No signs of a Fed pivot

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 1.1739– 13 September high – Strong
• R1 1.1496 – 5 October high – Medium
• S1 1.1227– 5 October low – Medium
• S2 1.1025 – 30 September low – Medium

GBPUSD – fundamental overview

The market was underwhelmed by the latest PM Truss and Kwarteng speeches which were short on details about generating growth. There is a lack of confidence in the notion that short-term disruption will lead to long-term gains. Key standouts on today’s calendar come from Eurozone, German, and UK construction PMIs, Eurozone retail sales, the ECB Minutes, US initial jobless claims, and some Fed speak.

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 141.76 – 23 September low – Medium
• S2 140.35 –22 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. Also seen weighing on the Yen is a plan by the government to introduce an energy relief plan by the end of the month. Key standouts on today’s calendar come from Eurozone, German, and UK construction PMIs, Eurozone retail sales, the ECB Minutes, US initial jobless claims, and some Fed speak.

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 0.6682 – 14 July low – Strong
• R2 0.6548 –4 October high – Medium
• S1 0.6363 – 28 September/2022 low – Medium
• S2 0.6300 – Figure – Strong

AUDUSD – fundamental overview

The Australian Dollar has been propped up by strength in metals, but is also facing stiff resistance into rallies on the diverging RBA and Fed rate paths. Key standouts on today’s calendar come from Eurozone, German, and UK construction PMIs, Eurozone retail sales, the ECB Minutes, US initial jobless claims, and some Fed speak.

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 1.3836 – 30 September/2022 high – Strong
• R1 1.3696 – 5 October high – Medium
• S1 1.3503 – 4 October low – Medium
• S2 1.3409 – 22 September low – Medium

USDCAD – fundamental overview

The Canadian Dollar took a hit on Wednesday on the narrowing of the Canada trade surplus. Canada building permits surged but did not factor into price action. Key standouts on today’s calendar come from Eurozone, German, and UK construction PMIs, Eurozone retail sales, the ECB Minutes, US initial jobless claims, and some Fed speak.

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 0.5755 would be required to take the immediate pressure off the downside.

• R2 0.5857 – 23 September high – Medium
• R1 0.5814 – 6 October high – Strong
• S1 0.5660– 5 October low – Medium
• S2 0.5565 – 28 September/2022 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has outperformed in recent sessions on the back of the RBNZ rate hike and the discussion the central bank had about even considering a larger 75 basis point move. This comes in contrast to the move at the RBA. Key standouts on today’s calendar come from Eurozone, German, and UK construction PMIs, Eurozone retail sales, the ECB Minutes, US initial jobless claims, and some Fed speak.

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.