.  The Dow Jones Industrial Average jumped 2.7% to 30,308.63, while the S&P 500 gained nearly 3% to 3,789.49. The Nasdaq Composite was over 3.5% higher at 11,609 with all sectors in the green after midday Tuesday.

All in all, risk appetite is back in vogue. Volatility is helping to elevate the price of gold, buoyed by expectations that central banks may ease the pace at which they tighten monetary policy resulting in US equity markets recording their strongest rebound since November 2020. However, views are mixed as to whether markets have now bottomed out or whether this recovery will be short-lived.

''We expect another beat on this week's nonfarm payroll data on Friday, which could present be a catalyst for a repricing lower,'' analysts at TD Securities argued. ''The pain trade is still to the downside in precious metals, and the latest positioning data highlighted that other reportables started to meaningfully liquidate their gold length, suggesting pressure towards a capitulation in gold is indeed building.''

Gold technical analysis

The daily chart has seen the price rejected higher as per the harmonic Crab which is a bullish pattern. The bulls are running into an area of potential resistance as per the weekly M-formation and prior week's highs as well as a 21/50 smoothed moving average cloud. For the day ahead, being the middle of the week, if this is going to be the highs of the week, then there will be a focus on the downside and that exposes a 50% mean reversion near the $1,685/75 area. 

What you need to take care of on Wednesday, October 5: Optimism prevailed for a second consecutive day, leading to a continued dollar sell-off. The ca

What you need to take care of on Wednesday, October 5:

Optimism prevailed for a second consecutive day, leading to a continued dollar sell-off. The catalyst this time was the Reserve Bank of Australia, as it came out with a dovish surprise. Australian policymakers hiked the cash rate by a modest 25 bps, below the 50 bps expected, being the first to halt the ultra-aggressive quantitative tightening.

However, the global worrisome scenario remains the same. Inflation remains stubbornly high, while the risk of recessions is present among most major economies. For the record, the EU published the August Producer Price Index, which soared by 43.3% YoY, a record high.

The decision fueled hopes central banks are approaching the end of aggressive quantitative tightening. Global stocks rallied on relief, with US indexes sharply up for a second consecutive day as major indexes added over 2% each.

Government bonds kept recovering ground, keeping yields under modest pressure, which weighed on the greenback.

The EUR/USD pair trades just below parity and at its highest in over two weeks. GBP/USD is also up, currently trading in the 1.1470 price zone.

The aussie was the worst performer after RBA’s monetary policy decision, with AUD/USD now hovering at around 0.6500. The USD/CAD plunged towards 1.3500, trading nearby at the end of the American session.

The Swiss Franc edged higher against the greenback, with USD/CHF now trading at around 0.9790, while USD/JPY kept consolidating, now trading at around 144.00.

Gold benefited from the broad greenback weakness, trading at around $1,725 a troy ounce. Crude oil prices were also up, with WTI now changing hands at $86.20 a barrel.

Market players now await the Reserve Bank of New Zealand monetary policy decision. The central bank is expected to hike the main rate by 50 bps to 3.5%, and any decision different to that should spur volatility across the FX board.

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USD/JPY is subdued, falling for the second straight day as global equities extended their rally, following actions of some central banks, like the Ban
  • USD/JPY drops on a risk-on impulse due to equities rising amidst a falling greenback and US T-bond yields.
  • If the USD/JPY clears 144.00, the pair could tumble to 143.00.
  • Even though RSI is at oversold conditions, the break of the 200-EMA in the hourly chart shifted the bias downwards.

USD/JPY is subdued, falling for the second straight day as global equities extended their rally, following actions of some central banks, like the Bank of England (BoE) and the Reserve Bank of Australia (RBA), taking a “dovish” stance. Therefore, speculations that the Fed might follow suit sent US T-bond yields and the greenback diving. At the time of writing, the USD/JPY is trading at 144.07, shy of the 144.00 figure, down 0.32%.

USD/JPY Price Analysis: Technical outlook

From a technical analysis perspective, the USD/JPY is still upward biased, even though it is approaching the 20-day EMA at 143.76. Upside lies resistance at around 144.00, followed by Monday’s high at 144.93, ahead of the Bank of Japan’s (BoJ) line on the sand at 145.00.

For the major to shift neutral, the USD/JPY would need to collapse below the September 22 low of 140.34. Once cleared, the next support would be the 50-day EMA at 139.11.

The USD/JPY one-hour scale shows the majors tumbled below 144.67, Tuesday’s daily pivot, and the confluence of the 20, 50, and 100-EMAs, opening the door for further losses. Furthermore, as the USD/JPY heads south, it surpassed the 200-EMA at 144.19, shifting the short-term bias downwards. Albeit the Relative Strength Index (RSI) is at oversold conditions, a fall towards the S2 pivot point at 143.49, ahead of a test of the 143.00 figure.

USD/JPY Key Technical Levels

 

GBP/USD has been whipsawed on Tuesday in a day that ran through a vast territory for a fresh high for the week so far at 1.1489 from a low of 1.1280.
  • GBP/USD bears are lurking at a key confluence area of resistance. 
  • The tables could be turning in terms of the outlook for the Fed and UK politics. 
  • Bulls eye a significant breakout on higher time frames. 

GBP/USD has been whipsawed on Tuesday in a day that ran through a vast territory for a fresh high for the week so far at 1.1489 from a low of 1.1280. The US dollar was hit hard on the back of poor JOLTS data that has accompanied weak Manufacturing data and prospects of a less hawkish Federal Reserve.

The bears are out to get the greenback and have pushed the pound towards extremes as per the longer-term charts in what has been a very strong bullish correction over the past two weeks from record lows. 

The dollar slid against major currencies and along with yields, it would appear to reflect the market participants' views on the outlook for interest rates. At the same time, participants in the sterling money markets welcomed the British government's U-turn on some tax cuts. The pound dropped to a record low of $1.0327 on Sept. 26 and bond prices tumbled following the unveiling of the new government's plans to slash taxes, particularly for the rich, and ramp up borrowing.

However, it was not a popular plan and the plans to get rid of the 45% top rate of income tax has helped the pound to recover, adding to gains that were sparked by the Bank of England (BoE) last week restarting its bond-buying programme following a dramatic plunge in long-dated gilts.

Meanwhile, US yields, which move inversely to prices, were pressured at the start of the week and stayed low on Tuesday on more weak data in the JOLTS Job Openings. This is a survey done by the US Bureau of Labor Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month:

US job openings fell to almost 10.1 million in August, according to the Bureau of Labor Statistics, below the consensus on Econoday for 11.15 million and down from 11.17 million reported in July. The larger-than-expected decline could be the first sign that demand for labour is falling ahead of this week's main event in the US Nonfarm Payrolls data.  The weaker data has caused traders to bet the Federal Reserve may raise interest rates less than previously expected.

GBP/USD technical analysis

The weekly outlook is bullish as per the strong recovery. However, the price is running into a wall of a confluence of resistances that include old lows, highs, trendline and high volumes. This would open the prospects of a meanwhile correction for the immediate future which could mean that we have seen the high of the week on Tuesday's trade. 

The hourly chart's structures could come under pressure should the price now start to decelerate on the bid and chip into and consequently break the trendline support as the first bearish leading indicator in terms of price action.  

Silver price continues to extend its recovery during the week, climbing above the $21.00 figure for the first time since June 2022, spurred by a soft
  • Silver price clears the $21.00 mark, courtesy of broad US dollar weakness amidst falling US bond yields.
  • Speculations that the Fed would tighten at a slower pace spurred the equities recovery since Monday.
  • US factory orders remained unchanged, while job openings, fell.

Silver price continues to extend its recovery during the week, climbing above the $21.00 figure for the first time since June 2022, spurred by a soft US dollar and falling US Treasury bond yields. At the time of writing, XAG/USD is trading at $21.02, up by 1.66%, as the North American session progresses.

US equities are trading in the green, signaling investors appetite improving. The greenback remains heavy due to speculations that the Fed might tighten at a slower pace of increases after a reading of US manufacturing activity flashed signs of tempering.

That said, the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, creeps lower by 1.14%, at 110.389, undermined by US Treasury bond yields. The US 10-year benchmark note rate coupon is down two bps at 3.619%.

Data-wise, the US economic docket featured factory orders for August, reported by the US Commerce Department. Figures came at 0%, after July’s reading of -1%. Meanwhile, the US Labor Department revealed that job openings in the US dropped, though they remained at higher levels. The US JOLTs report for August showed that vacancies dropped from 11.239M in July to 10.053M in August.

In the meantime, Fed policymakers continued to grab the headlines as Fed Williams, Barkin, Jefferson, and Daly crossed wires.

New York Fed President John Williams said that the Fed’s “job is not yet done” while adding that rates are “not yet in a restrictive place for growth.” Richmond’s Fed Barkin said that a strong dollar has potential spillover effects on the global economy but stressed that the Fed is focused on the US economy.

San Francisco Fed Mary Daly said that further rates are needed, and then the Fed needs to hold restrictive policies in place until “we are truly done” on reaching the Fed’s goal. Earlier in his first remarks, Philip Jefferson said that inflation is the most serious problem facing the Fed. He added, “Restoring price stability may take some time and will likely entail a period of below-trend growth.”

What to watch

The US economic docket will feature the ADP Employment change, alongside the US International Trade and the S&P Global Services and Composite PMIs for September.

Silver (XAG/USD) Key Technical Levels

 

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