Positioning into Friday event risk

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.3143.

• R2 1.2272 – 29 September high – Strong
• R1 1.2220 – 2 October high – Medium
• S1 1.2037 – 4 October low – Medium
• S2 1.2010 – 15 March low – Strong

GBPUSD – fundamental overview

As was the case with the Euro, the Pound was also up on Thursday on broad based US Dollar selling. Data and news out of the UK was not GBP supportive. UK Metro Bank was out attempting a capital raise, while UK construction PMIs plunged to a post-pandemic low. Key standouts on Friday’s calendar come from German factory orders, the Canada employment report, and the US employment report.

USDJPY – technical overview

At this stage, it looks like the market is wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported on dips.

• R2 150.17 – 3 October/2023 high – Strong
• R1 150.00–  Psychological – Medium
• S1 148.53 – 29 September low – Medium
• S2 147.31 – 3 October low – Strong

USDJPY – fundamental overview

The Yen has entered a tight range trade after some whipsaw volatility earlier in the week on still unsubstantiated chatter around MOF intervention. Nevertheless, the market has been less inclined to sell Yen aggressively right now on fear of a second round of MOF action. Key standouts on Friday’s calendar come from German factory orders, the Canada employment report, and the US employment report.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6300 would give reason for rethink. Back above 0.6523 will take the immediate pressure off the downside and strengthen case for a bottom.

• R1 0.6501– 29 September high – Strong
• R2 0.6400 – Figure – Medium
• S1 0.6300 – Figure – Medium
• S2 0.6285 – 3 October/2023 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has been getting help from a broad selloff in the US Dollar, recovery in equities, and solid local data. Aussie exports data was decent, while retail sales came in as expected. Key standouts on Friday’s calendar come from German factory orders, the Canada employment report, and the US employment report.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3800 – Figure – Strong
• R1 1.3786 – 5 October high – Medium
• S1 1.3657 – 3 October low – Medium
• S2 1.3552 – 2 October low – Medium

USDCAD – fundamental overview

The Canadian Dollar has been a relative underperformer in recent sessions, taking a hit on slumping oil and a dip in Canada Ivey PMIs. Key standouts on Friday’s calendar come from German factory orders, the Canada employment report, and the US employment report.

NZDUSD – technical overview

Overall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6049 would be required to take the immediate pressure off the downside. A monthly close below 0.5900 would intensify bearish price action.

• R2 0.6049 – 29 September high – Strong
• R1 0.5989 – 22 September high – Medium
• S1 0.5871 – 4 October low – Medium
• S2 0.5859 – 5 September/2023 low – Strong

NZDUSD – fundamental overview

ANZ Commodity Export Prices were up 1.3% in September, matching the quickest pace since March 2022. This, along with a recovery in risk assets have helped to fuel this latest recovery in the New Zealand Dollar. Key standouts on Friday’s calendar come from German factory orders, the Canada employment report, and the US employment report.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4600 will be required to take the immediate pressure off the downside. Next key support comes in at 4200.

• R2 4358 – 22 September high – Medium
• R1 4334 – 29 September high – Medium
• S1 4216 – 3 October low – Medium
• S2 4201 – 4 October low – Strong

US SPX 500 – fundamental overview

We've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy, especially with the growth outlook looking up in recent months. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies despite market expectations that would argue otherwise.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. Next major resistance comes in at 2100, above which opens the next extension towards 2500.

• R2 1880 – 29 September high – Medium
• R1 1849 – 2 October high – Medium
• S1 1813 – 5 October low – Medium
• S2 1805 – 28 February/2023 low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.