No shortage of doom and gloom

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. A break above the September high at 1.1739 will solidify the recovery. Until then, look for setbacks to be well supported ahead of 1.0800.

• R2 1.1496– 5 October high – Strong
• R1 1.1226 – 7 October high – Medium
• S1 1.1000 – Psychological – Medium
• S2 1.0930 – 26 September high – Medium

GBPUSD – fundamental overview

The UK Gilt market is falling apart and the BOE has announced a doubling of its buying allocation to GBP 10 billion per day. The UK government is scheduled to release a fiscal plan on October 31 and the market continues to rest uneasy with all of these developments. Key standouts on today’s calendar come from UK employment reads, US consumer inflation expectations, and central bank speak from various, BOE, ECB and Fed officials.

USDJPY – technical overview

Technical studies are looking quite stretched on the longer-term chart, warning of consolidation and correction in the days and weeks ahead. Look for additional upside from here to be well capped into the 145.00 area. Next key support comes in at 140.35.

• R2 146.00 – Figure – Medium
• R1 145.90 – 22 September/2022 high – Strong
• S1 143.17 – 26 September low – Medium
• S2 141.50 –9 September low – Strong

USDJPY – fundamental overview

The Yen sits just off multi-year low levels and back around pre-intervention levels from September, despite the BOJ's aggressive attempts to force a reversal of flow last month. Yen sellers were out taking advantage of thinner Monday trade on account of Japan and US holidays. Key standouts on today’s calendar come from UK employment reads, US consumer inflation expectations, and central bank speak from various, BOE, ECB and Fed officials.

AUDUSD – technical overview

Overall pressure remains on the downside with the market confined to a well defined downtrend. A break back above 0.6682 would be required to take the pressure off the downside. Until then, scope exists for deeper setbacks towards 0.6000.

• R1 0.6433 – 7 October high – Medium
• R2 0.6380 –10 October high – Medium
• S1 0.6261 –11 October/2022 low – Medium
• S2 0.6200 – Figure – Strong

AUDUSD – fundamental overview

The policy divergence between the RBA and Fed has become even more pronounced in recent days, resulting in fresh multi-month declines for the Australian Dollar. The US-AUS 2 year rate differential has just hit 104 bps, nearing its widest differential since 1988. Key standouts on today’s calendar come from UK employment reads, US consumer inflation expectations, and central bank speak from various, BOE, ECB and Fed officials.

USDCAD – technical overview

A recent surge back above 1.3000 signals an end to a period of 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 1.3900 – Figure – Medium
• R1 1.3836 – 30 September/2022 high – Strong
• S1 1.3676 – 7 October low – Medium
• S2 1.3503 – 4 October low – Strong

USDCAD – fundamental overview

The Canadian Dollar has held up well relative to its commodity currency cousins, but hasn't been immune to setbacks against the Buck. The Loonie was able to hold up a little better on account of firmer energy prices and a holiday thin session of trade. Still, some have been pointing to a worrying sign that is TD Bank paying 8.125% for 60-year money. Key standouts on today’s calendar come from UK employment reads, US consumer inflation expectations, and central bank speak from various, BOE, ECB and Fed officials.

NZDUSD – technical overview

Overall pressure remains on the downside with the focus on a retest of the critical low from 2020 at 0.5469. A break back above 0.5814 would be required to take the immediate pressure off the downside.

• R2 0.5814 – 6 October high – Strong
• R1 0.5674 – 7 October high – Strong
• S1 0.5541– 11 October/2022 low – Medium
• S2 0.5500 – Psychological – Strong

NZDUSD – fundamental overview

The bleak China outlook is really hurting the New Zealand Dollar, which now eyes a retest of the pandemic low. Key standouts on today’s calendar come from UK employment reads, US consumer inflation expectations, and central bank speak from various, BOE, ECB and Fed officials.

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. Back above 3922 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in around 3200.

• R2 3922 – 20 September high – Strong
• R1 3808 – 5 October high – Medium
• S1 3559 – 3 October/2022 low – Medium
• S2 3500 – Round Number – Medium

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 that risks potential recession in the months ahead. Overall, we expect inflation to continue to be a problem in 2022 that results in downside pressure into rallies.

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.

• R2 1766 – 25 August high – Strong
• R1 1736 – 12 September high – Medium
• S1 1615 – 28 September/2022 low – Medium
• S2 1600 – Round Number – 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.