Still no signs of Fed pivot

Special report: US CPI Preview

Today’s report: Still no signs of Fed pivot

There was nothing in the Fed Minutes to suggest the Fed would be looking to consider a pivot away from higher for longer policy. And so, the market reaction was subdued, with perhaps just a little selling of the fact kicking in.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

Technical studies are turning up from oversold territory, suggesting additional setbacks should be limited in favour of some form of a meaningful correction and consolidation. A weekly close back above parity will take the immediate pressure off the downside.

  • R2 0.9817 – 7 October high – Medium
  • R1 0.9754 - 10 October high – Medium
  • S1 0.9636 - 29 September low – Medium
  • S2 0.9536 – 28 September/2022 low – Strong

EURUSD – fundamental overview

The Euro continues to trade with an offered tone, getting more selling from the latest news around the German government slashing the growth outlook, while simultaneously upping its inflation call. ECB Knot may have helped the Euro's cause a bit after saying rates were way below neutral and the ECB needed at least two more significant rate hikes. Key standouts on today’s calendar come from German inflation reads, US inflation reads, and US initial jobless claims.

EURUSD - Technical charts in detail

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 1.0924 – 12 October low – Medium

GBPUSD – fundamental overview

Wednesday's round of UK economic data was not pretty, though the Pound was ok shrugging it off, instead focusing on chatter that parts of the UK budget would be reversed and that tax cuts would be deferred. Key standouts on today’s calendar come from German inflation reads, US inflation reads, and US initial jobless claims.

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 ahead of 150.00. Next key support comes in at 143.52.

  • R2 147.00 – Figure – Medium
  • R1 146.98 – 12 October/2022 high – Strong
  • S1 143.52 – 5 October low – Strong
  • S2 141.50 –9 September low – Strong

USDJPY – fundamental overview

The Yen has extended declines to fresh multi-year low levels, sinking below pre-intervention levels from September. Policy divergence continues to be a big deal here, with yields moving more and more in the US Dollar's favour. Key standouts on today’s calendar come from German inflation reads, US inflation reads, and US initial jobless claims.

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 0.6235 –12 October/2022 low – Medium
  • S2 0.6200 – Figure – Strong

AUDUSD – fundamental overview

The Australian Dollar has extended its run of declines to a fresh yearly low, on the back of softer economic data, a downturn in global sentiment, and slumping iron ore prices. Key standouts on today’s calendar come from German inflation reads, US inflation reads, and US initial jobless claims.

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 1.3856 – 11 October/2022 high – Medium
  • S1 1.3676 – 7 October low – Medium
  • S2 1.3503 – 4 October low – Strong

USDCAD – fundamental overview

RBC has called for a recession in Q1 2023, while also calling for the jobless rate to rise to 7%. Meanwhile, the Canada housing market continues to look quite frothy. All of this has been weighing on the Canadian Dollar. Key standouts on today’s calendar come from German inflation reads, US inflation reads, and US initial jobless claims.

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 0.5536– 11 October/2022 low – Medium
  • S2 0.5500 – Psychological – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been slumping of late, but has managed to find some relative outperformance against its peers in recent sessions, this on the back of Australia-New Zealand yield differentials and also on the back of some solid Kiwi data. Key standouts on today’s calendar come from German inflation reads, US inflation reads, and US initial jobless claims.

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.

Peformance chart: 30 Day Performance vs. US dollar (%)

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