Fed still not willing to bend to the will of the market

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 1.2429.

• R2 1.2429 – 6 November high – Strong
• R1 1.2400 – Figure – Medium
• S1 1.2289 – 24 October high – Medium
• S2 1.2184 – 3 November low – Medium

GBPUSD – fundamental overview

BOE Bailey was on the wires on Wednesday, talking a little less dovish than BOE Pill. The central banker said it was too early to talk about rate cuts. Key standouts on today’s calendar come from the ECB economic bulletin, US initial jobless claims, and a batch of central bank speak highlighted by ECB Lagarde and Fed Powell appearances late in the day.

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 151.72 – 31 October/2023 high – Strong
• R1 151.00 – Round Number – Medium
• S1 149.19 – 3 November low – Medium
• S2 148.80 – 30 October low – Stronger

USDJPY – fundamental overview

BOJ Ueda has given the market yet another reason to expect the central bank will maintain the status quo. Ueda said the wage-inflation cycle was still weak, and no mistakes were made in the conduct of policy. And the BOJ Summary of Opinions has backed this up, emphasizing the need for easy monetary policy to support the momentum of wage hikes, as a sustainable and stable achievement of price target has not yet been achieved. We have since seen renewed Yen weakness in the aftermath. Key standouts on today’s calendar come from the ECB economic bulletin, US initial jobless claims, and a batch of central bank speak highlighted by ECB Lagarde and Fed Powell appearances late in the day.

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 0.6200 would give reason for rethink. Back above 0.6523 will take the immediate pressure off the downside and strengthen case for a bottom.

• R1 0.6523– 30 August high – Strong
• R2 0.6523 – 6 November high – Medium
• S1 0.6397 – 9 November low – Medium
• S2 0.6387 – 2 November low – Medium

AUDUSD – fundamental overview

The Australian Dollar is trying to recover on Thursday after taking a hit from weakness in Chinese and metals markets. Key standouts on today’s calendar come from the ECB economic bulletin, US initial jobless claims, and a batch of central bank speak highlighted by ECB Lagarde and Fed Powell appearances late in the day.

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 1.3899 – 1 November/2023 high – Strong
• R1 1.3815 – 8 November high– Medium
• S1 1.3683 – 7 November low – Medium
• S2 1.3629 – 6 November low – Strong

USDCAD – fundamental overview

Canada fundamentals have been less than encouraging of late, which has resulted in a wave of renewed Canadian Dollar selling. On Wednesday, Canada housing data plunged, with building permits coming in at -6.5% month over month. We've also seen added downside pressure from weakness in commodities prices, with a particular focus on oil setbacks. Key standouts on today’s calendar come from the ECB economic bulletin, US initial jobless claims, and a batch of central bank speak highlighted by ECB Lagarde and Fed Powell appearances late in the day.

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 0.6056 would be required to take the immediate pressure off the downside. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6056 – 11 October high– Strong
• R1 0.6002 – 6 November high – Medium
• S1 0.5906 – 9 November low – Medium
• S2 0.5884 – 3 November low – Medium

NZDUSD – fundamental overview

New Zealand business inflation expectations came in softer than previous but a little higher than forecast, which perhaps helped to prop the Kiwi rate somewhat into the latest dip. But the Tuesday GDT auction results were not good and renewed downside pressure on risk assets is expected to ultimately weigh on the currency. At the moment, the OIS market sees the RBNZ keeping the rate unchanged until 4Q 2024, while pricing a rate cut at the October 2024 meeting. Key standouts on today’s calendar come from the ECB economic bulletin, US initial jobless claims, and a batch of central bank speak highlighted by ECB Lagarde and Fed Powell appearances late in the day.

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 4400 will be required to take the immediate pressure off the downside. Next key support comes in at 4103.

• R2 4398 – 12 October high – Strong
• R1 4391 – 8 November high – Medium
• S1 4308 – 3 November low – Medium
• S2 4239 – 2 November low – Medium

US SPX 500 – fundamental overview

Investors continue to struggle with the reality of a higher for longer Fed policy track in the face of ongoing worry around inflation, while also contending with an escalation in geopolitical risk. 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 2071 – 8 March 2022/Record high– Strong
• R1 2010 – 27 October high – Medium
• S1 1945 – 19 October low – Medium
• S2 1908 – 16 October low – Medium

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 stable and 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.